How Automation and Outsourcing Can Increase a Property’s NOI

By Anuradha Kher, Online News EditorNew York–This is the worst economic downturn since the depression, there is competition from the shadow rental market, renters are doubling up and there are concessions in the apartment market everywhere, explained Diana Mosher, Editor in Chief of Multi-Housing News at the Webinar hosted by the brand on ‘Learning how to Streamline Financial Operations and Gain Efficiency.’ “At a time like this, automation and outsourcing can lead to big savings, resident retention and greening of properties,” said Mosher. Jeffrey Adler, president of the Sanctuary Group and Michael Radice, CEO of NWP were the other two speakers.“The pain of NOI (Net Operating Income) declines will be felt next year more than it has been felt this year,” said Adler. “Online payment systems can cushion the owner from volatility costs by adding those costs to bills. Site level staff spends 67 percent of their time on transaction processing and administrative duties, which is why automated rent and utility payment systems make sense.”The average default rate for Class A properties is 0.5 percent, 1.0 percent for Class B and 2.0 for Class C, Adler explained.He said when implementing online payment systems, it is important to make sure they are integrated with property management systems. “This is critical to creating office staff efficiencies. Testing the integration is equally important. Demand vendors to prove that their solutions integrate and are scaleable,” he said.There is a lot of resistance from managers and owners initially because on-site staff often view their job as collecting rent.Michael Radice, CEO of NWP, explained, “There is an ever-increasing need to reduce expenses, streamline operations and improve financial performance.” He then explained the three strategies that NWP offers to streamline operations and boost NOI.With NWP’s Utility Pay Manager, a 250-unit apartment property can see administrative cost savings of $7,942, utility theft savings of $5,750 and utility theft penalty fees (collected from residents) of about $2,250. That’s a total of over $15,000 in potential annual savings. With Resident One Bill, which is a convergent billing system including utility and rent, outsourcing utility invoice processing, utility cost savings and cost recovery savings can add up to $94, 500 for a 250-unit property. Resident ePay is the way residents pay their bills, either online through their checking accounts, with check scanning, credit cards or cash payment, the implementation of which can lead to potential savings of over $7,000. “With all three automated systems in place, a 250-unit community can save up to $117,000 every year which is about $470 per unit,” explained Radice.