Property Managers! What is the first thing you would do when taking over a new property to reduce expenses???

Question

I am a new manager and this is an area that I am struggling with.


any suggestions is great!

Answer 1

I would guess you are "struggling" with it because you have no idea what your costs actually are versus what is reasonable and customary for your area and type/size of property.

Along with my regular job, I manage a 5 unit building that my employer owns.

I can tell by looking at the water bill if one of the tenants has a leak that they didn't tell us about. You have to know what things should cost before you can tell if there is a problem.

I make sure I use the same repair people and have a good relationship with them so that I can negotiate costs. Don't ever be afraid to negotiate, especially if you are a repeat customer.

Little things like using energy saving bulbs in common areas and timers on outside lights can also help.

I make sure little problems are fixed right away so that they don't turn into big expensive ones.

I have a good relationship with each tenant and I make sure it stays that way. Tenants who like you and feel valued as a good tenant are less likely to cause problems or do damage.

Answer 2

Is this commercial or residential? Regardless, get an accurate P & L system going and account for all components. Do it on an accrual bases. It will give you a much better idea on your real expense on a month to month bases so you can make adjustments quickly.

For commercial, there are not a whole lot of items to watch out for. Your rent is fixed on a lease. Other than collection, there is not a whole lot you can do. But having a solid P&L will help you collect CAM recovery at year end.

Taxes and insurance are also fixed. So the others left are Janitorial, electricity, grounds maintenance, repair and replacement, trash removal and etc. Watch those like a hawk.

If your managing an appartment complex, each appartment may have separate meters so you won't have to deal with it. For commercial, watch the A/C. If the timer is set 7/24, it will cost you a fortune. It is not unusual A/C accounts for 50% to 60% of electric consumtion in a commercial building. Preventive manitenance is crucial.

All in all, property management is a nickle and dime business. Rent collection and tenant turn over is everything. However, the small expenses become a major equity leake. A $1,000 here or there will run up $30,000 a year more than you hope for. It may not reduce your profit that much. However if you put a CAP 10 to that $30,000 reduction on your NOI, it is $300,000 lost in value on the property.

Answer 3

Make sure to do real maintenance, not just fix things when they break.

For example, A/C units need the coils cleaned & the filters changed. This will keep you from having numerous compaints of broken A/C. Dirty coils are the most common cause of A/C failure.

Home Depot (or other places) will sometimes work with you to get supplies at a reduced cost if you order them in bulk, i.e. 10 supply lines ordered instead of purchased one at a time.

Your maintenance man can be your best friend or your worst enemy. Treat him well.

Answer 4

The first thing is to get all the documents, which must be original.