3 Ways to Reduce (& Potentially Eliminate) Property Expenses

3 Ways to Reduce (& Potentially Eliminate) Property Expenses

2 min read
Matt Faircloth

Matt Faircloth, co-founder and president of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, N.J., is a developer and owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa creates partnerships to finance select real estate investments and has a proven track record of providing safe, profitable investment opportunities to their clients.

Experience
Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to hundreds of units in residential and commercial assets throughout the East Coast. Under Matt’s leadership, DeRosa has completed tens of millions in real estate transactions involving private capital, including fix and flips, single family home rentals, mixed-use buildings, apartment buildings, and office buildings.

Matt is an active contributor to the BiggerPockets Blog and has been featured on the BiggerPockets Podcast three times (show #88, #203, and #289). He also regularly contributes to BiggerPockets’ Facebook Live sessions and teaches free educational webinars for the BiggerPockets Community.

Matt authored the Amazon Best Seller Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money. The book is a comprehensive roadmap for investors looking to inject more private capital into their real estate investing business and is a must-read for anyone looking to grow their business by using private lenders and equity investors. Kirkus, the No. 1 trade review publication for books, had this to say about Raising Private Capital: “In this impressively accessible introduction to a complex subject, Faircloth covers every aspect of private funding, presuming little knowledge on the part of the reader.”

Matt and his wife Liz live in New Hope, Penn., with their two children.

Education
Matt earned a B.S. in Industrial and Systems Engineering with a minor in Business from Virginia Tech. (Go, Hokies!)

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As investors, we know there are two main ways to put more cash flow in our pockets. We either need to increase income or reduce expenses. This sounds simple, but it’s not always the easiest to do.

Whether you are just starting out with one property or you are managing over 100 properties, reducing expenses becomes critical to your success and growth. In this video, my goal is to stimulate your thinking about your property expenses.

Why You Should Want to Reduce Your Expenses

There are a couple reasons you should aim to reduce your expenses. They may seem obvious, but here they are:

  1. It puts more money in your pocket.
  2. It increases the value of your property since rental property is assessed based on the income that it makes.

That said, here’s how to go about lowering your expenses.

Related: 3 Rental Property Expenses Investors Should Always Anticipate

3 Ways to Reduce (or Eliminate!) Property Expenses

In the video above, I go into detail about a few methods you can use to significantly lower your expenses. I’ll summarize for you here.

1. Question each expense.

Look outside the box. Go through one expense at a time, and question why it even has to be there. Can you find a way to make it zero?

Here’s a couple examples that you maybe don’t need or can reduce. Does your property need to be cleaned as often? Have you considered solar energy to offset your electrical bill?

2. Use efficiencies.

The second thing is to use efficiencies so your bills will be less. That could mean using water-reducing showerheads, low-flow toilets, things like that.

With water you can also find a way to bill back the tenants through sub-metering. The same goes for heat—find a way to reduce it and/or bill it back.

3. Ask yourself, “Are the ‘fixed’ expenses really fixed?”

No. 3 is looking at things you think are fixed expenses and finding ways to reduce those. Taxes are a great example.

Most people think real estate taxes just are what they are. That’s not true. If you think your property may have been assessed over its value, which would mean you’re paying a higher tax amount than is warranted, have it reassessed.

I’ll tell you it’s worth it. I’ve saved thousands of dollars a year by challenging my real estate taxes when properties are over-assessed.

The same might go for home owners association (HOA) fees. If you’re part of an HOA, you might be able to challenge what you’re being charged.

Watch my video above for more about each expense-reducing strategy.

As always, let’s get some discussion going. What clever ways have you reduced your expenses?

Thanks for watching! Be sure to leave a comment!