In real estate, a Net Operating Income (NOI) is a formula used to evaluate the profitability of an income-generating real estate investment project. Real estate investors and property managers use NOI (Total revenue- Operating expenses) as a key performance indicator to showcase the revenue sources and the operating expenses. The results of NOI help them come up with new ways of improving operations so that they can improve property profitability.
Luckily, the use of technology has proven to be the answer as it’s able to drastically lower operating costs. In this article, we shall look at the various ways in which property owners and managers are leveraging technology to increase Net Operating Income (NOI) and property value.
- Improving energy efficiency
HVAC systems can take up to 80% of a building’s energy consumption. If they are poorly maintained or not correctly configured, they end up increasing energy loss which adds to the operating expenses. Even commercial properties with Building Management System (BMS) are prone to miss-programming and this can lead to energy loss if the systems are not closely monitored.
With technology, energy-consuming systems and equipment can be closely monitored to ensure they work efficiently and that the energy consumption is optimized by eliminating any weakness that can cause energy loss or inefficiency.
- Keeping maintenance costs minimal
Property maintenance costs constitute a bigger percentage of operating costs. Most of these costs are incurred through regular maintenance of equipment and replacement as it becomes impossible to monitor all the systems in a real estate property and ensure they are working properly without automation.
However, with technology, property owners and managers can now monitor various equipment such as boilers and HVAC systems in real-time and give notification in case there is any malfunction so that the maintenance team can rush and fix the problem before the issue escalates to huge expenses.
- Automating tenant meter billings
Manual meter reading and invoicing tenants can be time-consuming and prone to human errors. It also requires more human resources which adds to operating expenses. Tenants who receive miscalculated meter billings are likely to be unsatisfied and you might end up losing them.
Adoption of technology helps eliminate the need for human meter readers and invoicing teams. Through, technology real estate investors are leveraging software that is able to automate the entire process thus, eliminating the risk of human error and reducing operating expenses.
- Enhancing compliance
By leveraging technology, property owners and property managers can generate their investment property performance data and automatically feed them to the appropriate compliance and certification systems.
For instance, the Energy Star certification system is used to help real estate investment properties achieve the required energy efficiency levels. Through automation, real estate investors can reduce their reporting costs thus, increasing their Net Operating Income (NOI).
- Lowering demand peak
With real-time energy consumption data, property owners and managers can predict when the electricity demand will reach its peak. It will also show the items that will contribute to the peak demand.
When the property managers understand the energy peak demands, they will be in a better position to implement energy-saving measures by reducing the supply of energy to non-critical equipment thus, reducing overall electricity consumption and high bills at demand peak hours.