Depending on who you ask, the current housing market is unlike anything seen in modern times. On one hand, multifamily owners and operators are finding it easier to retain residents due to either economic immobility or inability to buy a house. Inversely, household compositions continue to grow while most are dealing with additional financial constraints of inflation. Both scenarios leave renters looking for options to support the need for more space against shrinking budgets…let’s dig into this further.
The most common reasons renters consider buying a home is the household income growth that comes with coupling, the need for additional space as the family grows or work from home becomes the norm, or concerns for personal safety and security.
Unfortunately, rising interest rates and home prices have pushed many away from the possibility of purchasing a home. A 30-year-fixed-rate loan has hit the highest interest rate since the crash of 2007-2008, as Reuters reports.
Second, homeowners are selling their homes because of the rising housing costs. They either cannot afford the property taxes, or they want to take advantage of the hot market to sell their home, pushing many sellers back into rental housing.
Rising interest rates and housing costs are creating competition among multifamily residential properties. As expected with supply and demand, when home ownership is out of reach, the demand for rentals increases. But this does not mean rental communities have an easy path forward.
Rent prices have reached a record high. A Redfin analysis indicates the national average monthly rent has surpassed $2,000 for the first time, with the median asking rent rising by 15% year over year. If rent becomes unaffordable, residents will couple, move in with family, or move to more affordable rental units, resulting in the vacancy issues experienced from 2007-2011.
If homeownership continues to decline, multifamily residential managers have a huge opportunity to shift revenue growth strategy towards maximize two- and three-bedroom units as demand will drive premium rates.
The biggest non-price factor for rental households with children is security. For multifamily residential properties to stay competitive and leverage larger floorplan opportunities, they need to invest in safety and security and align it with their marketing, reputation management, and resident retention efforts.
Why Security Is Becoming a Must-Have in Multifamily Residential
Pivotal moments like George Floyd’s death while in police custody have greatly changed how crime and policing are managed. It has led to criminal reforms. Many crimes have been reduced from felonies to misdemeanors. The reduction of the severity of the crime has driven some criminals to risk committing more, knowing they will not be as severely punished.
It’s a perfect storm of economic problems, social anxiety, de-policing, the release of criminals for lower-level crimes, and the reallocation of police resources. It all fuels the increase in crimes. It also doesn’t help that supply chain crisis remains a problem as crooks go after high-demand, low-supply items.
Inflation, large-scale layoffs, and increasing interest rates are all signs of a recession. When this happens, crime climbs. The data proves this. Ever since the 1950s, crime has gone up as indicated in a Reuters article.
Moreover, Homicide, Acquisitive Crime, and Inflation: A City-Level Longitudinal Analysis by Richard Rosenfeld and Matt Vogel shows the connection between inflation and crime. Inflation typically goes up about 2% per year. The average price of goods in the U.S. has experienced the highest increase in 41 years per the U.S. Bureau of Labor Statistics Consumer Price Index.
The NICB Informer publication explains criminal justice reform policies have led to more problems than solutions. Many police departments have reduced their workforce and resources. Some cities have instituted a no-response policy meaning that the police won’t respond unless it’s life-threatening.
That’s what happened in Austin, Texas. The Austin Police Department no longer responds to non-life threatening 911 calls. Many states have changed their laws indicating the police cannot engage in high-speed pursuits. Auto theft tends to have a less severe punishment because it’s not a violent crime. Therefore, the residents’ vehicles in the multifamily property parking lot are more at risk for theft.
Violent crime is increasing according to the Council on Criminal Justice (CCJ). A CCJ’s news release reveals that gun assault, aggravated assault, robbery, and motor vehicle theft all went up in 2021. You may have noticed the phrase “brazen thieves” popping up often in the news.
Criminals are not afraid to resort to violence to pursue their insidious plans. Luke Matsik tells Lubbock’s KFMX that vehicle break-ins have been common. However, Matsik has noticed a change in that thieves do not wait until nighttime to steal. They’re committing crimes in broad daylight.
Is it any wonder residents rank security high on their list of must-haves when choosing a place to live? This is confirmed as Schlage and Wakefield Research has found 61% of millennials want increased security. Baby Boomers and Gen X also put security high on their list of multifamily residential requirements as National Apartment Association reports.
