Are you doing everything possible to improve the operating results of your affordable apartment property? Suppose you could take steps that would increase your net operating income (NOI) by 5 percent? How about 10 percent? What would that mean?

Let's say you have a 100-unit lowincome housing tax credit (LIHTC) property with an NOI of $2,300 per unit per annum. A 5 percent improvement in the NOI would mean an additional $115 per unit per annum, and 10 percent would be a boost of $230 per unit. This means $11,500 to $23,000 more each year in net cash flow. It also means $135,000 to $270,000 more in value using a capitalization rate of 8.5 percent.

That's net to the bottom line. If you sold the property, you and your investors would put that much more in your pockets.

So how hard could it be to bolster your bottom line by $115 to $230 per unit? It's easier than you might think.

Let's start on the income side of the ledger. Most on-site managers hate to raise rents. They have to listen to their residents complain about the increase, and they believe they'll incur higher vacancy that will make them look bad and make their jobs harder. You might want to offer them a financial incentive to help you increase the gross potential.

If you can get your state housing fi- nance agency to approve a $10 rent increase, the result is a 1.8 percent increase on a $550 per month apartment—less than the rate of inflation. It also means $120 per year in additional income—at 100 percent occupancy. But let's factor in normal vacancy and collection loss and use an economic occupancy of 91 percent. Thus a $10 rent increase means $109 more on the bottom line.

Don't overlook ancillary income. There are many different possibilities here. If you accept pets, you undoubtedly charge a pet deposit. If you don't already do so, consider charging pet rent as well. Let's take the same 100-unit property and assume there are 15 pets on the premises. If you charge pet rent of $25 per month, you'll generate $375 per month, or $4,500 per year. Spread across 100 units, you've picked up another $45 per unit in income. Make sure the additional pet rent doesn't push your rents above the maximum allowable under the LIHTC program.

Operating expenses offer a wide range of NOI enhancement opportunities. The largest expense categories typically include payroll, property taxes, utilities, and insurance.

Payroll is influenced by how much maintenance work is performed inhouse and how much is contracted to third parties. Often, tweaks to the payroll category can yield beneficial results.

Each employee should have a comprehensive and current job description. In the process of preparing such descriptions, you may find that you are anywhere from slightly to significantly overstaffed. Pay attention to how your employees are being scheduled. On a 100-unit property with a $1,050 per unit payroll, I would be surprised if you can't find a way to reduce your payroll costs by 5 percent to 7 percent ($53 to $74 per unit).

Many affordable owners and managers don't bother with property tax appeals unless they think there's a chance for a big score. Suppose your taxes are $700 per unit per year. And let's also suppose that you need to replace several roofs and a parking lot, and the hallway carpeting is shot. Consider making a case to your local taxing jurisdiction that your value should be decreased by the amount of deferred maintenance that needs to be performed. Be able to document the costs for repairs with bids, and have photographs showing the condition of these components. You may be able to negotiate a decrease in your assessed valuation resulting in tax savings. A minimal 5 percent reduction is worth $35 per unit per year.

What is your annual resident turnover? Many LIHTC communities can have turnover rates as high as 60 percent. What if you could reduce your turnover rate by 10 percent? On a 100-unit property, that's 10 units.

Think about all of the costs associated with turnover. Painting, cleaning, maintenance, vacancy loss, advertising— the cost can easily exceed $1,000. If you turn 10 fewer units, you save $10,000, or $100 per unit when spread across the entire 100-unit property.

Improved resident communications and customer service are the best ways to reduce turnover. Focus on simple things like timely maintenance service, a friendly greeting when seeing a resident, calling a resident after maintenance has been performed, and keeping the property looking crisp and clean.

Instead of a $5,000 deductible for your property insurance coverage, consider a $25,000 property deductible. You might save $20 to $25 per unit per annum in the process. Increasing your general liability deductible to $5,000 could save another $20 to $25 per unit.

There are other smaller savings that you can realize. Utility companies typically have a range of rates that are charged depending upon a customer's classification. Often, residential customers are charged the highest rates. If your utility offers a commercial rate, your property may qualify for it.

Perhaps you can reduce the number and/or size of trash dumpsters and modify the pickup schedule. Is your lawn mowed on a set schedule? Tell your mowing contractor not to automatically show up; you'll call when it's time to mow. You might eliminate one or two cuttings per season.

So let's tally the NOI increase. We raised rents and picked up $109. We instituted pet rent for another $45 per unit. Let's split the difference on the payroll savings range and use $64 per unit. Taxes were reduced by $35 per unit; we saved $100 per unit on turnover and $45 on insurance. All of a sudden we've generated $398 per unit per year in additional NOI, or a whopping 17 percent—a far cry from the 5 percent to 10 percent originally proposed.

On our hypothetical 100-unit LIHTC property, this means $39,800 more in net cash flow and an increase of $468,000 in property value. As you can see, bolstering your bottom line can happen with just a few strategic and creative initiatives.

R. Lee Harris, CRE, CPM, is president and CEO of Cohen-Esrey Real Estate Services, LLC, a Kansas City-based commercial real estate organization that has managed more than 58,000 multifamily units since 1969. You can e-mail Harris at