With costs rising everywhere, controlling the costs for your multifamily portfolio is more important than ever. From labor costs to building supplies to utilities, costs are increasing and having a major impact on the bottom line. Navigating the rise in operating expenses is critical for owners, developers and property managers.
Building materials have been greatly impacted by supply chain issues, helping fuel the increase in operating costs. According to the National Association of Home Builders, building material costs are up nearly 20% compared with last year. This increase not only affects developers, but also maintenance costs. One way to control material costs is to buy in bulk. This strategy not only gets discounts from vendors, it also provides a known cost for the supplies and materials for the on-site teams. It also helps smooth out fluctuations from the disrupted supply chain. With an on-hand inventory, the supplies are available for repairs when they are needed.
Many multifamily companies are struggling with a dramatic increase in their labor costs. Salaries and benefit costs have increased since the pandemic as the labor market tightened. One of the best ways to control these costs is to improve your employee retention. Improving employee retention not only helps improve operations and tenant satisfaction. Hiring and training new employees is a costly endeavor. Treating your employees as a valuable asset will help control your costs in the long-run. Additionally, you can try adding low-cost benefits such remote work, increased vacation time and expanded training programs. These additional benefits can help with retention as well as attracting new employees.
One of the best ways to help control costs is to improve your company’s efficiency. There are a number of strategies that can he implemented by multifamily owners, from centralizing leasing agents to streamlining the renewal process. Increasing the convenience of online payments can also improve efficiency by creating an instantaneous digital record, rather than having accounting enter individual payments. Increasing energy efficiency can also help control costs, whether by using more energy efficient bulbs, motion sensitive lighting or drip irrigation can all substantially reduce utility expenditures.