Trimming the fat off your rental portfoilio
Real Estate Agent · Gardena, CA · Member since 2017 · 21 posts · 3 votes
Wondering if any experienced landlords/ property managers out there have figured out how to "trim the fat" off their rental property expenses & or time allotted to them? Examples include:
-writing into the contract that the tenant is responsible for the first $100 of any repair
-automatic deposit
-switching out carpet for hard flooring
-homogenize paint colors,
-writing into the contract that the tenant is responsible for the first $100 of any repair
If you charge the tenants, you'll never hear about a simple leak under the sink due to a failed $1 p-trap washer, and will instead find a rotted cabinet bottom and/or floor after they move out. Charge them for what's their fault, pay for maintenance otherwise and work that average % into your rental rate.
-automatic deposit
Doesn't save much time, still have to reconcile the payment unless you use a 3rd party service, which likely will charge you so the net difference will be 0 between the time savings and fees charged.
-switching out carpet for hard flooring
Depends on your long-term plans - how many carpet replacements will it take to pay off your hard flooring? How many tenant turnovers do you have during that period (because normally that's the only time you'd replace).
-homogenize paint colors
Yes, do this. Same with hardware and finishes between properties. If they all use the same tile, door handles, paint, etc, replacement is much easier and less costly as you likely have leftover in your own stock.
Another one is to buy/use durable fixtures. Spend the extra $100 for a good toilet, spend the extra $10 for name-brand door handles and faucets. You'll burn up those 'savings' 5 times over in just one replacement in labor costs to replace in the short lifespan of the discount brands.
-writing into the contract that the tenant is responsible for the first $100 of any repair
If you charge the tenants, you'll never hear about a simple leak under the sink due to a failed $1 p-trap washer, and will instead find a rotted cabinet bottom and/or floor after they move out. Charge them for what's their fault, pay for maintenance otherwise and work that average % into your rental rate.
-automatic deposit
Doesn't save much time, still have to reconcile the payment unless you use a 3rd party service, which likely will charge you so the net difference will be 0 between the time savings and fees charged.
-switching out carpet for hard flooring
Depends on your long-term plans - how many carpet replacements will it take to pay off your hard flooring? How many tenant turnovers do you have during that period (because normally that's the only time you'd replace).
-homogenize paint colors
Yes, do this. Same with hardware and finishes between properties. If they all use the same tile, door handles, paint, etc, replacement is much easier and less costly as you likely have leftover in your own stock.
Another one is to buy/use durable fixtures. Spend the extra $100 for a good toilet, spend the extra $10 for name-brand door handles and faucets. You'll burn up those 'savings' 5 times over in just one replacement in labor costs to replace in the short lifespan of the discount brands.
@Matthew Olszak great points. I completely agree with the repairs. Thank for the 2 cents
As others have stated, no chance in heck I'd ever make the tenants have to pay the first $100, guarantee no one will call. It'd be a big dose of "hey, it's not my problem!" and the $100 problem will cost you thousands. Very bad idea IMO. If you haven't already made it all online, I'd highly recommend it! We have everyone on automatic systems, and it's great!
One thing I'd recommend that we do, is at each year renewal-- we ask them what they'd like for an upgrade to their home, up to $200.. maybe painting a room, maybe adding a small fence, light, whatever they want. It's also an open platform for them to tell us anything else that may need to get fixed. If they know we'll be there, they'll add small stuff that they probably viewed as insignificant, but it's nice to keep our homes in top rental shape!
@Andrew Johnson Thanks Andrew. How long did it take you (or will it take you) to get to the point where you felt comfortable letting a PM company handle everything? I'm sure there's some "breaking in time"...
@Linda S. can you elaborate more on automatic systems please? My father has his tenants deposit the rent directly into a checking account...how can rent deposits be more automatic than this?
so a couple of $100 bucks to incentivize the tenant into staying, thus reducing turn over costs & saving time. Not a bad idea...thanks for the tip!
@Stanley J Okazaki I left her handle everything right from the get-go. She started with a tiny 5-unit building for me so there wasn't a massive amount of risk. I flew back twice the first year just to see how things were going on the properties. I found some tiny nit-picking things (I do every time I fly back) but that's really about it. And those small things don't really make anything close to a material difference on how the property performs, it's just a bit of my OCD nature. It was pretty easy to allow her to "scale with my portfolio" from there. I still call her twice a month just to ask how things are going. The last thing I want to do is be surprised by stuff. And, well, she's pleasant to talk to and always tells me if she thinks there's anything interesting coming onto the market to buy.
The only thing that requires "breaking in" is the properties themselves. That 5-unit property was smooth from the start. The other two apartment buildings that I bought all had some quirk issues with tenants the first year. Someone claimed they had an agreement to get the "13th month free" if they paid on time (with no documentation), a few tenants had actually worked for the previous owner (so they moved), some tenants tried to sneak in a dog, blah blah blah. So there were just "stabilization" issues that hit. I'm not really sure there's much you can do but handle them on the fly.
I guess the bottom line for me is that I work well with my particular PM but it's still not exactly 100% "mailbox money".