All of these factors indicate multifamily residential properties must invest in security if they want their community to thrive. Safety and security are increasingly valuable investments for marketing, property reputation, and resident retention efforts. Security will help properties stay competitive in the rental industry. Multifamily residential property managers who opt for remote video surveillance tend to be rewarded with higher net operating income (NOI) growth.
The Advantage of Remote Video Surveillance
Most traditional security measures are reactive. They don’t do anything until after something happens. If you want to deter crooks and trespassers, then you need to look to proactive security measures. Better yet, consider taking a blended approach to maximize security and safety. Multifamily residential properties benefit from video surveillance with remote monitoring.
Video surveillance with live remote monitoring services can continuously watch a property through a cloud-based surveillance system integrated with security cameras and trained monitoring operators. Surveillance cameras with monitoring are more powerful when it consists of video analytics with human monitoring operators. Analytics can catch something humans might miss, and humans know how to respond to any given scenario.
This largely speeds up reaction time. With remote video monitoring, the trained operators work with video analytics to watch the building through cameras placed in and around the property. As soon as a situation unfolds, the monitoring operator can quickly assess the situation and respond appropriately.
Trained monitoring operators are in a location away from your multifamily residential property. They can see far more than a security guard can as well as areas guards cannot access. One way the operator may respond is by activating onsite speakers. They use these speakers to warn the intruder and tell them to leave or they will contact law enforcement.
No single security system can be solely responsible for all of your property’s security. It’s crucial to have multiple layers to your security. The more layers in a security system, the harder it makes for crooks to cause damage. Most don’t want to work that hard to achieve their goals.
That’s another benefit of surveillance cameras with remote monitoring. You can integrate them with other security systems like an access control system to add another layer. An integrated security system requires fewer people to manage and that delivers cost savings.
Access control technology manages who has access to the property. Their main job is to grant and revoke access to the property as well as specific areas on the property. For example, multifamily residential buildings have areas where only staff and residents can have access. Residents would have access to the pool, fitness room, and laundry facility. Employees would have access to the office.
Check out these videos from multifamily residential properties where video surveillance helps deter crime:
- Multifamily community prowler tampers with electrical box
- Apartment community car lot prowler
- Gunfire in an apartment community
- Apartment common area computer theft
Multifamily residential community managers have a responsibility to keep the property safe for everyone including visitors, employees, residents, and vendors. Any injuries or accidents that occur in your community can become a liability even if the person is doing something criminal.
Surveillance cameras with remote monitoring can help decrease liability. That’s because the system can record everything the cameras see. This gives you the evidence you need to help with liability claims. It’s difficult to win these claims without proof.
As with the economy, demand for rentals will not stay high. Security can play a large role in your marketing and resident retention strategy. The savings gained from keeping residents can easily pay for the security technology. Often, remote video monitoring can replace guard expenses entirely. Reducing guard costs can help greatly in a down-market cycle.
How Video Surveillance Grows Multifamily Residential NOI
You’d be surprised how affordable video surveillance with remote monitoring can be. ECAM’s multifamily residential clients generally see a return on their security investment within months. Not only does the technology help avert crime but also it costs up to 60% less than what it costs to hire security guards.
If you’re not sure what’s right for you, meet with security consultants with multifamily residential industry experience and ask lots of questions. Our security consultants have designed security systems with video surveillance and access control systems in rental properties across North America.
It’s impossible for staff to watch everything that goes on and spot potential security and safety problems. You can potentially increase your net operating income if you install the security technologies. Furthermore, every multifamily residential community needs to stay competitive in this market. Having a proactive security system may put you ahead of the curve.
A Stealth security consultant can review your requirements and property to design an effective surveillance camera system that fits your requirements and budget. Here’s a video surveillance checklist to help you find the right security provider.
In response to pressure from investors, regulators, and criminal elements, the industry is searching for ways to get better results. Therefore, now is the right time to find a more robust security solution to help keep residents and visitors safe. Investing in security solutions requires making cost/benefit decisions. These can influence your NOI.
Multifamily operations need an effective solution that has a positive impact on its operating fundamentals. This guide on Monetizing Security While Balancing Access, Safety, and Profitability goes into depth on these and how safety and security affect them. Contact us with your questions. Texas Private Security License Number: B14187.
