Increasing your NOI with Creative Strategies

[Cale Delaney]

Hi Everyone,

I wanted to share some creative strategies that have allowed me to increase the NOI on our first multi-family property by an amazing 105% in only 5 months of ownership using some creative strategies I learned from BP and various other webinars, etc. The property is a 4-plex located in South FL. We acquired it in July 2020, fully rented. So, here goes:

1. Reduced insurance by 26% by doing hurricane clip retrofit on trusses: Total Savings = $2047

    - For those in hurricane zones, you know that insurance is expensive! This property did not have all the hurricane clips to qualify for the best wind mitigation credits so we paid $1625 to have additional clips installed and in return got a credit of $2047. Can't beat that return! We also got the lender to immediately reduce the escrow to reflect the lower insurance and reduce the monthly payment.

2. Increased rents to market rates as leases turned over with 0% vacancy: Total Gain = $8100

    - We had all 4 leases turn over in these first 5 months and we rented each one out for top of the market range with 0% vacancy. Advertised on Craigslist, Facebook, Cozy, Zillow, and Zumper. Most came from FB.

3. Started charging non-refundable move-in fees: Total Gain = $1202

    - Learned this from a Jake & Gino webinar. Basically, instead of charging a full month of security deposit, we break it up so that a portion is non-refundable and goes straight to the bottom line. Still have the remainder as security deposit in case it's needed.

4. Passed on all water costs to tenants via Ratio Utility Billing System (RUBS): Total Savings = $3300

    - Learned this from a Brad Sumrock webinar. There is only one water meter so as the leases turned over, on the new leases we assign a percentage of the bill to that unit based on SF and # of occupants and bill them separately per unit.

5. Passed on pest control responsibility to tenants: Total Savings = $2784

    - The house was tented for termites prior to us purchasing and had no evidence of active termites and we put in the new leases as they turnover that tenants are responsible to pest control in their units (mainly for rats, roaches, ants, etc.). Granted, if there are any issues that do come up with termites or fleas, etc. outside than we may need to institute that, but that's not common here in S FL anyway.

Though this is on a small scale, all of these can be applied to any size property from SFH to large multi-family. This took us from a projected breakeven year 1 (including vacancy and maintenance allowances) to pro-forma year 1 of $280/unit net monthly cash flow after all expenses including debt service.

In addition to this we are doing a cost segregation report and anticipate additional tax savings year 1 of up to $24k by utilizing bonus depreciation.