Data plays a critical role in optimizing investment properties and increasing returns. It provides valuable insights into the performance of an asset and helps identify areas for improvement.
Data plays a critical role in optimizing investment properties and increasing returns. It provides valuable insights into the performance of an asset and helps identify areas for improvement. Leveraging data, multifamily owner-operators can make informed decisions on where and how to allocate resources, which value-add projects to implement and prioritize maintenance requests leading to more efficient operations, increased tenant satisfaction, and, ultimately, greater ROI.
In this article, we outline the steps to take when collecting, analyzing, and implementing multifamily real estate investment data.
Establishing KPIs
Keeping track of data for a multifamily asset is crucial for the owner-operator to make informed decisions and ensure the property performs well. During the underwriting process, Key Performance Indicators (KPIs) that are specific and measurable should be established. There are a multitude of metrics to track, but the most crucial ones include Occupancy Rate, Revenue Growth, Net Operating Income, and Net Cash Flow.
It’s important to maintain realistic expectations when setting KPIs. This means considering factors like market conditions, industry trends and other external factors that may impact asset performance. The data collected can be used to improve the property’s performance and can also be leveraged to predict where the market is heading by taking into account historical data like rental and vacancy rates.
When our company was looking to increase revenue at one of our properties, we leveraged our operational expertise to implement a water bill-back program that resulted in an estimated 5,513.2% ROI on $12,720 in total capital expenditures. An experienced owner-operator will be able to identify opportunities to meet and even exceed the KPIs for property investments.
Analyzing Data and Implementing Changes
Once the data is gathered, it’s time to analyze and make informed decisions to improve the asset and increase returns. If the data indicates the KPIs are not being met, it is time to take a step back and look at which areas of the business need extra attention. For example, if occupancy rates are low, the marketing strategy is a good first place to look. Owner-operators should evaluate if the advertising and the social media strategies are effectively reaching the target audience and that leasing agents are actively promoting the property. Sometimes tweaks to the marketing strategy, like introducing incentives for leasing events or adding more property images to social media pages, can increase traffic and lead to signed leases.
Using data to retain tenants
While generating outsized performance is the end goal in multifamily real estate investing, an equally important goal is tenant retention and satisfaction. There are many ways data can assist when it comes to boosting tenant satisfaction. For instance, keeping a watchful eye on maintenance data, such as the number of requests made and the average time the team takes to resolve issues, can aid in creating an efficient system that increases tenant satisfaction.
With a rise in the use of prop tech, more owner-operators are implementing data-informed improvements in common areas. Many communities provide tenants with key fobs giving them access to an onsite gym or mail room. The owner-operator can use the data to understand how often common area facilities are used, leading to cost savings if lights or the HVAC can be scheduled to turn on during high-traffic times.
Summary
In summary, data plays a critical role in optimizing multifamily real estate investment properties and increasing returns. Establishing specific and measurable KPIs during the underwriting process is crucial for making informed decisions and ensuring the property is performing well. Realistic expectations should be set, taking into account external factors that may impact asset performance. Analyzing the data and implementing changes based on the findings can improve the property’s performance and increase returns. By leveraging data, property owner-operators can make informed decisions that lead to more efficient operations, increased tenant satisfaction, and, ultimately, greater ROI.