As the cycle matures, savvy multifamily investors are taking a look at the reality: a market correction could occur at any time. In advance of any downward movement, the best owners and managers are examining what can be done proactively to recession-proof properties.
As a property management firm with more than 160 multifamily communities under management, Western National Property Management has strategized small, but effective ways for today’s property owners to begin protecting their assets in the event of a future economic downturn.
Consider strategic upgrades
Now is the time in the cycle to proactively implement changes that matter most to residents. By focusing on amenities that are known to increase resident retention, property owners and managers can maintain their existing renter base while also adding value to their properties.
For example, according to the National Multifamily Housing Council/Kingsley Associates 2017 Renter Preferences Report, 88 percent of renters are seeking apartments with secure resident parking, and 71 percent of those renters will not sign a lease if the property doesn’t offer this amenity. In addition, 92 percent of renters are seeking apartments with reliable cell phone reception.
These are good examples of relatively small improvements that can benefit owners in the long term, especially if a downturn occurs. The installation of a security gate or cell phone signal boosters can increase resident retention and property value now, and will also help owners and managers keep residents in place for longer periods of time.
The importance of curb appeal can also impact a property’s chance of attracting potential residents. Owners should consider minor exterior improvements, such as a fresh coat of paint or minimal landscaping upgrades, now in order to be prepared to stand out among the competition should the economy slow.
Make things easier for residents
Another way property owners can better meet resident demand is by providing convenience and improving the overall quality of life for current and potential renters.
Because millennials represent nearly half of all new renters, apartment communities are implementing online apps to meet the demand of this demographic. Software such as Appfolio Property Manager and Rentec Direct can help to simplify ongoing processes. These programs make the initial resident application process much quicker and add a level of convenience when it comes to rent payments, maintenance requests and lease renewals.
Providing services that are important to residents can also positively impact retention rates. For example, approximately 68 percent of households own a pet, making it increasingly important for apartment communities to offer amenities and services that specifically accommodate the needs of pet owners. By offering amenities such as pet-washing or pet-walking services, properties can appeal to the vast majority of renters who own pets.
Other potential services that apartment owners and managers may consider include dry cleaning, grocery delivery and trash valet. These added amenities can vary and need to be tailored depending on the specific apartment community’s demographics and needs.
Encourage community engagement
According to a study by the Journal of Environmental Psychology, place attachment is a cognitive bond that can occur when someone feels an emotional connection to a place and the individuals associated with it. Multifamily owners and managers who can foster a sense of community for their residents will be better able to extend the retention rate of their properties.
Cultivating that sense of community often starts with the on-site staff. Property management, maintenance crew and concierge can play a vital role in establishing personal connections with residents.
Implementing communal activities, such as monthly community yard sales or fitness classes, can encourage neighbors to mingle and form relationships with one another, therefore increasing the chances of lease renewals, even if a downturn emerges.
Overall, both property owners and managers need to remain proactive in recession-proofing their communities. By making strategic updates now, implementing effective strategies to make residents’ lives easier and encouraging meaningful community engagement, multifamily professionals can improve the chances of having a recession-proof property if and when a market correction does occur.
Donna Gill serves as regional vice president of Western National Property Management, the multifamily real estate management arm of Western National Group. Headquartered in Irvine, Calif., Western National Property Management currently oversees the management of 23,600 apartment units in 162 communities throughout California and Nevada.