Balancing property capital projects into your multifamily portfolio is the perfect approach to driving a stable and growing revenue stream. Keeping multifamily residential communities current attracts more quality residents in higher income brackets. All the while, effective budget management is a must for implementing capital projects across your multifamily portfolio. Renovating large communities is a major effort, understanding the why (and the how) is important.
Why are multifamily renovations so important?
Thoughtful property renovations keep you competitive in a flooded multifamily residential landscape with changing generational demographics, consumer demand, and resident expectations. Keeping your properties up to date supports greater value and profitability while reducing costly resident turnover and gaps in occupancy.
Property capital projects don’t just fuel greater resident appeal, they can also future proof your multifamily portfolio with the latest technology. These technology updates increase resident satisfaction by saving them money on utility bills and elevating their standard of living. Energy-efficient appliances, smart home features, upgraded windows, and quality insulation all lower costs while promoting a more sustainable environment—a growing focus for consumers.
How can you balance multifamily capital projects and budget management?
There are a lot of complexities to navigate when it comes to budgeting at scale to position your capital project projects for success. These best practices can keep you aligned with your multifamily residential capital project and financial goals:
1. Identify specific renovation needs with a comprehensive property assessment.
First, pinpoint the specific needs and priorities for property capital projects. Your assessment should take a complete inventory of unit conditions, common areas, and any shared, communal facilities.
2. Leverage historical data to make smarter, data-backed decisions and budget accordingly.
Reference historical business data across similar projects, market trends, and industry benchmarks. These numbers help estimate accurate costs, anticipate potential obstacles, allocate resources efficiently, and make deliberate, informed decisions at scale.
3. Mitigate risk and focus on contingency planning for maximum preparation.
Building material and equipment outages have been a regular occurrence over recent years with growing demand, inundated service vendors, and disrupted supply chains. You must plan ahead to prevent running over budget and out of resources. Incorporate a contingency plan into your budget to account for unexpected expenses or delays.
4. Include long-term agreements and strategic negotiation in your vendor selection and management process.
It’s critical to leverage your value and buying power with the weight of your multifamily portfolio while you’re vetting vendors and discussing terms. Negotiate favorable terms, bulk discounts, and long-term agreements to optimize costs. Evaluate your vendor performance routinely while seeking bids from multiple suppliers to ensure you're getting the best quality and lowest cost possible.
5. Integrate new and legacy technologies for deeper insights that layer with your current IT structure.
Identify the right project management and accounting software to track expenses, monitor progress, and generate real-time reports and insights. Cloud-based platforms empower greater collaboration across teams while driving transparency across your entire portfolio.
6. Prioritize energy efficiency and sustainability for long-term savings.
Even with higher upfront costs, investing in smart and green technologies can position your multifamily portfolio for a powerful ROI with less turnover and higher property values. Green capital projects are becoming a baseline expectation for millennials and Gen Zers who now dominate the renter real estate market.
7. Stay in constant communication with your residents to limit disruptions.
Manage expectations, prevent avoidable misunderstandings, and protect your brand reputation from a barrage of negative reviews online. Keep your residents informed of capital project schedules and potential disruption to provide transparency and support. But don’t stop there. Solicit feedback from your residents to identify areas for improvement for the current and future property renovation process.
8. Actively monitor and report your ongoing capital project costs and make smart pivots.
Track expenses, identify plan disruptions or deviations, and find smart alternative routes forward when necessary with a robust reporting system. Real-time reporting keeps your projects on course with strategic and proactive decision-making.
9. Identify areas for growth and improvement for future capital projects.
After each project, run a thorough review to identify lessons learned and areas for improvement. Be sure to examine your budgeting and project management processes.
Bringing it all together
Effectively managing your multifamily portfolio capital project budgets at scale mandates a laser-focused and systematic approach. You and your property managers can act with confidence by applying data-driven decision-making, standardized processes, and a commitment to continuous improvement. Promote success across your capital projects by planning and actively incorporating your budgetary requirements to keep property upgrades on schedule and limit unnecessary community disruptions.
Streamline capital projects and control costs with Lessen.
We lessen the complexities of multifamily residential capital projects. With access to our pre-qualified, national network of 30,000 vendors across 55 trades, you can ramp up your efforts sooner with our technology-powered services. You can keep capital projects moving on time and budget—manage work orders, optimize processes, and monitor costs all in one place on our One by Lessen platform.
Learn how to scale faster and seamlessly without displacing your tried-and-true legacy platforms.