A good location, well-tended units and common areas, and the right amenities are no longer enough to keep occupancy rates up and a property’s value high.
To maximize value, there are two main goals:
Meet or exceed budgeted rental income
Meet or exceed budgeted net operating cash flow.
Two areas of apartment operations that directly affect a property’s economic performance:
Occupancy and rental maximization
Expense management, as it relates to unit turnover
To meet each property’s challenges and its owner’s demands, the manager must integrate these disciplines into daily operations.
95 percent Occupancy
From both an investment and an operations standpoint, 95% occupancy is considered the optimum level for multifamily properties. Lenders use the 95% occupancy rate to structure loans, while managers consider 95% to be the balancing point between keeping a property full and focusing on raising rents.
In most situations, prospects will either inadvertently drive by the property, or will be drawn there by an ad or a current resident’s referral. For this reason, curb appeal is vital to draw in prospects.
Reducing costs is crucial to maximizing apartment property value.
There are several basic approaches that any size management company can use:
Install and enforce tight checks and balances on all purchases, no matter how small. Every purchase must fit into the property’s approved budget, which specifies the use of all purchases.
Repair first, and replace only when necessary. Although it is easier and more convenient to replace a broken item for a few dollars, very often the problem can be resolved with parts that cost only a few pennies.