| Property management is pretty basic business. | | | | will from time to time cut costs in various areas in |
| Cash in and costs out equals cash flow. As | | | | this manner. In particular, if your portfolio is |
| operators though keeping this flowing the right | | | | expanding this will be a consistent contributing |
| way can be truly challenging and even seem | | | | item. |
| impossible at times. A great management | | | | Start looking for systemic means to reduce costs. |
| reporting system combined with strong purchasing | | | | Do you have systems that need to be upgraded. |
| control can turn a problem in to tremendous real | | | | Can you justify a capital improvement on a cash |
| estate rental cash flow. | | | | basis and reduce your monthly costs. Do systems |
| The first step is to understand market costs | | | | need to be improved to gain efficiencies? Are |
| where your property is located. This is best | | | | water costs too high? Are electrical costs or AC |
| established by comparing operating costs and | | | | repair costs too high. Can you use long life high |
| revenues from as many projects and properties | | | | odor aborbancy carpet to decrease carpet |
| as possible. Second, you should seek bids for | | | | replacement saving $100 per year or more in |
| every possible service and every possible supply | | | | maintenance costs? Slowly work through the |
| item. Simply getting quotes is not enough. You | | | | systems and processes gradually chipping away at |
| should choose three sources with good | | | | the costs and improving your cash flow. |
| reputations and the best initial prices possible. | | | | The combination of setting up comparative |
| Second, you have to develop a complete | | | | reports with cost reducing processes and |
| understanding of what the day to day supply and | | | | procedures will certainly and continually contain or |
| service requirements should be. This then is the | | | | reduce costs for your rental operation. The |
| baseline for operations. Next, you will begin | | | | process must not deal with costs simply on a |
| monitoring the costs on a line item basis in a | | | | cost comparative basis, but also on a system and |
| budget vs. actual cost. With this process in place, | | | | process improvement plan to reduce the means |
| you've laid the foundation for management to | | | | of completing operations. |
| slowly but gradually drive costs down. | | | | Investors and managers who use this approach |
| The process for reducing costs is accomplished | | | | will see strong and increasing profit margins. The |
| through a mix of activities. First and simplest, | | | | improving margins will lead directly to highest |
| keep checking prices and re-bidding sources. You | | | | possible project value. |