Commercial 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 & Debt 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.
Asset and debt management solutions, like Defease With Ease | Thirty Capital’s proprietary software, 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. Connect with our team to learn more.
