4 Smart Budgeting Moves That Can Save You Money
How to utilize resources and get a head start on the budgeting game.
Budgeting can be long and tedious, but planning and preparation can help streamline the process and make it more efficient. Stephanie Graves of Q10 Property Advisors shared some often-overlooked areas and resources that can provide substantial cost savings during the budgeting process, helping to reduce expenses and increase property value.
1. Assess move-out costs.
One of the common mistakes Graves has observed is miscalculating move-out costs and not adequately communicating them to residents when they sign their leases.
“Moving out a resident and turning an apartment is really expensive,” Graves explains. “But if [managers and owners are] not calculating for that as a true number, then the budget line items for those repairs and [that] maintenance typically tend to be high.
“And then they don't accurately inform the residents of what the charges are going to be, so they end up in a fight with them,” she adds.
An easy way to address that issue is to have a new resident sign a summarization of charges when signing a lease. Then, when the resident provides notification of intent to vacate, the staff can send him or her a copy of the signed summarization, spelling out everything.
2. Chart utilities.
Minimizing utility use — both by residents and by staff — can provide huge monetary savings. The key is to know what the current usage is (something that not all apartment communities have real-time access to, depending on billing procedures) and then take steps to decrease use with measures such as installing light sensors in infrequently used spaces or making staff turn off their computers when they leave for the day.
Even if an apartment community doesn’t pay for residents’ utilities, Graves recommends establishing best practices and communicating efficiencies to residents to encourage reduction.
“Even if [residents] don't quite understand the process, if we can help them with [features such as] low-flow toilets and make it as easy as possible, it just empowers [residents] more,” she notes.
In addition to monitoring use for residents and staff, reducing usage in vacant apartment homes can also be a major factor in lowering utility costs.
“One of the things that we implemented with my company is we have a vacant cost of $26 per apartment,” Graves explains. “If it goes over that, then it comes out of the commissions of the team.”
Utility reductions include turning off lights and air conditioning when no one is there, and providing a set time for turnover work to be completed.
3. Negotiate contracts.
Vendors are more likely to lower costs if there is a larger amount of work or more repeat business to be done. Apartment-community managers and owners should evaluate not only what needs to be completed on a per-unit basis, but also what projects will be needed on an annual basis to create a more robust request for proposals (RFP).
“Instead of quoting one carpet being replaced, [the vendors are] going to quote 56 carpets being replaced over a year's time,” Graves explains. “[That’s] where it’s going to lower your rate, because that's guaranteed income or guaranteed revenue for them.”
Sister properties can compile needs into one larger proposal to get a discount across multiple locations.
To better connect with multiple vendors, Graves recommends parsing out meeting times based on task, such as meeting with landscapers in January and June. That way, managers and owners can focus on that particular task and avoid trying to fit in as many visits as possible prior to budgeting. By creating a more established RFP process and accurately specifying needs, apartment-community managers and owners can also ensure that they’re looking at apples-to-apples comparisons in terms of cost and scope.
Graves has also observed vendor frustration on the opposite side of the RFP process and encourages apartment-community personnel to not only provide adequate time and instructions for the RFP process but also follow up with vendors regardless of whether or not they are selected to provide a service. It will help establish a better relationship and hopefully create a stronger RFP process moving forward.
4. Delegate tasks.
To better engage team members and inform the budgeting process, assign responsibility for portions of the budgeting process to relevant parties. For example, in addition to setting specific time frames for talking to painting companies, apartment-community managers and owners can delegate that task to a maintenance team, who can speak readily to the tasks at hand and provide a solid estimate on the work required.
But be sure to establish deadlines and provide enough advance notice so that the teams in question can properly assess the budget needs.