Need ideas on how to cut expenses

Multi-Family and Apartment Investing
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Need ideas on how to cut expenses

Lisa S.
Investor · Alexandria, VA · Member since 2015 · 18 posts · 3 votes

hi all, 

I have 2 small multi family (4 units) and I am getting killed on expenses each month. They are averaging $3500 each month and that's before the bills are paid. Most of the tenants are section 8 and call for repairs to be made literally daily. I'm thinking about asking the property mgmt company to use American Shield or another type of warranty company to get a handle on expenses. Does anyone have any ideas on how to better control expenses under these circumstances?? All ideas welcome 

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
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I predict you are literally being robbed by an unscrupulous company. You say you are averaging $450 in repairs per unit, every month. There's not enough stuff to repair in an apartment for that kind of money on a monthly basis that wouldn't be direct vandalism by the tenants. 

Fire the management company and self-manage for one month and see what happens. When was the last time you did an inspection of all the units? Having a PM company doesn't mean you collect your money and wipe your hands of the enterprise - it's just like having a manager of any other kind of business - you have to trust but verify. 

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  • Natasha M.
    Investor · MD · Member since 2015 · 208 posts · 32 votes
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    @Lisa S. As a former property manager in NYC I suggest that you get the list of which unit had what done and go have a friendly visit your tenants. The PM should be doing this but I think you need to see this for yourself. Luckily, you live close enough to visit them and they'll tell you what's going on, you'll get to inspect the apartment, the work that was done and if there's anything you notice for future problems.

    This way, they'll see that you care and you're a real person, not a bank account. Also, you can tell if the tenant is respecting the unit.

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  • Lisa S.
    OP
    Investor · Alexandria, VA · Member since 2015 · 18 posts · 3 votes
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    these are all great suggestions, tips and insight. Thank you to everyone who responded!!!! 

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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
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    Lots of good responses above. I also agree with James. Until you get a clear picture on what the repair money is going to, you really don't know for sure that a new PM company will fix anything. You have work to do to fix this problem. You not only own the property, you own the problem. Yes you can delegate, but you need a system of checks and accountability for those you've empowered to manage for you.

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  • Kevin Harrison
    Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
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    So I read through all the responses and I am surprised that no one has mentioned this, so here it goes. Have you thought about just making a weekend run to you properties? Alert your tenants and not the PM. Get there and check out your property, and while your there it presents a perfect chance to ask the tenants what has been going on.

    IE. so have you had a lot of thing breaking lately? How often do you see the PM? are they responsive when you do try to get ahold of them? what concerns do you have about the property?

    Not saying to take everything they tell you immediately as fact. But if they say that there has been nothing broken then you know your PM is a liar. If things are broken you can get an idea of how serious it is and compare that with what your PM has been charging you for.

    This can be just a simple quick in and out weekend trip to let you get a feel for what is really going on and go from there. You could find out that you just have really bad tenants, or a really bad PM or some combination of the 2. But at least when you leave you should know exactly where you stand.

    Not telling you how to run you business but that is what I would do if I were in your shoes.

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  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
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    When you go inspecting the units, go with the role that you're verifying repairs done at their units or perhaps tell them that you're losing confidence on your PM or their contractors not doing a good job, I say let tenants enumerate what repairs were done on their unit without showing them your list (just blend them on the conversation while "checking" the repairs). Tenants in Section 8 are not really friendly with persons going into the units, they'll find something to sue you with if you cross some lines.

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