Reducing Your Expenses at Your Investment Property
In this economy, we need to be scrutinizing every dollar spent whether for personal or business. This is especially true when own investment properties. Currently, do you just write those expense checks each month without thinking much about if the bill is correct, necessary, or could be lower/eliminated? Although you can typically only raise rent every 12 months, it is always the right time to work on reducing your expenses on your investment properties.
Here are some areas to review:
- When is the last time that you took a good look at your water bill? Did you just assume it is correct? Call your city water department and have them estimate what your water bill should be for each property based upon number of units and number of tenants living in each. If you find your bills are higher than the estimate, it is time to do some investigative work. Check for dripping faucets and running toilets. A dripping faucet can cost you an extra $50 per year and a running toilet can cost up to $200 per MONTH!
- If you are paying heat on this building is there anyway to install a more efficient furnace or boiler? Or for that matter, can you install multiple units or even electric baseboard heat to shift the expense to the tenants.
- One other thought about a building where the landlord pays heat. Make sure that all windows are closed in the winter and locked. It may be good practice to come through the building in November and check each window to insure it is closed completely.
- Make sure the weather stripping is good and the storm windows are also closed.
- Many older multi-unit buildings that were once single family Maple Grove homes and they often have electrical systems that we not properly divided. Turn off the main breaker on the house panel and see if anyone complains that the lights or outlets in their unit have gone out. I bet you will find at least one incorrect device you are paying for. Some of my customers have found entire units on the house meter!
- Tune up any central boiler, water heater, or air conditioning unit that you pay for every 2 years. Clean them out before each heating and cooling season for peak efficiency. A dirty A/C coil expends 200% the necessary power to produce the same cooling. Not to mention you are helping them last longer.
- Are you paying too much for a service for the property such as lawn mowing, snow removal, or garbage service? Call around and see if you can find a cheaper vendor that offers the same service.
- If you have a property manager, are you getting your money’s worth out of them? Are they really necessary? Just like the above vendors, can you find a cheaper, but as good one?
By taking some time to examine the expense of your investment property, you may be surprised how much money you are wasting. Over the next 60 days, see how much you can reduce or eliminate. You will be laughing all the way to the bank.
I am a licensed Realtor in the State of Minnesota. This website is not a multiple listing service, but each Minnesota & Minneapolis real estate agent is a member of the Regional MLS of MN, inc., a provider of the Minnesota MLS.
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