The Rental Report: Cutting Costs @ What Cost
By: Naomi Nicholson ARM, MG Properties
When cutting cost, reducing expenses it is important to keep in mind the result these actions will have on both your bottom line and how it will affect the quality of life for your residents. Doing this in today’s economy climate can be challenging. During the last decade, our industry changed dramatically. Amenities and perks given away 10 years ago are now part of premium rental packages with costs passed on to the resident. Today, we look for ways to save money and lower cost without jeopardizing the asset or the residents that live there. It’s ok and even expected to be charged for these amenities. To increase income try charging for water, parking, pets and appliances, which can be considered a rentable item especially if they are a washer and dryers within the unit.
There are several programs available that assist a property in reducing costs and increasing the properties income. Different companies offer programs that are available to owners and managers at minimal costs if not free. Finding and taking advantage of these programs is sometimes difficult. Following is a list of a few programs that I have personally used and that have saved my owner thousands of dollars.
1-Synergy Companies / Energy Management Division 888-988-9829. This company provides a 1-year warranty on HVAC services that they perform for you for “FREE”. The company writes and delivers all the notices to the residents. The notices sent inform them on what maintenance will be performed in their apartment. This is not only a money saver for you the owner, but for the resident as well. By allowing this company to do this work for you it will also save energy while they cool the apartment and it will reduce cost for the resident.
AC Diagnostic Scope of Work. Connect diagnostic computer, airflow probes, temperature probes, and diagnostic equipment.
Clean coils, Replace filter, and add Freon, Adjust the refrigerant if necessary and Verify that system is in proper working order.
If you are currently using another provider for these services, contact them to see if they offer this type of services and if they offer large volume discounts.
2- SDG&E 800-411-7343 www.sdge.com also have an Energy Programs available. They will come out and install many different items for you again at no cost to you. Low flow toilets, Refrigerators, Energy efficient light bulbs, Light fixtures. Call or go on line and ask what programs you may qualify for. www.sdge.com. In addition to multi-family programs available. SDG&E also has residential programs available to help you in saving money, as well as rebate programs available for new appliances.
3-All water districts—Contact your local water district. Many of them have programs and offer grants to the multi-housing industry. The programs offered through the water districts can have substantial savings to property owners. One that I have worked with is the Helix Water District, which offered a “GRANT”. Through this grant the property owner received a $5000.00 grant for one of their properties—the check was written directly to the owner. While this program may not necessarily be available currently, call your local water district and ask what programs are available and what steps you can do to take advantage of programs that are offered.
4-Advertising. These types of costs will destroy any budget if you are not careful. Outreach marketing can be done for just pennies. It’s kind of like “cold calling” in a sense that you are searching out people to live on your properties. I found that one of the best “free” ways to do advertising is to go out and “sell” the property myself. I do this by making small baskets or giving away $5.00 Star Bucks® Cards.
This I use to market directly to other properties in the area. I visit competitors, introduce myself and our product and let them know that we welcome referrals and that we provide them also. Since our products differ in some way or form, it works to our advantage. Whether it is the size, amenities, yes/no pet policies I make sure that they understand that this can be a win-win for both of our properties. I receive many referrals this way and it costs the property virtually nothing.
5- Web sites. There are several sites in which you can advertise your vacancies for free. Some work better than others, but all have proven results. Some of those where you can list vacancies for free are: Craig’s list, Back Page.com & Oodle.com are just a few with proven results. Hubbuzz.com is a new web site that only charges you if you get a lease from them.
By utilizing these free Web sites you will be able to reduce costs without compromising the service and quality provided to your residents. Increasing your cash flow will allow you to generate more income, lower cost and have a higher NOI.
6-Ancillary income—Consider what you are currently offering. Extra income can be found through parking, pets and appliance or other rentable items. Another way to supplement income would be by offering different color schemes. There are several companies that will put together color schemes for free, when paint is purchased from them. Other areas which can increase ancillary income are light fixture upgrades, ceiling fans, mirrors, and crown moldings.
In conclusion what you do today will affect what happens tomorrow. Our good intentions should never be at the risk of any moral or ethical behavior. Have a plan, a budget and a time line. Following these steps will help you reach your highest potential in growth as well as keep cost down and resident retention up.
