2414 SW Andover St, Ste D207, Seattle WA 98106 • 206-283-0816 • F: 206-286-9461 • [email protected]
Even Though the Rental Market Is Stronger
—Keep Trying to Cut Costs
By Craig Swanson,
Redside Partners, LLC,
RHA Associate Member
bill. Whenever, we see
a spike in the water
usage, we’re quick to ask
tenants again about any
leaking faucets (usually
an email gets a very
quick response) or we’ll
simply do an inspection
of all the units. Invariably, we almost always
find the culprit.
T
he renta l ma rket
seems particularly
strong right now. It is
always strong in July,
August and September,
however it seems particularly strong this year. After
the last few years of mediocrity, we have earned it.
Craig Swanson
I was once told that on average, you
should show an apartment five to seven
times before it rents and if you show
it more than ten times, something is
wrong (poor condition, the price is too
high, poorly marketed, etc.). Recently,
even after some hearty rent increases,
we’re having a hard time showing units
three times before renting them.
Even while we all enjoy the relatively
strong rental market, don’t lose sight
of continued ways to lower expenses.
With each new building we have
recently started managing, we have
been able to quickly cut some significant expenses.
If you don’t already, you should be
paying attention to those neat little
graphs on the power and water bills.
It’s an easy and effective way to make
sure your usage is consistent. While
we frequently remind tenants to alert
us of leaky faucets or toilets, they frequently don’t. This is especially true
when they’re not responsible for the
Seattle and most other
municipalities don’t usually have neat
little graphs for garbage bills though,
and I don’t think owners look very
hard at their garbage bills or check
to see how full their garbage cans are
before pick-up. Even at my house, with
composting and recycling, our garbage
use has fallen considerably in the last
three years.
And garbage companies, like most
vendors, don’t call and say “we’ve been
noticing a lot of extra capacity in your
dumpster and think you should get a
smaller one…”. Your property management company has tons of data on
various buildings, a comparison should
be easy. We have established what we
think is a strong benchmark for garbage fees per unit. It’s also important
to remember recycling is free in residential buildings, and more and more
tenants want to be “green” and recycle
and/or compost. Even if you cut back
on garbage capacity such that you have
a few extra garbage charges, you’ll usually save money.
As an example of the possible savings,
in two buildings we recently started
managing, the reduced garbage fees
were equivalent to a third of the
monthly management costs!
The expertise and attention to detail
of good management should be able
to add value in other areas too. Most
management companies offer the
option of going into a pooled insurance
program. The benefit of such programs
is usually greater buying power and
lower premiums. In nearly every case
we have reviewed, we have been able
to save money for our clients and get a
more comprehensive and robust policy.
This year for example, our policy
removed the deductible altogether for
water damage as a result of a leaky
water heater or broken pipe.
We have also seen ways to lower costs
with central boiler systems too. Sure
it’s preferred to have individually
metered electrical heaters but installing these may be cost prohibitive; and
there are still ways to make the boiler
more efficient. Updating the thermostats is a great example. In one case,
thinking that new windows would
significantly reduce heat loss, new
windows were installed at significant
expense. The new windows did help a
little bit (and they look much better)
but we saw a bigger improvement in the
gas bill after installing more accurate,
electronic thermostats that focus on
the outdoor temperature.
(continued on page 2)
Article reprinted with permission from the August 2012 issue of the RHA UPDATE monthly newspaper • page 1 of 2
2414 SW Andover St, Ste D207, Seattle WA 98106 • 206-283-0816 • F: 206-286-9461 • [email protected]
Even Though the Rental
Market Is Stronger
—Keep Trying to Cut Costs
(continued from page 1)
There are plenty of other examples and
your building probably has its own
nuances. Most importantly, review
your profit and loss statement and
focus on every expense line item at the
same time you focus on getting market
rents; to optimize your bottom line you
need to focus on both.
Craig Swanson founded Redside Partners, LLC in 2002 and has managed properties in Seattle since 1990.
Redside is a progressive real estate
management firm that manages multifamily and commercial properties in
the greater Seattle area. Craig can
be reached at 206-323-1771 or via
email at: [email protected]
• www.redsidepartners.com u
Article reprinted with permission from the August 2012 issue of the RHA UPDATE monthly newspaper • page 2 of 2