Whether you own a real estate property or a commercial building, it’s easy to lose your hard-earned money and investment if you don’t know how to play the game. You’re likely to face damaging risks due to problems such as rising strained rental affordability or a surprise slump in the market. The best solution for this is good property management.
People rely on property management to lower risks and maximize returns for their investment properties. If done right, it can also help improve the quality of life and ensure the safety of all the tenants in the building. The catch is, property management often requires a huge amount of money. Before you freak out, check out our tips here on how you can save money on handling residential and commercial real estate operations.
1. Understand your financials
Getting an accurate overview of your financials is necessary to help you determine how much you can cut down and what areas you’re overspending. Check your cash flow from previous months to see how much you’re spending on staff payment, advertising, maintenance, as well as the hiring of vendors. Knowing how money goes in and out of your investment property is the first step to reducing property management costs.
2. Invest in preventive maintenance
One of the most crucial parts of property management is upkeep and maintenance. Not getting in front of your problems can cost you thousands of dollars, which you can avoid by investing in preventive maintenance. Performing regular inspections in your systems or equipment is a huge help in detecting early signs of damage or faults that can lead to costly repairs.
You can acquire regular plumbing services for your residential or commercial property to ensure your water heaters or sewer system runs efficiently. Replacing systems like sewer lines can cost around $25,000 to $30,000, which can surely hurt your finances. It’s also best to have regular inspections of your heating and cooling systems to minimize costly breakdowns and save you up to 30% of energy cost.
3. Go green
Switching to green energy might cost you great money upfront, but it can help you save more in the long run. If you want to boost the energy efficiency in your property, this is the method you should invest in. If you have a large residential or commercial property, investing in solar panels is worth the money. You can also switch to a more environmentally friendly heating source like heat pumps, boilers, or solar thermals. Such sources aren’t just cleaner alternatives but are also low in energy consumption.
As for lighting, you can either improve the property’s natural lighting or using LED light fixtures instead of incandescent bulbs. Moreover, improving the insulation of your investment property can also reduce energy bills.
4. Cut off water costs
Another smart way to save on property management is to actually cut your water costs. Look at it this way. If your tenants pay a flat fee for their utilities, they are more likely to use more water than they normally would. This is obviously not good for your finances. Think about the thousands of dollars you can save if you cut the water cost.
In fact, according to several studies, property owners overpay on water expenses by up to $500 per unit every month. Aside from cutting the water cost on your fee, you can also fine-tune toilets on the units so they’ll utilize minimal water levels. This also prevents water cycling and leaks. Or, you can install new aerators on the kitchen sink or bathroom faucets to limit the gallon per minute output.
5. Hire a tax appeal expert
If you’re a property manager or an apartment owner, you probably already know that tax is generally the biggest expense you need to face every year. But did you know that you can actually appeal for your property taxes, especially if they’ve increased significantly? For this, it’s best to hire a professional tax appeal expert.
These professionals can help you what kind of valuation approach suit your situation and ensure you’re doing the tax reduction appeal the right way. What’s more, depending on the local market and your property size and age, they can determine loopholes so that you’ll only pay for a small portion of your tax.
Running an income-generating rental property requires a great investment of time, effort, and of course, money. From advertising rental listing, enforcing leasing agreements to scheduling maintenance, everything is crucial to ensure the success of an investment property. Reduce your management costs with these tips and save money for other property needs.