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Finding New Ways to Reduce Expenses

EXPENSE, n. 1. something expended to secure a benefit or bring a result. 2. one of the most difficult items to keep under control for most on-site professionals.

You're "over" in that category. Ouch! Just when you thought you would close the month under your budgeted expense amount, an unexpected move-out that requires new carpet blows your Carpet Budget out of the water. It seems to happen every month! Something seems to come up beyond your control, causing all your hard work, careful planning, and conservative spending efforts to go down the drain.

Being over a bit in an expense category or two doesn't necessarily mean your efforts are wasted or that you're doing a poor job operating the property. While excessive overspending can indicate a serious management problem, all on-site professionals occasionally miss their goal and spend more than is budgeted. Yet the really expert managers agree most cases of overspending can be prevented with a little more planning and analyzing of what is happening now on the community and how it will impact the near and not so near future.

We'll assume that like most on-site professionals, you are cost conscious and take your budget with great seriousness. You work hard to get the best prices from contractors and suppliers. You don't spend money frivolously. You invest in "extras" that directly or indirectly help you meet your primary objective - Increasing the Value of the Property. So, where else do you cut? It's foolish to save money at the expense of the lifestyle your Residents expect and pay for. We don't recommend slashing expenses or reducing payroll (and service) simply because you've planned poorly. Instead, consider some of these adjustments to your management style that will result in better control of your expenses.

Planning ahead to save tomorrow
Many of your everyday management reports are invaluable to forecast future potential expense problems. Below are just a few ideas for better timing and prevention of future expenses.

  • Keep up with lease expirations - At most communities, certain months tend to have more leases expiring than other months. Look five to seven months in advance to when leases expire to better anticipate costly make-ready expenses. If you have twice as many leases than average expiring in a particular month, you can usually count on as much as twice as many make-readies; so you know that theses expenses will be hitting you all at once. Plan ahead to stockpile some of those Cleaning and Decorating (C&D) funds in lighter months to use in the big turnover months.

    Note: If you budget for 12 make-readies per month and meet your Make-Ready Budget with only six move-outs in a given month, haven't you actually overspent by 100%?

  • Plan Move-Ins During the Week - Avoid new Resident move-ins on weekends when it may mean paying overtime to your maintenance personnel. They may be needed for an unexpected new move-in. Even better, stagger the maintenance work week so you can have a full-time person working Saturdays to keep up with service requests and assist with new move-in problems and, thereby , avoid costly overtime.

  • Plan your day ...the day before! Rather than rushing to the office in the morning, arriving just barely on time and with no real game plan for the day, try planning ahead. Spend some "quality time" the day before, putting together a strategy for completing the tasks the following workday. Put together your "To Do List" over coffee before coming to the office to face the day's challenges and opportunities. When you start your day with a plan, the extra preparation makes you more efficient, less frantic, and better able to deal with the daily interruptions that define on-site management. Will this reduce costs? You bet! You'll feel the difference as you seem less rushed and more willing to lead and coach your on-site team. Advance preparation will help you better utilize your on-site personnel.

  • Better Utilize On-Site Personnel
    It's time for our industry to take a new look at our hours of operation and the way we staff our properties. Not only can it be wasteful to staff your property from 8:30am to 5:30pm Monday through Friday, it is also VERY inconvenient for Residents and rental prospects who may need us, but are usually working these same normal business hours.

  • Get Rid of the Weekend Leasing Consultant - We don't mean to be discourteous, nor do we recommend a mass layoff. Good weekends leasing professionals are worth their weight in gold! Yet in some situation, couldn't we cover weekends more effectively by scheduling an assistant manager or full-time leasing consultant from Thursday to Monday? A full-time employee will be more in tune with the ongoing operations of the community. Many on-site professionals enjoy working weekends and having two days off during the week. Furthermore, Sunday usually has an abbreviated schedule, making the actual work week shorter.

  • Adjust Your Office Hours - Schedule someone from 10:00am to 7:00pm Monday through Thursday and provide better office access for Residents and prospects alike! How does this save money? Better access to the office means you have better access to your Residents. An office open until 7:CPM each evening makes it much easier for a resident to drop by to renew their lease. Reducing turnover will definitely lower your expenses! Another benefit is all the new leases you get from prospects who appreciate the convenience of coming by your community after work.

  • Get More from Your Maintenance Folks - While your service technicians are competent and hardworking, you may surprised at how little actual "maintenance work" they perform each day. By the time they start the day with coffee and a meeting, run here and there for parts or supplies, and waste time trying to interpret poorly written Service REquests, you can end up with only four or five hours of true "maintenance". To maximize the effectiveness of your service technicians, follow these guidelines:
    1. Organize the Service Requests before starting time. By the time the maintenance people clock in, their day should be appropriately planned.
    2. Don't waste a talented and skilled maintenance person's time of errands. If you "just have' to pick up the part, send your junior service technician or grounds keeper.
    3. Schedule your maintenance people the same hours as the office to ensure efficiency and accountability.
    4. Allow your highest paid and most skilled individual the time to do the maintenance work, not organize other personnel or the maintenance shop.
In most situations, the lead maintenance or maintenance supervisor is under utilized. The manager can usually better organize and prioritize the maintenance.

There's more to controlling costs than simply using a Budget Control Log, changing vendors, or rebidding your service contracts. Rather than reducing expenses, determine the validity of certain expenses in the first place. Is it possible to eliminate an expense all together? Take a fresh look at Cost Control, and let your creativity help you find new and impactful ways to cut costs and increase Net Operating Income!

Rick Ellis, one of multi-housing's foremost consultants & educational speakers.

Rick Ellis' Biography and Article List
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