By Kari Negri, Chief Executive Officer, SKY Properties, Inc.
- Question: Hi Kari, can you give me some tips to help keep building expenses down?
This is such an important question. I can talk for two hours addressing this question alone. Let me give you 7 quick tips to keep in mind though:
Tip 1: Respond quickly to resident’s maintenance requests. The number one reason a tenant moves is due to lack of maintenance and having to turn over a unit interrupts your cash flow. Not only that, but in today’s technological ecology, the miffed resident not only tells their friends, but they tell the world about the experience via the Internet. Stopping a vacancy before it happens is a great way to cut your expenses.
Tip 2: Every year, bid out your maintenance vendors to stay current with the most optimal vendor market prices. These might include services you regularly utilize such as painting, pool service, carpet, plumbing, and electrical. For example, you might compare three painting vendors, and be sure to ask about extra charges that might come up on the job site, which may not have been quoted such as not painting over hardware, painting ceilings or inside cabinets. An industry trade magazine, such as Apartment Age magazine, is a great resource to first find contractors and then compare vendor pricing.
Lastly, remember to balance and consider how hard you grind down any vendor’s pricing. The quality of their work may suffer when you negotiate too low of a price, which may cost your building more in the long run.
Tip 3: Cleanliness and leaks. On your 6-month smoke detector walk-throughs, look out for small leaks and signs to perform preventative maintenance. A minor plumbing issue may become a major one if you do not catch it early. Make sure you or your on-site manager is taking care of cleaning, walking the property, and looking for leaks as well. Encourage residents to stay on top of cleanliness to help prevent pest infestation and/or other issues. The 6-month smoke detector check can be one of your very best tools to know what is happening in your units and to take steps to protect your investment.
Tip 4: Consider collecting laundry and vending machine money yourself. When cash is involved, you just never know and anything can happen. Consider changing out your laundry equipment to coinless machines which are now easier to get and hook up. Coinless means less contact for all, less sorting and fewer trips to the bank as well as adding convenience for resident use. Residents prefer not having to get coins as well. Additionally, in today’s COVID-19 environment, you are better served to avoid handling coins and currency.
Tip 5: When property prices dip, sometimes it is a good opportunity to renegotiate property taxes. There are companies out there that will do this for you but honestly it is not too difficult to do if you get recent sales in your neighborhood for like kind buildings.
Tip 6: Insurance. Make sure when bidding your property insurance, that your broker has relationships with multiple companies to get 3 or 4 different quotes. Be aware that an insurance agent may represent a single company, whereas an insurance broker may typically have access to multiple carriers and rates. Keeping your building in excellent shape and doing regular inspections at your own property to stay on top of repairs and maintenance like loose handrails or trip hazards will pay off in the long run.
Tip 7: Evictions. Evictions are the source of our greatest expense in my opinion, in addition to a source of great stress. From the lack of rent collections, to the cost of the eviction process, it’s often best to be quick to take deal with problem tenants by starting the process at the earliest signs of trouble. One bad tenant can scare away other residents living at your property, so take the time to make sure your tenant is fully qualified before renting to them and of course be sure to be well versed in the Fair Housing laws before you do. It is also important to keep in mind that there are many recent changes to eviction laws due to the pandemic, including suspension of evictions in some cases. The eviction process is a lot to navigate but having the most recent and correct information can save you time and legal fees in the long run.
Kari Negri is the Chief Executive Officer of Sky Property Management and is a member of the Board of Directors of the Apartment Association of Greater Los Angeles. Do you have a question for me? Please send your questions and comments to me at Kari@SKYprop.LA.