This Month’s Question comes from Margaret in Los Angeles:
“Hi Kari, what are some tips to keep building expenses down?”
Hi Margaret! This is such an important question. I can talk for two hours at a seminar on this question alone. Let me give you 6 quick tips to keep in mind though:
Tip 1: Respond quickly to resident’s maintenance requests. The number one reason a tenant moves is due to lack of maintenance, and having to turn over a unit interrupts your cash flow. Not only that, but in today’s technological ecology, the miffed resident not only tells their friends, they tell the world about the experience, on the Internet.
Tip 2: Every year, bid out your maintenance vendors to stay current with the most optimal vendor market prices. These might include services you regularly utilize such as painting, pool service, carpet, plumbing, and electrical. For example, you might compare three painting vendors, making sure to ask about extra charges that might come up on the job site, which may not have been quoted, such as not painting over hardware, painting ceilings or inside cabinets.An industry trade magazine, such as Apartment Age, is a great resource to compare vendor pricing. Lastly, remember to balance and consider how hard you grind down any vendor’s pricing. The quality of their work may suffer as a result of negotiating too low of a price, which may cost your building more in the long run.
Tip 3: Cleanliness and leaks. On your6-month fire alarm walk-throughs, look out for small leaks and signs to perform preventative maintenance. A minor plumbing issue may become major if you don’t catch it early.Make sure your on-site manager is taking care of cleaning, walking the property, and looking for leaks as well. Encourage residents to stay on top of cleanliness to help prevent pest infestation, and carpets will last longer if often vacuumed.
Tip 4: Property taxes. It is a great idea to periodically check the L.A. County Tax Assessor’s website at http://assessor.lacounty.gov Look for the “Tax Savings Programs” section. You can also hire a company that renegotiates property taxes on your behalf. These companies offer this service for a percentage of what they save you, so it can be a win-win for both of you.
Tip 5: Insurance. Make sure when bidding your property insurance, that your broker has relationships with multiple companies to get 3 or 4 different quotes. Know that an Agent may represent a single company, whereas a Broker will typically have access to multiple companies, rates and services.
Tip 6: Evictions. Evictions are the source of great expense. From the lack of rent collection, to the cost of the eviction process, it’s best to be quick to take care of them by starting the process at the earliest signs of trouble. Most importantly make sure that all of your tenants are qualified to begin with by running a credit and eviction report with AAGLA and checking your application thoroughly – a little extra work in the beginning could save you a ton of money later.
Please submit your questions and comments to me via commenting on my : Ask Kari YouTube Channel
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