• Additional Services. Offer additional services or amenities to tenants for a fee. This could include services like Wi-Fi or cable television, and concierge service packages (attach a couple of options for this type of service).
ASK KARI: Innovative Ways to Increase Revenue
Kari Negri, Chief Executive Officer, SKY Properties, Inc., and Carmen Zelaya • September 26, 2023
We as rental housing providers all share a common concern - the rising cost of housing operations and its impact on our lives. This month, I want to cover what has been at the center of the conversation in the past few years – the massive reduction of net operating income, or better known as “NOI.” It is a topic that affects landlords, tenants, and apartment communities together.
If you are in the City of Los Angeles covered under the rent stabilization ordinance (RSO), your ability to increase rent was taken away in March 2020 when the COVID pandemic reared its ugly head. You will not be able to increase your rent until starting on February 1, 2024. And, despite the “freeze” in Los Angeles, under normal circumstances in similarly situated jurisdiction under an RSO, there are strict limitations placed on rent increases.
So, given the circumstances what can you do? You likely will have to attack this issue in several ways by finding ways to create additional income and at the same time, reduce your expenses. Let’s talk about how you can do this:
New Income Stream Possibilities to Supplement Your Rental Income
Some of the ways you can increase “top-line” revenue at your properties are:
• Utility Reimbursement. At properties where utilities are included in the rent because they are not separately metered, consider implementing a utility reimbursement program (a Ratio Utility Billing System or “RUBS”) for all new tenancies making tenants responsible for a portion of the utility costs. If you offer this from the standpoint of going green and conservation, many tenants tend to react more positively to it.New Paragraph
• Furnished Units. Consider renting units furnished and charge a premium. Focus on Reducing Expenses to Improve Your Bottom Line
• Energy Efficiency Measures. Implement energy-efficient practices and technologies such as LED lighting, smart thermostats, and energy-efficient appliances. This can lead to lower utility bills and long-term cost savings. There are sometimes incentives like rebates offered by the utility companies.
• Bulk or Group Purchasing. Explore opportunities for bulk purchasing of common supplies and materials used in the multifamily building. Buying in bulk can often result in volume discounts and reduced expenses. Join a rental property owner’s association like the Apartment Association of Greater Los Angeles for discount opportunities for insurance, supplies, and services.
• Monitor Usage Carefully. Track supplies usage to avoid purchasing more than you need and make sure you are well stocked on basic supplies. This can help avoid a simple repair becoming a hunt for a needed part. For instance, you do not want your maintenance man going to Home Depot for $3.00 parts when you are paying him $55 an hour.
• Expense Tracking and Budgeting. Maintain detailed records of expenses and track them against a budget. This allows landlords to identify areas of overspending, make informed decisions, and adjust financial plans accordingly. A budget simply makes it easy to see where you are overspending or under spending which can also be a problem.
• Insurance Review. Regularly review insurance policies to ensure appropriate coverage and competitive premiums. Shop around for insurance providers to find the best rates and coverage options.
• Outsourcing Non-Core Functions. Consider outsourcing non-core functions such as accounting, legal services, or property maintenance to specialized professionals or companies. This can save time and potentially reduce costs associated with managing these tasks in-house.
• Competitive Bidding. Seek multiple bids for major repairs, renovations, or contracted services to ensure competitive pricing. Comparing different bids can help landlords find cost-effective solutions without compromising on quality.
• Vendor Negotiations. Negotiate with vendors and suppliers for better pricing and discounts. Building strong relationships with vendors can lead to cost savings on supplies, maintenance services, and repairs. This is also a terrific opportunity to get input from your vendors on ways to lower costs and even streamline services.New Paragraph
This blog is from an original article by Kari Negri, published in the Apartment Age magazine from AAGLA https://aptnewsinc.com/aagla/2023aa07/#p=46
Kari Negri is the Chief Executive Officer of Sky Properties, Inc. and is a member of the Board of Directors of the Apartment Association of Greater Los Angeles. Do you have a question for Kari? Please send your questions and comments to Kari@SKYprop.LA.
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