In a recent survey we conducted of property management challenges, 45% of respondents found “Lowering Operating Costs” to be “challenging” or “very challenging.”
Every business is in constant pursuit to reduce operating costs. Maximizing profits is important for any business.
Where can you lower operating costs?
According to CCIM, “multifamily properties run at expense ratios of about 45 percent; so payroll, taxes, and maintenance account for about half of all expenses.”
We are going to look at cost saving opportunities in each of these categories.
In effort to keep this post positive, I wanted to provide some payroll tips that didn’t involve layoffs or pay cuts.
- Hire a service that will manage tenant calls and other administrative tasks. This is a great solution for after hours and during peak times.
- 3 Ways To Cut Payroll Taxes Without Cutting Payroll
- Cross training employees will let you do more with your current team.
- Improve your time and attendance management.
- Reduce employee turnover. Zanebenefits.com mentions, “Some studies (such as SHMR) predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses.” Look at your company culture and policies to see what you can do to attract and keep the best talent.
Full transparency, at Unicom, we are not tax experts. While writing this post I found countless sites that offer tax advice you can consider. Speak with a professional property tax adviser to see what options will be best for your company.
Maintenance and Other
I personally found this part of my investigation helpful. After 10 minutes of researching, I found myself starting to implement these changes in my own home.
- Replace standard light bulbs with LED lights. Replacing a 60-watt bulb with a 14-watt CFL or LED saves about $0.66 per month.
- Lower the temperature of hot water heaters. “The hot water heater is a major energy drain in most homes, accounting for about 14% of energy costs,” according to thesimpledollar.com.
- Make sure windows and doors are weather proof or tightly sealed. The loss of cool air in the summer and the loss of warm air in winter can both increase your utility bills substantially. Here is a guide from Energy.gov to sealing a home.
- Use timers to turn off power in areas at specific times of day, when foot traffic is low or not in use.
- Verify and eliminate unused services. Are you paying for services you are not using? Have old phone lines? Cable plans? Complete an audit of your services to see where you can save.