Reduce Property Management Expenses
In a recent survey on challenges property managers grapple with, 45 percent of respondents said that “lowering operating costs” is “challenging” or "very challenging.”
Reducing operating costs is a universal quest among businesses of all types. Maximizing income is de rigueur among owners and managers alike.
That said, finding ways to lower operating costs is usually the dilemma, especially in today’s ever-changing world of property management.
According to real estate experts at CCIM, multifamily properties run at expense ratios of about 45 percent. Therefore maintenance, taxes, and payroll account for about half of all expenses.
Let’s look at cost-saving possibilities in each of these departments:
Implementing the following changes can add up to cost-savings more quickly than you’d think.
Replace standard light bulbs with LED lights. Replacing a 60-watt bulb with a 14-watt CFL or LED will save about $0.66 per bulb, per month.
Utilize timers to turn off power in public areas at specific times of day and night, when foot traffic is low or not present.
Lower water heater temperatures. Water heaters consume a major amount of energy, accounting for approximately 14 percent of energy costs.
Weatherproof windows and doors or make sure they are tightly sealed. Loss of cool air in summer months and loss of warm air in winter months can hike the cost of utility bills considerably.
Verify and eliminate unused services. Check to see if you’re paying for services you are not using, such as old phone lines, cable plans, Audit all of your services to see what can be eliminated and where you can save.
Ideally, controlling payroll costs shouldn’t involve layoffs or pay cuts if at all possible.
Outsource: enlist a service to manage tenant calls and other administrative tasks. This solution can be an effective cost-saver for after hours and during peak times.
Automate: Are your administrative tasks as automated as they could be? Automation is another way to find substantial cost savings.
Cut payroll taxes without cutting payroll. Make the most of your current team by cross-training employees on various tasks.
Examine and fine tune your time and attendance management protocols.
Reduce employee turnover. Studies find that every time a business replaces a salaried employee, it costs six to nine months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses. Review your company culture and policies to find ways to attract and keep valuable talent.
If you don’t already, enlist a professional tax expert for advice regarding what options for tax savings are available to your property management company. The expense of a tax advisor could be well worth the price when a professional tax advisor saves you substantial dollars in exemptions and other industry-specific strategies of which you may not even be aware.
What cost-saving measures have you put in place that have reduced your property management expenses? Leave us a comment!
RentVest Property Management offers customer-centric property management services to property owners in Atlanta, Las Vegas, Dallas, Phoenix, Tucson, Reno, and Hawaii. Learn more about RentVest’s full service management benefits.