3 Ways to Reduce (and Potentially Eliminate) Property Expenses [Video!]

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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 is simple, but 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 today’s video, my goal is to stimulate your thinking about your property expenses.

Related: 3 Rental Property Expenses Investors Should Always Anticipate

I share three ideas to reduce (and potentially eliminate) your expenses, which include:

  1. Question each expense.
  2. Use efficiencies.
  3. Ask yourself, “Are the ‘fixed’ expenses really fixed?”

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!

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area. One of DeRosa’s mantras is “to make money while making a difference.”

14 Comments

  1. Jerry W.

    Matt,
    Thanks for the article. I just bought a 4 plex that has pretty marginal cash flow. I found the current owners are paying well over $300 per month in lawn care. While the lawn is beautiful it does not need to be golf course quality. It is my hope I can reduce that cost by about $140 per month. One little tip is after mowing there is a lot of weed eater work needed to trim around mail box posts and trees, and sheds etc. A little judicial use of roundup will kill the grass off in a border so you do not have to trim grass with a weed eater saving time and money.

    • Matt Faircloth

      Hey Jerry,

      Wow, $300 per month! That doesn’t make sense even if the property was on 3 acres, lol. Good tip on weed removal also. I make sure that my landscapers properly edge the grass at the sidewalks and curbs. I also try and put mulch or crushed stone around mailbox posts or areas where weeds tend to grow.

      Good luck with that 4 unit!!

      Matt

  2. Matt, really good video article.

    I have a background in economics and it has helped me throughout my life by asking the 3 questions that you pose in your video. I like to call ‘efficiencies’, ‘synergies’ btw. Your cost-reduction suggestion that I like the best is: challenge your tax bill. Challenge is a fitting word for this because the municipality in which one lives demands a tax bill and the way that it arrives at the number can be challenged in so many ways. When property values go down, the municipality never lowers taxes. At least I have never seen this to be the case. Property taxes always go up, period.

    It’s all about reducing expenses AND putting in place ways to MAXIMIZE cash flow. Every household in America should be run like a small business with a balance sheet!

    This is why I like to work 4-10 hours per week, when others whose expenses are totally out of control think the only solution is to get a second and third job.

    • Matt Faircloth

      Hey James,
      I must say that if feels validating to have someone with a background in economics agree with my post, LOL!

      You made some really good points, and made an interesting expansion on property taxes. I will have to do a deeper dive into that on another post. But I wanted to underscore one thing you said – the municipality will NEVER voluntarily reduce your taxes. It’s up to you to compare their OPINION of value to the actual value to make sure you are being taxed fairly.

      Also great point on expense reduction – both in business and home. Most of the time people focus on increasing income to make more profit. It’s just as important and sometimes simpler to keep revenue the same while strategically reducing expenses to increase profit!

      Take care,

      Matt

  3. Peter Crisp

    Matt,

    Great video. I would like to add to this a bit and I think it fits right in. I use Quality techniques to find the root causes of problems, and I strive not to have my Property Managers have to deal with anything twice in at least 10 years. The cost of labour often swamps the cost of buying quality. For example, I only use quality name brand faucets, and I’ll replace over repairs typically. I use used stoves, but I usually buy new or gently used fridges that are much more energy efficient (I typically pay the electrical) and much less likely to stop working on a tenant – with the complaints that go with this kind of failure. I’m replacing siding this summer as part of an insulation upgrade, and I’m going to use unpainted fiber cement panels that require essentially no maintenance (no painting etc.), eliminating a future expense. It costs more up front, but there’s a downstream return. Quality is often ‘free’ because headaches/callbacks are reduced a lot.

    • Matt Faircloth

      Hey Peter,

      Great comment. I love that goal – never deal with something twice in at least 10 years. That may require the more expensive option and no “band-aid” solutions. I have learned that band-aids fall off, ha ha. The repeat repair visit knocks out any savings one would have realized by cutting corners. And there is always a repeat visit if you cut a corner, in 10 years at least. I really agree with your strategy, thanks again for sharing it!

      Matt

  4. Frank Woodin

    If the tax bill is intimidating you can have a tax attorney look at it – my tax attorney is only paid if he reduces my tax bill and I pay him one third of one year’s tax savings – so if he reduces my bill by $1000.00 I pay him $333.33. So far every time I send him one of my new properties to review he is able to reduce the bill. Easy money with essentially no work on your part.

    • Matt Faircloth

      Hey Frank,
      I’m glad you brought that up, because we didn’t get into the actual process to appeal the taxes. In some areas you can do it yourself but it is recommended to consult with an attorney or have them handle it for you, especially if they will do it on commission as yours did. Great point!
      Matt

  5. Pyrrha Rivers

    Matt,
    I love the video delivery you chose. It is very personable, clear and comfortable. In education we are always required to consider learning styles and for some people auditory is very strong and often underutilized as much information comes almost exclusively in written form.
    Your tips are great and I will be using them to review my holdings. Fixed expenses are not always really fixed!

    • Matt Faircloth

      Pyrrha,
      I’m so glad that you enjoy our chosen medium! I am really enjoying creating the videos and find that I can shoot in many locations including the field to show physical examples of the point I’m trying to make.
      Thanks!!
      Matt

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