One of the most important functions of residential property managers is to increase the value of their assets. This is no easy task, and the job comes with a lot of pressure and stress. Competition in residential property management is fierce, and to be a top performer in your region, you must take measures to increase revenue, cut costs and improve value.
So, how can you raise your building's value quickly and efficiently?
We all know that maintenance, repairs and supplies are a crucial part of your operations, but residential property management companies often overlook these areas. When using the right systems and tools, like Raiven, smart property managers can optimize spending and save 20% on these routine costs, thereby increasing the value of their property.
Today's market poses several challenges for residential property management companies. Some of the biggest include:
Net operating income (NOI) is a constant thought in most property managers' minds. The steady pressure to improve NOI shapes your actions and operational processes. Indeed, as a manager, you have to be conscious of every dollar you spend or receive.
The pressure to always improve the bottom line means that property managers must get creative, scrappy and resourceful. This is where you can separate the average performers from the top tier.
However, in the fast-paced business of residential property management, staying on financial track has become more challenging. Costs keep rising, skilled labor is in short supply and renters are pickier than ever. Systemic economic changes, a shift towards the service economy and the recent pandemic have exacerbated conditions and have made improvements to the bottom line tricky.
Stakeholders and owners have high expectations, and they expect you to perform, save money and increase value. So, this pressure means that increasing NOI is always top of mind.
The impact of COVID-19 on the residential rental market has been devastating in some areas. The pandemic caused a heartbreaking loss of life, employment and living accommodations. Landlords were in a difficult spot since they too were directly affected by the collateral damage from the disease.
Residential property management companies also found it difficult to staff their business because people were scared. Many did not want to come into the office and tried to work remotely, which is challenging in the property business.
When residents lost their jobs - at no fault of their own - it was difficult for them to stay current on rental payments too. Property managers had little recourse to evict or to collect.
Rental rates and occupancy levels also suffered. Property managers had to entice renters with lower rates to try and fill units to make up for the revenue drain.
These problems have had an accumulative effect on the market and have made the quest for NOI growth difficult. If these problems were not enough, other costs are creeping higher too.
Repair costs have been steadily rising and have cut deep into profits in the residential property management sector. Supply chain issues have stifled projects, and regardless of whether units are occupied, they still need maintenance and repair.
You cannot afford to defer these projects because they will cost you more money in the long run and will steal from your bottom line.
MRO supplies are the lifeblood of residential property management operations. As they rise in price, you need to make wise decisions on how to save money for your properties.
Fortunately, there are products and systems that will help curb the rise in MRO supply prices - even in today's brutal market.
The often-overlooked area of MRO supplies is an easy way to cut costs and increase the value of your building. It may seem too simple, but it is an effective way to increase NOI and thus boost the value of your property.
You always need HVAC and plumbing supplies in business. You routinely purchase filters, compressors, belts, fans and more across your properties. So, if you saved 20% on these supplies, you would see an immediate impact on your bottom line (and a stronger NOI and increased property value).
Raiven Marketplace can save you money on MRO supplies fast. It works by aggregating supplies from multiple vendors to ensure the best pricing available.
As your employees conduct normal purchasing practices, they are able to choose the best deals and see how much money they are saving.
Implementing a strategic sourcing platform within your company will allow you to take control of your spending practices. Analyzing your current purchasing habits, compiling data, and cultivating relationships with vendors and suppliers will help you get the best pricing possible.
Raiven's software will also end rogue spending, which occurs when employees purchase supplies from unapproved vendors and leads to high costs.
Online marketplaces are a network of suppliers that provide access to their products on a web-based platform designed for B2B activities. These sites make the purchasing process for companies easier and more transparent, which saves time and improves internal efficiencies.
These electronic marketplaces provide a level of convenience that allows for millions of dollars worth of products to be purchased from the click of a mouse. Amazon and Alibaba are ubiquitous examples of marketplaces that are widely known and used daily.
Raiven has its own network of suppliers that will help you save money on your routine supply purchases, enabling you to raise the value of your property by creating an overall cost reduction in operations. This advanced marketplace is an online shopping center that has all the items that your business needs.
With Raiven Marketplace, you can find any product that you are looking for at a discounted rate. Residential property management companies cannot overlook this method of saving money. If you want to increase the value of your property fast, this is where you should start.
