Do you just write those expense checks every month for your investment properties without thinking about if the bill is correct or could be lower and/or eliminated? Although you typically can only raise rent every 12 months, it is never the wrong time to work on reducing the expenses of your investment properties. Here are a few areas to explore:
- If you are paying the heat bill, is there any way to install a new furnace or boiler in the other unit(s) to shift the cost to the tenant? Can you install electric baseboard heat for one or more units and shift the expense to the tenant?
- Does the building only have one water heater (that you pay for), but each unit has its own gas meter for cooking? Can you easily install a water heater for each unit and shift the expenses to the tenant?
- When is the last time you really analyzed your water bill? Call your municipality and find out how many gallons a typical household should use per month. If your building is using more than that, check for dripping faucets and running toilets. A dripping faucet can cost $50 per year and a running toilet can cost $100 per month!
- Older buildings that have been converted into apartments often have electrical systems that were not converted properly. Turn off the main breaker to the common areas and see if any tenants complain that they lost power. You could be paying to run your tenant’s television!
- If you live in a colder climate, like Minnesota, make sure the storm windows and inside windows are closed during the winter to minimize heat loss. Consider adding weather stripping to the doors.
- Making sure your boiler/furnace and water heaters are cleaned and tuned up at least every 2 years will not only save money, but will lengthen their life span. There are also more sophisticated thermostats for boilers that monitor the outside temperature and adjust the boiler temp to compensate. Not need to heat water to 200 degrees when it is 50 degrees outside (140 will do).
- Are you paying too much for services to mow the grass or take care of the snow? Can you find a teenager in the neighbor that would love to do it (for less)? Or can you give a tenant a discount to do it?
- If you have a property manager, are you getting your money’s worth out of them? Can you take on some of the management for a reduced price?
Roll up your sleeves and look at all your expenses for 60 days. See if you can reduce or eliminated any. It will not only bring you more cash flow, it will make your investment property more appealing to a buyer when you sell it.