Even if you are just starting out, think about how to create repeatable processes and generate additional cost savings by focusing on the long-term game.
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Plus, you’ll build stronger relationships with these providers, which can help you to get higher quality output and, oftentimes, priority over other operators. For example, if you can hire the same property manager or construction team across multiple properties, you can often negotiate a lower cost for these services. We’ve actually implemented water cost savings at properties we operate and have seen the impact on our bottom line.Ĭreating a portfolio of rental units within the same market can allow you to scale your NOI-increasing solutions. As the operator, you can take control of this and lower your water bill by implementing water-saving solutions such as installing low-flow toilets and shower flow controllers. Since tenants often are not expected to pay for the water bill, it can be difficult to simply ask or hope that they will reduce their water consumption on their own. A good place to start is by checking local solar programs in your state.Īlong the same lines of saving money on energy, look for creative ways to cut down on water usage. Of course, this is not only good for operators because of the potential cost savings and tax benefits like depreciation for implementing a solar program, but it’s also a win for the planet. One way to decrease your expenses and, therefore, increase your NOI is by installing solar panels. I've found many tenants are now especially willing to pay more for the convenience of not having to deal with the setup and management of their own internet or cable bill. Tenants are increasingly tied to their devices, which means the presence of Wi-Fi is not only desired but expected these days. Including Wi-Fi or cable in your rental units can increase the perceived value for tenants and, therefore, the rental price, without too much cost to you as the operator. Adding this “luxury” opens the opportunity to increase rents while also creating a more convenient living environment for your tenants. While it’s not always entirely feasible depending on the space and layout of the units, if you have the ability to add a washer and dryer to the unit, the return on investment can be well worth the cost. New flooring, appliances, furniture or paint can exponentially improve the value of the rental unit, thus allowing you to increase rents to match that value. I've found the most clear-cut way to recover this income is by raising the rents at the end of each lease to stay on pace with market rates. This is typically seen when a property is taken over by a new owner and the previous owner did not keep up with the increase in market rates (or the property is in a particularly hot market and rates have increased during the last 12 month lease period).
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It is essentially the difference between the unit’s market rate and the actual rental income agreed upon in the lease. "Loss to lease'' is a term used to describe the amount of money a property owner loses by not charging market rents.