How to Keep Vacancy Costs to a Minimum During Downtime
Using extra time, money and resources to complete the dreaded move-out process can be detrimental to an apartment manager’s finances if not handled correctly. Vacancy loss days, maintenance fees and marketing efforts for new residents are just a few expenses that add up during apartment turnaround.
In a time when rentals are on the rise, new technologies, strategic thinking and regular maintenance or renovations can make the turnover process more efficient and cost effective. Every time a lease ends, it shouldn’t have to mean 40-plus days of money and time wasted.
Due to the industry’s strong rebound from the recession, developers jumped on the opportunity to increase supply. According to CoStar Group, there was a 66 percent increase in unit construction in the largest 54 metros in 2012, and 2013 will mark the first year since 2009 that the number of new apartment units added to the market will return to historic average levels. However, while there was a steady growth in rentals through 2012, many expect a more moderate growth in 2013.
This boom in multifamily construction is a positive indication and part of the reason why the industry contributed a significant $1.1 trillion to the economy. But the increase in supply also signifies an increase in vacancy rates, which CoStar predicts will trend upward in 32 of the 54 largest metros in 2013. If not handled strategically, each empty unit could end up costing owners significantly. In order to keep expenses and vacancy time down, it’s important to keep the following in mind.
Management and labor costs stemming from re-keying traditional locks are two of the biggest hurdles for apartment managers as residents move out. By implementing available technologies upfront, owners will save costs in the long run. For example, Kwikset’s Key Control Deadbolt allows residents and owners to have one-key access control to all units and maintain key control throughout tenant turnover. This way, managers save the time and money it takes to swap out cylinders or buy and install completely new locks. If a manager were to change 100 locks, he could save an estimated 9.5 minutes and $35 in labor per lock, or 15.8 hours and $3,500 total compared to a traditional pin and tumbler lock.
Nearly two-thirds of apartment managers increased their staff in 2012 due to high demands. Utilizing their workers efficiently is important when managing turnaround time. By staggering move-out dates throughout the month, landlords can ensure that resources are readily available to get the maintenance jobs finished quickly and effectively. Employing in-house crews instead of third-party workers will help managers save additional time and money.
Minimize turnover rate
The ideal solution to saving money and time from turnarounds is to cut them out completely. Know what renters value in a multifamily home, and ensure they are pleased with what you are offering. If done strategically, renovations end up paying for themselves. Some projects to consider include:
- High functioning kitchen and baths
- Installing home access control systems to monitor lighting, energy usage and security
- Hard surface flooring to ensure less risk of damage
- Exterior improvements to the building to maintain structure and appearance
It’s vital to know how to manage resources efficiently during a year when vacancy is likely expected. By employing available technologies and strategies ahead of time, apartment managers can avoid added expenses associated with apartment turnaround.
David Seeman is the director of builder development for Kwikset, Weiser and Baldwin, part of the Spectrum Brand Hardware and Home Improvement Group (HHI).