Managing ‘Fixed Costs’ at Your Property
For last week’s Apartment Chat, we decided to veer away from marketing-related topics to discuss another issue that every apartment operator faces — how to manage fixed expenses like property taxes, insurance, utilities and personnel costs. Here’s the recap of the conversation:
Have any of you used a service to fight your property tax bills? We are considering it, but paying out 1/3 of the savings seems high.
- Kimberly Madrigal: Yes, I used a fixed-fee service. Waiting to hear from County. Can do youself. Not complicated in L.A.
- Kimberly Madrigal: Had worked w/ them before during last recession and were successful w/SFR property tax reduction. Still waiting to see . . .
- Will Clark: Use it everywhere. Many good services out there for appeals. Can be complex (IN) but adds value to property.
- Kimberly Madrigal: Paperwork here is very easy. Don’t know abt where you are. Consider going to county office or check online and looking at forms.
- Will Clark: Get appraisals, cash flows, BOVs (Broker Opinion of Value), fire damage report, anything to show reduced value.
- Will Clark: LIHTC is particularly vulnerable to high appraisals. Assessors do not understand income limits.
- Lisa Trosien: I would guess that values have definitely fallen in most markets. Do you know the value of your property today?
- Will Clark: Check all your parcels. Are they correctly classified (improved, vacant, commercial, etc)?
One of my highest costs is payroll. How can I effectively cut staff without cutting service to residents? (You had a LOT to say about this!)
- Bob Gura: Trading services such as painting units rent credit is an area we are exploring.
- Heather Blume: Outsourced contract workers can be a major money saver dep. on the cost of benefits, but they’re not as stable always.
- Jeff Sandell: Hire only strong multi-taskers. No one can just be one thing and one thing only in this market.
- Heather Blume: If you (hypothetical), cut one leasing agent job right now, & then used staffing over the summer, you might come out ahead.
- Eric at Buildium: One example, posting online virtual tours may cut time spent on property tours, thus reducing staffing needs.
- Will Clark: Watch OT, explore flexible scheduling. Open late to prospects, give staff time to complete admin work. Use floaters.
- Charity Hisle: It’s important to evaluate staff carefully, to see if they ‘fit’ your company culture and values. If not, cut.
- Tamela Coval: Technology like iPhones for Service Techs is an efficient way to manage time therefore $$.
- Heather Blume: Another solution is to bring in a company like Community Northwest or CARES who can handle the retention side.
- Bob Gura: Outside of resident retention, there isn’t many things more important to take time for than property tours.
- Elena Ferranti: Change to a Wed to Sun work week to eliminate need for weekend staff. Maintenance continued Mon to Fri.
- Will Clark: Identify where people spend time and look for efficiencies. LIHTC apps, invoicing, non-resident svcs that are time sucks.
- Lisa Trosien: One company here in IL is cutting ALL benefits but keeping on all staff. Is that a solution?
- Kimberly Madrigal: UDR is using commission-only leasing agents.
- Jennifer Kennedy: I think you are better of retaining your best employees and keeping them happy – no cutting benefits.
- Heather Blume: Pay people well and APPRICIATE them, and they are more likely to be higher performers for you.
- Eric Brown: Many cuts in expenses may seem short sighted, but we have never seen economic times like these.
- UMoveFree: If you use commission-based leasing agents, make sure they are trustworthy and ethical or it could damage your property’s reputation.
- Darcey Forbes: Most companies are looking at how to reduce/consolidate staffing due to the implementation of programs like Level One or Crossfire.
- Leigh Curry: Use a health insurance auditor. Good auditors can find up to a 10% discount in total medical insurance costs.
- Bob Gura: We are coming up on one year with Crossfire and I am not impressed with the results. Our staff is much more engaging.
- Lisa Trosien: I have seen companies who do not reduce staff because they add a call center, but simply don’t replace staff who leave.
- Bob Gura: Don’t downplay stability at properties. It really impacts retention. Don’t be penny wise and pound foolish.
- Heather Blume: The owner/CEO of CSI took total pay cut my last year there in the hopes of not laying off people. Breeds loyalty.
- Lisa Trosien: REIT salaries of top execs are published; interesting to see if there’s any difference in year to year.
- Will Clark: As an owner, a good PM is always worth the NOI hit. I love seeing familiar faces and not retraining to my style and goals.
- Katie Roncadori: I think you can, as long as you have quality staff in place that actually cares about the community and the residents.
- Jonathan Saar: Broad question- but I don’t ever feel people going will aid resident service.
As a follow-up, Lisa Trosien posed this question:
Do we all believe the old rule of 100-1 units to staff doesn’t hold anymore? Thoughts?
Here’s how you responded:
- Will Clark: I can be persuaded that 1.5:100 is the new standard. Depends on age, turnover, needs of property.
- Laura at GABP: That rule didnt work when it was the industry std. How many U need depends on the quality of your people.
- Lisa Trosien: I think the # of people depends upon the level of service you provide and your tech sophistication.
- Elena Ferranti: Number of staff can also depend on history of prop. A problem prop needs much more staff.
- Bob Gura: Redesigning jobs to broaden responsibilities and staggering shifts can create a leaner more focused environment.
- Eric Brown: The number of people required verses the level of service can be overrated, More people doesn’t = better service.
- Eric at Buildium: I agree that 1 can’t manage 1,000. But a quality person will find a way to do a great job with limited tools.
We wrapped up the conversation with our picks for the Big Game — it looks like the #AptChat audience will be a house divided on Super Bowl Sunday.
There were a lot of interesting comments along the way about the training, technology, personality and motivation required to help onsite staff succeed — make sure you read the discussion, and leave your own comments below. Here’s the link to the full transcript — we had 338 tweets over the course of the hour, coming from 57 different contributors.
What are you doing to keep your expenses in check? Tell us what you think!
Related posts:
