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Shelley Cernel2024-09-04 10:53:442024-09-06 09:43:52Future-Proofing Your Portfolio: The Role of Scenario Planning in CRE Decision-MakingCommercial real estate (CRE) professionals across various asset types often monitor and report on similar metrics, such as net operating income (NOI), to gauge performance and profitability. However, the key metrics and their significance differ between managing traditional multifamily properties and affordable housing properties.
In the affordable housing sector, success hinges on focusing on specific metrics such as tenant-paid delinquency, occupancy rates, allowable rents, and repairs and maintenance. These metrics provide a comprehensive view of the financial health and operational efficiency unique to affordable housing, ensuring the sustainability of a property’s long-term operations.
Tenant-Paid Delinquency
Affordable housing properties receive income from two parties – the tenants and the government – and delinquencies (failure or delay in paying rent) typically occur on the tenant side. Effective delinquency management is crucial due to the reliance on timely rental payments to meet the stringent budget constraints often associated with affordable housing. Asset and property managers must continuously monitor delinquency rates to identify trends, implement effective collection strategies, and support tenants facing financial difficulties. For example, partnering with local agencies to offer financial counseling or assistance programs can help reduce tenant delinquency rates and improve tenant stability.
Occupancy Rates
Occupancy rates (the percentage of leased or occupied units) are a vital metric for asset and property managers in affordable housing. High occupancy ensures a steady flow of rental income, which is essential for covering operating expenses and achieving financial stability. Monitoring occupancy also helps identify trends and address issues promptly. For instance, a decline in occupancy rates could indicate problems with tenant satisfaction, marketing strategies, or competition in the area. Proactively addressing these issues helps maintain the property’s financial health and compliance with funding requirements.
Allowable Rents
Affordable housing properties must adhere to guidelines for allowable rents (rent limits set by government regulations) to ensure affordability for low-income tenants. Asset and property managers must carefully track these allowable rents to ensure compliance and avoid penalties. Staying updated with changes in allowable rent levels helps adjust budgets and financial projections accurately. Additionally, understanding the rent limits allows asset and property managers to maximize rental income within the regulatory framework, ensuring the property remains financially viable while providing affordable housing.
Repairs and Maintenance
Repairs and maintenance are critical for property upkeep, tenant safety, and compliance with housing standards. In affordable housing properties, tracking these activities is essential to ensure regulatory compliance, avoid fines, and maintain funding. It also enhances tenant satisfaction by reducing turnover and increasing occupancy. Additionally, tracking repairs and maintenance helps asset and property managers identify trends, plan for capital expenditures, and implement preventive maintenance, enabling them to manage costs and avoid costly emergency repairs.
How Asset Management Software Can Help
Efficiency is paramount for asset and property managers operating affordable housing properties. However, reaching an efficiency threshold can be challenging when relying on manual reporting processes.
Lobby CRE provides an automated and comprehensive approach to tracking delinquency, occupancy, rents, maintenance, and more. By achieving new levels of efficiency, asset and property managers can enhance property performance and deliver more value to their tenants. Click here to schedule a demo and see the full value that Lobby CRE can provide to your affordable housing properties.
Additional Resources
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Shelley Cernel2024-09-04 10:53:442024-09-06 09:43:52Future-Proofing Your Portfolio: The Role of Scenario Planning in CRE Decision-Making
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Javon Nathaniel2024-08-27 09:33:432024-09-06 09:44:38Mastering CRE Debt Management: Leveraging Technology to Optimize Cash Flow and Risk
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Javon Nathaniel2024-08-23 14:19:072024-09-06 09:45:33A Strategic Edge: How Savvy CEOs Are Using Asset Scenarios to Thrive in a Volatile CRE Market
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Javon Nathaniel2024-08-20 14:25:412024-09-06 09:45:214 KPIs That Successful Affordable Housing Firms Are Tracking (and You Should Too)
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Javon Nathaniel2024-08-13 14:12:392024-09-06 09:45:08CRE Core Questions: What is the Interest Rate Forward Curve?
