Inflation and rising expenses are impacting multifamily operations’ bottom line. It is painful to see average net operating income (NOI) experience the first decrease since 2010. In greater context of pre-pandemic / post-pandemic economics, we will probably be asking macro questions about how this happened for many years. At a micro level, the biggest factors of cost increases in rental apartment communities are property taxes, insurance, and maintenance according to the most recent National Apartment Association Survey of Operating Income and Expenses. Yes, there are the same usual suspects of labor, taxes, insurance premiums, and utilities…but there have been some spikey surprises in the mix we should consider.
Property values, and their associated taxes, have been rising every year for almost a decade. Multifamily insurance premiums had been on a steady climb pre-pandemic, generally attributed to major natural disasters and damages attributed to social unrest. Abruptly, insurance soared by almost 20% in 2020. Since then, some multifamily residential properties have seen their premiums double or even more than double, largely contingent on location.
Here are four ideas that may help lower costs on primary expense categories
1. Reduce MRO Spend
Let’s assume if you’re reading this you know the fundamentals of reducing maintenance, repair, and operational expenses (MRO) through energy-efficient products, routine preventative maintenance, and strong procurement practices.
Labor is generally our major expense; many once-emergent technologies are now robust and have proven to reduce expenses. If your company has not yet implemented technology to expedite PO processes, streamline utility billing, better organize maintenance logistics / inventory tracking, or offer self-guided leasing tours, you are behind the times. Many platforms exist, and everyone has a favorite. However, having any of them is better than having none.
2. Lower Your Risk to Lower Your Rates
It is almost impossible to reduce existing insurance premiums if you have already shopped for the best rates. However, preventing these premiums from increasing is somewhat within our sphere of influence. For most operators, this means preventing the more egregious of unwanted behaviors that result in significant claims (and lawsuits). Many insurance companies extend lower premiums to properties that leverage remote video surveillance to avert these unwanted behaviors.
Remote video surveillance helps mitigate multifamily liability risks, enhancing safety by fortifying security. At Stealth, we find that adding security solutions that combine remote video surveillance with access control systems can have a strong impact on proactively mitigating incidents that would have otherwise likely become significant financial burdens.
Unwanted incidents take many forms. From slip-and-falls or ‘wander-off’ residents in Senior Housing, to wild parties in Student Living, or more typical resident / trespass / criminal issues in Conventional and Affordable, we find video surveillance almost always makes a bad situation better.
Live video monitoring, done properly, means that you have real-time video monitors watching your property, sounding off audible alarms to dissuade unwanted behaviors, and summoning the police if escalation is warranted. These security solutions save time and money by helping deter crime, prevent injuries, and reduce liability. Moreover, video surveillance provides you with 24/7 recordings for the evidence you need to properly engage law enforcement, insurance claims, and lawsuits.
A video surveillance system that includes real-time monitoring using video analytics and a trained monitoring operator generally yields faster response times from law enforcement. As a result, criminals and trespassers are typically caught before they cause additional damages or get away with stolen items.
In addition to cutting risks and lowering insurance premiums, you’ll help increase resident and employee safety, while often reducing guard, patrol, and courtesy officer expenses.
3. Explore Utility Tax Credits
In addition to efficient devices like low-flow water solutions and LED lighting upgrades, state and local green-utility tax credits are becoming more accessible for multifamily developers and rehab projects, especially when it comes to solar, energy reporting programs, and consumption forecasting. This is an area to explore no matter what asset type or class you own or operate. HUD has provided various incentives in these areas that affordable operators would be wise to explore. The most prolific affordable operators are ahead of curve, spear-heading additional access for laggards…take advantage.
4. Protest Property Taxes
While this is the greatest expense, we saved this for last because it is a challenging area in which to make impact.
In recent years, many cities are seeing property taxes rise steeply. Those responsible for estimating property values often aim for the stars hoping few will contest the increase. Unless the city lowers a property’s assessment, it’s worth doing research on your property taxes every year and taking steps to protest them.
