Title: Ten Ways to Find $10,000 on Property
Alternate Title: How to Get $10,000 More Out of Your Property – Now!
When people find money on property it is usually in small increments like a jar of change or that lost $20 in an old pair of jeans. The following are ideas on finding $10,000 this year from the rental property you already own. Some of these ideas can produce $10,000 by themselves. Some may reduce costs and drop additional cash to net operating income (NOI).
Keep an open mind and view each idea through the lens of the real estate assets you own. This is not a case study: this information is real-time and can be applied to changes, small and large, that you can make to get $10,000 more from your current rental property assets – now!
Professional athletes know this well; it is not any one thing they do that makes for success, it is doing many small things well that culminate in high achievement. The same applies to property management. Presented here are ten suggestions for finding an additional $10,000.
In multifamily there is no magic bullet, however, savings and revenue are sometimes right in front of us. We just have to keep looking. All of the following ideas, collectively, should assist you in finding $10,000 on property.
- Answer every phone call. Every phone call is a potential lease. Large Real Estate Investment Trust (REITs) have proven that answering every call can directly impact revenue generation to the tune of one or two percentage points per year. For multifamily assets with one million dollars in annual revenue, this equates to $10-20,000 a year.
- Enforce late fee collections. Adhere to the terms of the lease. Both parties, property management, and tenant have agreed to the terms of the lease. The lease has a provision for payment of late fees. Enforce the provision.
- Thinking of time. Get ideas from those that know the property best. Have a brain-storming session with site personnel; management, leasing, and maintenance. Make it fun. Have food! Really. No one knows the property better.
- Increase on-site coin-operated washer/dryer fees by .25 cents per wash and dry. Load factors are pretty easy to figure out. On 1,000 loads (wash/dry) per month a .25 cent increase generates an additional $250 per month, or $3,000 annually.
- Charge monthly pet fees. It's common practice to charge a one-time pet fee at time of the original lease. An alternative strategy is to lower this fee (not eliminate the entry fee) and charge a monthly fee for each pet. This could be as little as $10 per month per pet. Size the fee-based partly on the average length of tenancy. This will provide guidance on the total pet fees earned per pet per lease. On a 200 units property with 20 units having pets a $10 monthly fee converts to $200 a month or $2,400 a year.
- Early termination fees. Make sure each new lease and each lease renewal has a clause for early termination fees (if allowable in your state). This amount can range from one to three months rent for breaking a lease. This provision can add several thousand dollars each year to revenue.
- Review existing loans for re-finance opportunities. The savings here can be significantly higher than $10,000 all by itself. This is one area where we prefer to stay away from the word "presume". Talk to real lenders and see what is possible.
- Utility Audit/Sub-metering. Sub-metering saves money. A review of all utility expenditures is just good business.
- Energy efficiency review. What energy upgrades were accomplished at your property recently? Lighting, Roofing, windows, insulation? New air filters or weather strips? What can you implement with the least costs and most immediate benefits? Install energy-saving lights bulbs... everywhere. And while we are all switching to CLF, check out the next generation in light bulbs: LED.
- Review all service contracts. Few properties are out-sourcing the watering of plants anymore but there are plenty of other places to look for savings. Example: reduce mowing/landscaping service by 25% if possible without getting over-zealous. If the mowing crew is cutting the same two-inches of growth from three weeks earlier consider skipping a week. Or two weeks. If shaving mowing has limited or no negative consequences on property presentation, then skip. Consider contracting for a maximum of eight to ten mowing's in the summer months. Preferably evenly spaced. This equates to one mowing about every ten days.