Real estate investments remain one of the most reliable and sustainable ways of protecting and growing your capital, and given the economic turbulence that continues to ravage the world, it’s only natural to look to these financial instruments to guarantee our financial security. And with the housing supplies at an all-time low and unable to meet current demand, the cup is spilling onto the need for apartment complexes, calling for more property development to appease the need for a home.
However, one major issue plaguing rentals and apartment buildings is the costs incurred every month to keep things in full operation, slashing the potential profit margin on an already low return due to the strains caused by the Covid-19 global pandemic. And so, today, we will be revealing effective methods at cutting back costs and how you can go about minimizing your monthly expenses in the most accessible way possible.
Determine The Overall Efficiency Of The Apartment Building
It all boils down to determining the overall efficiency of the apartment building and whether you’re getting the most bang out of your buck for every bit of cash that flows in and out of your investments. Specifically, we’ll be exploring three areas infamous for racking up unnecessary costs; (1)the functional building systems, (2)costs incurred on repairs and maintenance, and (3) office, administrative, and miscellaneous expenses.
#1 Electricity, Plumbing, And All Others Building Systems
All the inner workings and functional building systems that keep the water running and the lights on are the foundation of an apartment building, and due to the superior importance of this area, it should also be approached with scrutiny. In fact, when taking a laissez-faire method in managing your overall utility budget can come to bite you back ten times harder when you least expect it, so give yourself the reassurance of optimizing these systems. We recommend having the property go through professional building commissioning so that experts can review the overall performance and make the necessary tweaks that will prevent any untoward business losses.
#2 Money Spent On Repairs & Maintenance
Although it’s a common principle to set aside a budget for the overall maintenance of the property and any issues that might need repairing in a month’s timeframe, these expenditures can just as quickly rack up when you keep allocating more of the budget haphazardly. Instead of slowly growing the budget allocation to an astronomical number, we strongly recommend that you discern the root causes and deal with them first, be it an unruly tenant or a much more serious issue concerning the building. Furthermore, it also helps to invest in higher-quality appliances and materials because you won’t have to worry about things breaking down as much and can encourage more tenants to stay long term.
#3 Office, Administrative, And Miscellaneous Expenses
Last but not least, we also have the matter of managing employees, office expenditures, and the miscellaneous costs that come knocking on our doors at the end of the month. In terms of the former, with more people looking to work from home, we suggest that you outsource some of the administrative work to remote employees and find ways to optimize the newly freed-up office space. And with more work and apartment searching now done on the digital space, it’s high time you go paperless if you still have documents kept away. As for the latter, instead of working with a flexible miscellaneous fees budget, we suggest keeping it strict and rigid to avoid any unexpected bills at the end of the month.
Of Course, Maximizing Profit Also Helps
Likewise, another effective method of cutting back costs is by maximizing profit, and while it is easier said than done, there are money ways you can help rekindle the flame for more cash flow. And, although these suggestions scale to more long-term returns, starting early and using time as your advantage is in your best interests.
- Reducing Vacancy Rates: One area that you should direct your attention to is the apartment building’s vacancy rates, and if you have a number of apartments just gathering dust and not housing tenants, then it’s time you step your game up. From virtual tours of the complex to more effective tenant screening, more tenants mean more monthly cash flow.
- Better Marketing Strategies: Another way you could maximize profit is by implementing better marketing strategies because when you can cover a much larger reach, you will most certainly score more tenants and potential partnerships. In fact, you might find many B2B opportunities such as renter’s insurances and even laundry services, to name a few.
Secure A Stable Cash Flow
With the financial world in a constant uphill battle, as evidenced by the crypto flash crash, we should set shift our gazes toward securing a stable cash flow. Therefore, we strongly recommend rental investors implement the solutions provided above so that your monthly bills won’t weigh down your profit margins as much.