The Smart Perspective | Q1 2024

Looking beyond a stagnating rent landscape

In a time when the rental housing industry is seeing oversupply and lower rent growth, operators have an opportunity to uncover other revenue streams—with the help of technology. Property management companies, en masse, are looking to tech-driven solutions that add to the bottom line and trim overhead.

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Proptech that works in coordination with smart home solutions plays a critical role, permanently streamlining business models and constructing more sustainable operational practices. In this newsletter you’ll find multiple ways to strengthen your NOI without relying on rent increases. I hope you uncover a few strategies that fit your goals.

Rent stagnation continues to affect earnings for owners and operators in many markets, putting leaders in the tough position of needing to simultaneously retain residents and improve NOI. If you feel the pull toward adding more fees to leases or offering concessions to keep residents, you’re not alone. Both trends are getting attention now, but they come with risks in the current multifamily landscape.

The temptation of concessions

According to the NMHC quarterly survey, owners and operators surveyed in January 2024 say the market is looser than last quarter—meaning that vacancies are high and rents are low. While conditions are different in every market, many communities face the challenge of maintaining NOI amid the threat of low occupancy. Retention is critical, and many property managers are considering concessions to keep current residents in place.?

The urge to offer concessions is likely to increase next quarter as we approach moving season, but concessions can sometimes be more trouble than they’re worth. Consider these guidelines to ensure concessions are a win-win for you and your residents.?

• Have open conversations with residents to see which concessions would be most meaningful to them.
• Avoid offering concessions that endanger your financial position or significantly impact your earnings, even temporarily.
• Track the costs of concessions—and whether they help you keep retention rates higher than the market.
• Document and communicate all concessions clearly so there’s no room for disputes later.
• Avoid setting the expectation for future concessions by emphasizing that concessions are a one-time or limited offer.

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Webinar recap: How to Successfully Launch Managed WiFi in Multifamily

In February we hosted an expert panel that shared independent market research about community WiFi:

• It’s what renters want. 53% of renters want the ability to roam their community without internet interruptions, but just 1% can do this now.? It’s a revenue opportunity. 64% of renters would pay $50 per month (and 35% would pay at least $100) for Community WiFi.
• It’s a revenue opportunity. 64% of renters would pay $50 per month (and 35% would pay at least $100) for Community WiFi.
• It’s a competitive edge. More renters would recommend Community WiFi and other managed WiFi than other kinds of internet service.

We also talked through what to do if you’re in an exclusive contract with your current internet provider or you don’t have the CapEx set aside for infrastructure and equipment.? If you missed the webinar, don’t worry.

You can check out the replay here.