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:
- It puts more money in your pocket.
- 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.
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!