5 Ways A Full-Service Multifamily Property Management Firm Can Lower Costs And Increase Revenue
Multifamily buildings in New York City are now facing an onslaught of new requirements that cost money, time and more money. In the past, to offset new expenses, landlords simply raised the rent. However, with an increase in new regulations, compliance issues and increased competition, balancing costs and increasing profitability is no longer that simple.
Owners are now beginning to look to their managing agents to decrease their buildings’ operating costs while simultaneously increasing revenue. But in this marketplace, they are seeing that not all property management firms are created equal.
“One of the biggest challenges we hear from building owners is that they have hit a revenue plateau. Owners see the value in full-service firms and the ancillary services that are specifically designed to help increase revenue and decrease costs,” Executive Managing Director of FirstService Residential Marc Kaplan said. “Full-service management companies have the expertise and relationships to leverage on behalf of their clients, whereas some of the smaller management companies do not have the same capabilities and look to third parties to achieve similar results.”
Bisnow talked to Kaplan about five ways a full-service property management firm can assist owners with reaching their financial goals.
1. Lowering Utility Bills And Keeping In Compliance With Energy Regulations
“In New York, energy is top of mind,” Kaplan said. “Building owners are now having to constantly review their energy usage in order to be compliant with city regulations or face hefty fees. Reputation is also very important. Potential tenants do not want to see a capital B or C when they are looking at a building. This is going to be a significant deterrent in a year from now.”
As of 2020, Local Law 33 will require NYC multifamily buildings over 50K SF to post their energy scores near their entrances, just like a restaurant with its Health Department grade. Those scores will be determined by those buildings’ energy spends this year.
Intro. 1253-C, which was just passed this month, aims to reduce building carbon emissions rates by 80% by 2050 and may require upgrades to buildings constructed before 2020. Local Law 84 benchmarks energy and water use, and Local Law 87 regulates energy audit and retro-commissioning.
FirstService Residential’s energy subsidiary, FirstService Energy, aggregates electric and gas costs to help buildings decrease their utility bills and offers clients a range of services including advanced control system monitoring, energy audits and inspections, utility bill audits, preventive maintenance programs and staff training on how to maximize building system performance.
2. Decreasing Repair And Maintenance Costs
Whether a building owner is faced with a major capital repair or general maintenance, the goal is to have the job completed on time and in a cost-effective manner with minimal disruption to residents.
The work required — coordination of bid packages, negotiation of costs with engineers and contractors, and the oversight of all aspects of a project — requires bandwidth and expertise that boutique property management firms may not have the resources, relationships and specialized knowledge to provide.
"During Superstorm Sandy, one of the buildings we manage in Lower Manhattan sustained serious damage," Kaplan said. "Luckily, our subsidiary, FirstService Project Management, was able to leverage their relationships with local contractors to quickly handle recovery and repairs. Our tenants were back to normalcy at home while neighboring properties were just beginning to clean up."
3. Reducing Compliance Violations
Failure to comply with regulations and laws can create significant problems — and added expenses — for a property. From the Local Law 11 Facade Inspection to the newly required sexual harassment training, it can be very difficult for an owner or developer to stay compliant without expert oversight. Failure to do so could subject the property to penalties.
“Our property managers are supported by an automated alert system that tracks violation and correspondence from various city agencies, so we can resolve complaints and violations earlier, renew permits and licenses in a timely manner, and track the status of mandated inspections on a daily basis,” Kaplan said. “Working with a larger firm with an in-house compliance department provides invaluable peace of mind, saves money on fees and can help prevent last-minute attempts to adhere to all these codes and regulations.”
4. Offering Better Terms With In-House Financial Services
Multifamily buildings often need capital for capital improvements and other expenditures, but without relationships with banks and brokers, they risk getting stuck with pricey loan terms.
Some large property management firms offer an in-house department of financial experts who have relationships with banks. This team can often help their clients secure preferred terms and pricing.
Kaplan added that, for clients of FirstService Residential, FirstService Financial proactively identifies ways to increase interest income for reserve funds through higher interest, as well as providing cash management, lending services, expense tracking, audit preparation, capital improvement financial models, and invoice and staff payroll support. They also facilitate the insurance procurement process on behalf of their clients.
5. Providing An Owner Mentality — Without Actual Ownership
“It is common to see management companies take an equity stake in certain properties," Kaplan said. "Oftentimes, we see those companies allocating some of their best staff to those properties. This is unfair to the rest of the managing agents’ portfolio. With that being said, FirstService Residential does not have any equity in any of the properties that we manage. We like to say that we have an owner’s mentality without actual ownership. This gives our clients peace of mind that they are getting unbiased service and that they are receiving our best people 100% of the time.”
Kaplan added that FirstService Residential manages over 500 buildings and 70,000 multifamily units in New York, including condos, co-ops and a significant rental footprint. As the largest property management firm in North America, the firm manages over 1.7 million doors throughout the U.S. and Canada.
This feature was produced by Bisnow Branded Content in collaboration with FirstService Residential. Bisnow news staff was not involved in the production of this content.