Trimming the fat off your rental portfoilio

[Stanley J Okazaki]

Wondering if any experienced landlords/ property managers out there have figured out how to "trim the fat" off their rental property expenses & or time allotted to them? Examples include: 

-writing into the contract that the tenant is responsible for the first $100 of any repair

-automatic deposit

-switching out carpet for hard flooring

-homogenize paint colors, 

[Matthew Olszak]

@Stanley J Okazaki

-writing into the contract that the tenant is responsible for the first $100 of any repair

If you charge the tenants, you'll never hear about a simple leak under the sink due to a failed $1 p-trap washer, and will instead find a rotted cabinet bottom and/or floor after they move out. Charge them for what's their fault, pay for maintenance otherwise and work that average % into your rental rate.

-automatic deposit

Doesn't save much time, still have to reconcile the payment unless you use a 3rd party service, which likely will charge you so the net difference will be 0 between the time savings and fees charged.

-switching out carpet for hard flooring

Depends on your long-term plans - how many carpet replacements will it take to pay off your hard flooring? How many tenant turnovers do you have during that period (because normally that's the only time you'd replace).

-homogenize paint colors

Yes, do this. Same with hardware and finishes between properties. If they all use the same tile, door handles, paint, etc, replacement is much easier and less costly as you likely have leftover in your own stock.

Another one is to buy/use durable fixtures. Spend the extra $100 for a good toilet, spend the extra $10 for name-brand door handles and faucets. You'll burn up those 'savings' 5 times over in just one replacement in labor costs to replace in the short lifespan of the discount brands.

[Andrew Johnson]

Stanley J Okazaki I don’t manage my properties but I do have my PM paint them all the same. You can buy those giant 5-gallon buckets, it makes touch-up easy, etc. And for one of my buildings I have a “clean the carpet but call me when it needs replacement” request in place. I’ll just have tile put down when that happens in the main living areas. Upkeep is less and it looks nicer.

As for tenant repairs, I’d never want them to have a fiscal interest in turning a $99 repair into a $999 repair just so they don’t have to foot the bill.

[Stanley J Okazaki]

@Matthew Olszak great points. I completely agree with the repairs. Thank for the 2 cents

[Linda S.]

@Stanley J Okazaki,

As others have stated, no chance in heck I'd ever make the tenants have to pay the first $100, guarantee no one will call.   It'd be a big dose of "hey, it's not my problem!" and the $100 problem will cost you thousands.   Very bad idea IMO.    If you haven't already made it all online, I'd highly recommend it!   We have everyone on automatic systems, and it's great!  

One thing I'd recommend that we do, is at each year renewal-- we ask them what they'd like for an upgrade to their home, up to $200.. maybe painting a room, maybe adding a small fence, light,  whatever they want.   It's also an open platform for them to tell us anything else that may need to get fixed.    If they know we'll be there, they'll add small stuff that they probably viewed as insignificant, but it's nice to keep our homes in top rental shape!

[Stanley J Okazaki]

@Andrew Johnson Thanks Andrew. How long did it take you (or will it take you) to get to the point where you felt comfortable letting a PM company handle everything? I'm sure there's some "breaking in time"...

@Linda S. can you elaborate more on automatic systems please? My father has his tenants deposit the rent directly into a checking account...how can rent deposits be more automatic than this? 

so a couple of $100 bucks to incentivize the tenant into staying, thus reducing turn over costs & saving time. Not a bad idea...thanks for the tip!

[Andrew Johnson]

@Stanley J Okazaki I left her handle everything right from the get-go.  She started with a tiny 5-unit building for me so there wasn't a massive amount of risk.  I flew back twice the first year just to see how things were going on the properties.  I found some tiny nit-picking things (I do every time I fly back) but that's really about it.  And those small things don't really make anything close to a material difference on how the property performs, it's just a bit of my OCD nature.  It was pretty easy to allow her to "scale with my portfolio" from there.  I still call her twice a month just to ask how things are going.  The last thing I want to do is be surprised by stuff.  And, well, she's pleasant to talk to and always tells me if she thinks there's anything interesting coming onto the market to buy.

The only thing that requires "breaking in" is the properties themselves.  That 5-unit property was smooth from the start.  The other two apartment buildings that I bought all had some quirk issues with tenants the first year.  Someone claimed they had an agreement to get the "13th month free" if they paid on time (with no documentation), a few tenants had actually worked for the previous owner (so they moved), some tenants tried to sneak in a dog, blah blah blah.  So there were just "stabilization" issues that hit.  I'm not really sure there's much you can do but handle them on the fly.  

I guess the bottom line for me is that I work well with my particular PM but it's still not exactly 100% "mailbox money".  

[Account Closed]

On a couple places I’ve run a chair rail the same as my baseboards at ~42”. This allows the lower 3’ (the main location of wear and tear) to be repainted if needed without having to do above that. Saves time. Also is a decent looking design feature if done right.

Light fixtures that accept regular LED bulbs. No crazy halogen that need to be imported by only ikea or similar.

3x12” subway style tile backsplash. They’re ~$.06/ tile more, and cut your install time almost in half, AND look way more expensive. It’s a great way to stand out from the big guys for $150 ish.

Stairs ALWAYS get vinyl plank. Always. They’re the most labour intensive to recover. I use lvp almost exclusively now but on stairs, not even an option.

And, as far as standardizing goes... standardize your property type also. Ex: I’ve got mainly ~1100sq ft suited bilevel houses built from ‘60-‘75. ... those are all gonna be okay with the flooring I chose, the paint colour (in and out), cabinets blah blah. It’s not a 2010 modern condo vs a 50’s 1.5 story house.

Keep in mind that trimming the fat absolutely applies to time as well. It might be your time now (most valuable asset by far) and someone else’s time later ($), but both have value.

I roughly run by the rule: anything that causes frustration, engineer out of the equation.

[Justin Stamper]

Stick to same turn over rehabs like most have said, buy in bulk when possible if you have enough properties to use materials on, and deff don’t charge tenant repairs. I offer my tenants incentives, not charges. Keeps them around much longer.