28 Ways to Reduce Apartment Expenses
As shared in my last blog, making money with an apartment building is all about creating value. Simply, the property can generate a lot more cash flow and the market value can be significantly enhanced by doing any number of moves mentioned below. You have control to increase the value with some ingenuity around revenue enhancing or expense reduction activities and that’s what owners love. This article will focus on expense reduction ideas while my last blog focused on revenue generating ideas. Thanks to Joseph Gozlan a syndicator from Dallas who collaborated with me on this one.
Expense Reductions Ideas:
1. Energy audits – there are free audits and audits provided by companies that promise significant savings before you pay for their services. Download “Energy Savers US Dept of Energy Guide” to get the most current energy saving information. You stand to save 10-40% of your energy bill. www1.eere.energy.gov/consumer/tips/pdfs/energy_savers.pdf
2. Monitor your water meters – the water bills are usually a few months behind so if you have a hidden leak that will increase your consumption by 30%-40% you won’t know about it until the surprisingly large water bill comes in 3 months later.
3. Modify landscaping or take out plants that require a lot of water.
4. Consider artificial grass for some areas or xeriscape part of the property.
5. Review irrigation system and ensure in proper order. Replace poor heads and install some drip systems to more efficiently water plants and not waste water.
6. Add sensors to ensure you are not watering right after a rain.
7. Install low-flow toilets and shower heads to reduce water consumption. Take advantage of local programs - For example the cities of Dallas and Fort Worth offer free low flow toilets if you replace an older high volume toilet.
8. Price shop all vendor contracts annually.
9. Have your property tax re-assessed if they are too high.
10. Review your insurance and get it re-quoted annually.
11. Review your turnover / makeover process and see if you can reduce turnover time by looking at every step of the process from resident exit, makeover to new resident move in.
12. Switch common area lighting to LED to reduce electricity cost.
13. Switch to LED/Fluorescent/halogen bulbs inside units.
14. Cable/internet/phone connections – see if provider offers a wholesale rate that can be offered to residents as an amenity, profiting on the difference of the wholesale vs the retail rate.
15. Explore adding a recycling center which may reduce the # of trash pickups.
16. Trash Removal-consider using larger containers less pickups.
17. Focus on resident retention activities / improving community morale of residents by hosting parties, incentives for resident referrals, etc. Changing the property management and focusing on the customer experience can go a long way to making residents feel that you care and may make the difference in them renewing and reducing makeover costs.
18. Have maintenance fee clause in rental agreement tenants pay $50 less each month in return for taking care of minor maintenance (this way management will not have to worry about minor things).
19. Capital improvements can reduce expenses. Adopt a Preventive Maintenance Program.
20. Reduce vacancies by doing exit interviews to understand reasons why people move and make changes as needed to reduce them.
21. Review opportunities to add solar to reduce energy costs.
22. Air-seal and insulate attics/roof access areas.
23. Capital improvements can reduce expenses. Adopt a Preventive Maintenance Program.
24. Reduce vacancies by doing exit interviews to understand reasons why people move and take corrective action to reduce future vacancies.
25. Buy used appliances on Craigslist
26. Buy new appliances during year-end sales such as Black Friday and Christmas.
27. Install standard dishwashers – older property might have “space saver” dishwashers and they are very expensive to replace these day.
28. Standardize frequently purchased items and equipment to benefit from volume discounting (e.g. paint, carpet, light fixtures, etc.)