If you want to operate efficiently in a crisis, you’ve got to plan ahead.That’s the takeaway from apartment operators who pivoted their businesses during COVID-19 to optimize operational efficiency, even as residents spent more time at home and put increased pressure on building resources.
“You’ve really got to be ready to self-evaluate and adjust course where needed,” says Dana Caudell, president of property management for the Wellington, Fla.-based Bainbridge Cos., which operates 20,000 apartments. “It’s at times like these when your crisis management capabilities are definitely tested.”
For example, when COVID-19 shutdowns began in March and businesses started laying off or furloughing employees, Caudell and her team huddled to look for potential operational savings, in anticipation of collecting less rent. That meant freezing any open positions at properties, especially as they were essentially going dark from an operational standpoint, except for emergency repairs.
“Early on, we did a cash flow analysis to try to project where we would be at the end of the year in terms of operational costs and rent collection,” Caudell recalls. “We were really looking for the point where we could at least break even.”
That was a challenge in itself. For instance, as more residents stayed at home and ordered in, the amount of trash, and the pickups necessary to remove it from buildings, increased. Other areas also saw upticks, such as cleaning contractors and supplies, a need for personal protective equipment (PPE) for on-site staff, and augmenting the technology systems Bainbridge already had in place to enable more virtual interaction with prospects and residents.
Caudell says those areas saw a 5% to 7% increase in expenses.
But by leveraging technology such as Zoom for staff meetings, virtual and self-guided tours for leasing, and cutting marketing spend on other channels such as apartment locators, Bainbridge was able to chip away at those overages.
Then, with most of its staff and executives working from home, overall travel expenses shrank. When new hires were brought on, they were onboarded virtually, which saved even more on airfare. Added together, those efforts allowed Bainbridge to flatten the curve against increased expenses.
“Because we were able to get ahead of it early on, we really netted out even,” Caudell says.
A Yin and Yang of Expenses
That net-net outcome was also apparent at Greenbelt, Md.-based Bozzuto Management Co., which operates 71,000 units, as it planned, and then took proactive steps, to counter COVID’s impacts.
“It was a yin and yang for us,” says Chad Cooley, managing director, strategic business solutions, at Bozzuto. “We had increased cleaning costs and additional funds for PPE, but costs associated with in-person tours disappeared with virtual touring and leasing. Plus, we haven’t printed physical marketing collateral for some time.”
Bozzuto also brought together its different operating units early on to see where it could find cost savings. One area that stood out: consolidated procurement and using performance management software to track inventory and supplies.
“Planning and purchasing ahead of time, instead of during an emergency, is critical,” Cooley says. “We’re already looking at what we’ll need this fall, winter, and beyond.”
Negotiating Flat Rates Out of the Gate
Looking ahead also benefited Chicago-based WPD Management, which operates 3,000 units on the city’s South Side. When COVID struck, the firm quickly reached out to its cleaning contractors to get preferred rates, right at a time when many businesses were shutting down.
“We jumped on those negotiations early so that we could use the prospect of increased work at a time a lot of people were losing their jobs to get a flat rate for our janitorial billings,” says Patrick Ryan, chief operating officer at WPD. He also says leveraging the firm’s online platform for rent collection and work orders has helped it stay ahead of the curve.
By planning ahead, and using technology to find cost savings even as other expenses rise, multifamily operators can get a leg up on operational efficiency, without breaking the bank.
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