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!