You can hire a company to help you protest your property taxes, however, be aware that there are many unscrupulous companies offering these services. Many regions are becoming increasingly strict on waivers, so your mileage may vary, but consistency seems to net results. Challenge these taxes every year and you’ll probably find additional NOI.
Benefits of Multifamily Residential Remote Video Surveillance
Apartment rental properties deal with vandalism, injuries, and the side effects of natural disasters. A multifamily residential building that implements video surveillance can get round-the-clock eyes on the property, which helps minimize damage and reduce liability.
Furthermore, the trained monitoring operators watching the cameras are safely located in a place away from the apartment property. It adds another advantage in that you don’t have to worry about them committing internal theft.
A remote video surveillance system can come with an audio deterrent. This lets the operator issue a warning to anyone acting suspiciously or doing something dangerous. This helps not only deter crime, but liability as well, as you can see in this video. A child had climbed the apartment pool fence surrounding the swimming pool.
The operator issued a loud warning. Fortunately, the child climbed back down and took off. Without video surveillance and an audio speaker, who knows what could have happened. It could’ve turned into a tragedy for the child’s family.
Here are videos of how Stealth Monitoring uses video surveillance at multifamily residential properties:
- People playing with guns at an apartment community
- Burglary suspect at an apartment building
- Suspect uses drugs in an apartment laundry room
- Breaking and entering an apartment building
Here are some benefits of apartment property video surveillance:
- 24/7 monitoring: There are always residents on the multifamily residential property, especially with more people working from home. Continuous monitoring/recording can help make sure everyone stays safe.
- Complete site coverage: Properties can install security cameras to view the entire property including parking areas and areas where security guards can’t patrol or see such as the roof.
- Liability protection: The video surveillance system captures and saves everything into the cloud. This provides you with any evidence you need for the police, lawsuits, and insurance claims.
- Faster response times: Companies like Stealth Monitoring have a relationship with law enforcement across North America. When an emergency operator receives a call from Stealth, they know it’s an active situation because Stealth has video verification that the situation is not a false alarm.
- Includes system health checks: You won’t have to worry about maintenance when it comes to remote video surveillance from Stealth. The system comes with a proactive, proprietary system to help ensure the cameras, hard drives, network connection, the entire system works. If something should need repair, it can often be done remotely without stepping foot on your property.
- Integrate security technologies: You can add more layers of security such as an access control system to manage who comes and goes into your property. Security integration can help level up your security and efficiency.
The thing that surprises video surveillance clients most of all is the cost savings. Remote video surveillance is one of the most affordable amenities that pays off in multiple ways. Many apartment rental communities yield a return on their investment in video surveillance with monitoring within four months. Video cameras with remote monitoring help enhance security by providing multiple layers. At the same time, your residents and employees gain reassurance to feel safe. You can’t put a price on that.
Security can mean the difference between signing with your property or another multifamily community. According to multiple studies, everyone from millennials to baby boomers wants security. Moreover, darkened parking lots and garages are a major security concern for residents. People simply want to feel safe at home and move around the apartment property. One reason security is a growing must-have is because some residents both live and work in your multifamily residential building.
Technology is constantly evolving to become more effective, more affordable, and more efficient. Video surveillance with remote monitoring is flexible. You can scale up or down as needed. Innovative security and access control systems can solve many problems. Multifamily residential properties that invest in surveillance cameras with remote monitoring have experienced increases in productivity, improved resident experience, and maximized their NOI.
The apartment rental community has different security requirements than other industries. To fully benefit from remote video surveillance technology, find a partner with experience in the multifamily residential industry. Be sure to add Stealth to your list.
In working with Stealth Monitoring, you’ll obtain a customized security system for your multifamily residential property. Our team of security experts can build a security system that meets your requirements and budget. To help you in your search for a security partner, refer to this video surveillance checklist. To learn more, pick up your free Complete Guide to Securing Your Apartment Building or contact us.