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Javon Nathaniel2024-08-06 13:16:302024-08-06 17:37:25The Hidden Threat in Financial Reporting: How Manually Standardizing Your Chart of Accounts is Hurting Your Bottom LineLobby CRE’s Content Round-Up for Q1 2024
As we find ourselves at the threshold of a new quarter, it is the perfect time to take a look back at the topics that were trending in the first quarter of 2024.
In this content round-up, we’ve curated a selection of articles from our own catalog, as well as other industry resources like Forbes and Bisnow. From discussions on data analysis to predictions for the year ahead, these topics dominated the commercial real estate (CRE) landscape. Continue reading to catch up on any articles you may have missed!
1. CRE Property Management Systems: The Power of Consolidation
When it comes to managing CRE property management systems (PMS), many firms may be operating with multiple systems across their portfolios. This blog highlights the challenges of data silos and inefficiencies arising from decentralized PMS usage, emphasizing the hindrances they pose to operational efficiency and strategic decision-making. By consolidating PMS, firms stand to gain improved operational efficiency, unified data and reporting, and faster, more accurate insights.
2. Unlocking CRE’s Data Potential in 2024
Data plays a pivotal role in navigating the CRE market amidst uncertainties such as escalating interest rates and dwindling transaction volumes. This article covers key topics such as navigating data sources for actionable insights, breaking down internal data silos to improve efficiencies, and harnessing AI, BI, and HI to advance data utilization. Highlighting the importance of understanding various data sources and centralizing data management, you learn how to implement data-driven strategies in optimizing real estate operations. Watch the on-demand webinar here!
3. Accessing & Leveraging CRE Market Benchmark Data
In the tumultuous landscape of 2024, data-driven decision-making is more important than ever before. This article highlights the value of data in CRE operations and explores strategies for unlocking its potential, including leveraging third-party data for key insights and utilizing benchmarking for informed decision-making. Download the checklist here to get started!
4. Analyze The Right Data For Your Real Estate Investment
This Forbes article discusses the importance of analyzing the right data when making real estate investments, looking beyond the traditional focus on location. It suggests considering factors like job figures, population data, demographics, foot traffic numbers, and city tourism and projects to gain insights into the market. The author highlights the significance of understanding trends in job growth, population growth, and industry presence in an area to identify potential investment opportunities. Additionally, utilizing resources like studies on office occupancy rates, apartment occupancy levels, and transit studies can help to make informed decisions. By leveraging available data, investors can assess the potential for a location to yield significant returns on investment beyond just its geographical appeal.
5. 40 CRE Execs Tell Us How 2024 Will Play Out — And What They’re Doing To Prepare
This Bisnow article features insights from 40 commercial real estate executives on strategies they’re employing to navigate the challenges ahead. Despite the difficult circumstances faced by the industry in 2023, there’s an overall sense of readiness and determination among these executives for the year ahead.
Key themes from the executives include:
- Adaptation and Diversification: Many executives emphasize the importance of adapting to changing market conditions and diversifying their portfolios to mitigate risks.
- Opportunities Amid Challenges: While acknowledging the challenges, several executives also highlight the potential opportunities that arise from market fluctuations and disruptions.
- Focus on Community Engagement: Some executives stress the importance of community engagement and collaboration in development projects to ensure positive impacts on local neighborhoods.
- Strategic Investments: Executives are focusing on strategic investments in stable asset classes and geographic diversification to weather uncertainties in the market.
- Operational Excellence and Customer Service: There’s a renewed emphasis on operational excellence and customer service as a means to add value and differentiate in the market.
- Long-Term Vision: Despite short-term challenges, many executives are maintaining a long-term vision and planning ahead for future market conditions.
Overall, while acknowledging the need to “survive till ’25,” these executives are also looking for ways to thrive by adapting their strategies, focusing on operational excellence, and identifying opportunities in the midst of market uncertainties.
Stay Up-to-Date With Lobby CRE
Stay tuned for more content and resources from Lobby CRE in the next quarter ahead! Visit our resource center to view our full catalog of best practices and thought leadership content for the commercial real estate industry.