Although most property managers overlook this aspect of the business or view it as an afterthought, this should be one of the first areas that you attack when trying to increase your property's value. It is low-hanging fruit that you can easily apply to your business practices so you can realize savings instantly.
The last thing your employees want is to have to source products from an unfamiliar vendor. They want the comfort of knowing that they are dealing with a reputable supplier with the best pricing. With Raiven Marketplace, your team will never have to worry about this problem.
When shopping for your MRO supplies, there are some vendors that are everywhere. We all have heard of them. We have all purchased from them. And Raiven has access to them. In fact, Raiven has the top suppliers in the industry, including Grainger, Office Depot, Fergeson and Home Depot.
With access to all the big players in the MRO sector, and with the best-negotiated pricing around, tapping into these vendors for your routine supplies is a reliable way to cut costs and increase your bottom line (and the value of your property).
Plus, your employees' shopping habits will not have to change - Raiven adapts to your purchasing practices too.
We know that residential property management employees get into routines - especially purchasers, whether that be the chief maintenance manager or administrative personnel.
The process of ordering MRO supplies is almost always done online from the comfort of a computer and office chair. In these scenarios, it is easy for your purchaser to get set in their ways and fall back on the vendors and suppliers that they are used to because they want to keep things simple. After all, purchasing MRO supplies should not be complicated, and fortunately, with Raiven's tools, it can remain simple. Your buyers can continue purchasing as they have been.
They can just log onto Marketplace, find any product they need and place an order in a matter of minutes. This will create a smooth and efficient process.
Indeed, as mentioned above, most of the sites that you purchase from are on Raiven Marketplace. So, your buyers will have the unique ability to add products from multiple vendors into a single universal shopping cart. This further simplifies and streamlines the process for everyone involved.
And even if your employees go astray and try to buy products from unapproved sites or suppliers out of habit, Raiven can help there too.
Software programs do not have to be complicated. This is true with Raiven’s browser extension.
The beauty of this system is that it works in the background while you are conducting your normal purchasing routines. If your employees stray from your approved vendors and try to source items from unapproved sites, the software is one step ahead of them. It will show similar or identical products from your approved network on the screen.
The browser extension will slide in products, show their price savings and allow your employees to add to your universal cart. In fact, they will not even have to leave the page they are on. The software conforms to their habits, mitigates their tendencies for rogue spend, and gives you the information and data you need to cut costs.
Ultimately, your team will find that they can save money from your network. Over time, this will create new habits and mental awareness. When your team has visible evidence of how they are saving money for the company, they will also see the bigger picture.
Can saving a few dollars here and there on supplies really help increase the value of your building? Yes. Take a look at an example of how this can and does work.
In this fictional scenario, the residential building in question is worth $100 million. The NOI for this property is 5%. Let us look at a few more details.
Yearly profit: The building is pulling in $5 million in profit.
Annual revenue: A building of this size has revenue of $15 million.
Yearly expenses:
Taxes: $5 million.
Operational costs: $5 million.
Ownership profits: $5 million.
These are respectable earnings for a large multi-family building. But you are under pressure to cut costs and increase value, so how this can get better?
Of the $5 million that goes to operational costs, the building spends $500,000 or more on MRO supplies.
Given this information, if you saved 20% on MRO supplies, that would mean that you spent $400,000 - a savings of $100,000.
Owner profits would then increase from $5 million to $5.1 million.
Your building's value has now increased
Now the valuation of the building has increased from $100 million to $102 million.
This is not a pipe dream or wishful thinking. This is an example derived from real-life scenarios in the residential property management sector. In this situation, we only focused on one area - MRO supplies, and it jumped the value of your building by $2 million. The beauty of this is that this example can work on buildings of any value - the concept stays the same.
If you present to ownership a scenario where they can increase the value of their building by $2 million, do you think they would listen? They would be foolish not to.
We know that you are under pressure to increase NOI and value, and Raiven’s software can help you get there.
The answer lies in cost savings from the routine purchases you make daily. Raiven ensures the best pricing from the top suppliers in the world, and the software seamlessly fits into your current structure. Continue purchasing as normal - only now you can save 20% or more on routine MRO supplies and increase your property’s value by $2 million.
To find out more about Raiven's unique system and how it can save you money, reach out today.