Ways to decrease expenses and increase cash flow

[King Mmuwe]

Without compromising important factors in managing apartments what can one do to decrease expenses and increase cash flow?

[John Warren]

@King Mmuwe some of the easy, low hanging items would be garbage contracts and insurance policies. On one of my buildings here locally in Berwyn, I received insurance quotes from reputable companies that ranged from $4100 per year all the way up to $8,200 per year (no joke!). The crazy thing was that the inexpensive policy was actually a very good policy.

Garbage is another area where you can save big. On a recent acquisition here in Cicero, I was quoted from $54 per month all the way up to $128 per month for the exact same service. Garbage pickup is garbage pickup. The tenants don't care what color the dumpster is as long as it is picked up in a timely fashion. 

Another way I look to save is through changing common area electric to low voltage LED bulbs. This can save big over time as the lower voltage bulbs use so little energy. 

[Account Closed]

The first thing we do is remove every swimming pool. It costs about $15,000 to remove a pool, but we save about $3,000 per year and every 10 years that saves us $30,000. The properties always look nicer when the pools and pool fences are gone and there is more practical common area for the tenants. We let tenants plant gardens where the pool areas were and the tenants love the gardens. All the tenants meet with each other in the gardens and they get along much better. I think tenants stay longer because we allow them to have gardens at most of our buildings. We don't own any properties where it would be better to keep the pools and we find that almost no tenants ever use swimming pools with the exception of children who use them for only a few weeks during an entire year.

We remove garbage disposers from every apartment because maintaining garbage disposers was a nightmare. We had to send our plumbers to repair garbage disposers as many as 5 times in one week and an average of two times every other week. Some tenants had problems with their disposers about two times every month. No tenant ever complained when we removed a disposer.

Inspect rental units every 6 months and no less than 1 timer per year. This saves a lot of money because you can go all the rental units at the same time with toilet parts, faucets, shower curtains, etc. and save a lot of time and money.

Remove all the trees around the property, remove all the shrubs and remove all the lawns. Plant succulents of plants that need very little water and very little maintenance. We don't have one plant closed that 3 feet from any structure and every plant and tree we have is in flower pots.

It took me several years to think about removing all the grass from every property because we always maintained our lawns to the point they were beautiful and weedless. We spent tens of thousands of dollars to landscape every property where we brought in dirt so the lawns had nice humps. Finally, I removed the lawns from 4 apartment building. I dug 6 inches below the sidewalk grade, trucked out about 30 1-yard trucks of soil, packed in 4 inches of concrete base and 2 to 3 inches of gold-colored rocks. It cost me about $40,000 and took several weeks to complete, but it is the best thing I ever did to make the buildings more maintenance free. I think I figured that I will save about $450,000 every 10 years. I can remember my calculations, but prior to removing the lawns the yard maintenance was the biggest maintenance issue I had.

We figured we save about $40,000 every 10 years by switching some of our apartment building flat roofs to pitched roofs. We purchased some apartment buildings with flat roofs that were only 1 year old and they leaked. We installed new roofs and they leaked withing 1 to 2 years. So, it cost alot of money to change to a pitched roof and we switched them about 10 years ago. We never had one leak and don't expect to for another 30 years.

We never put window bars on the outside of windows because it makes the buildings look ghetto. We have our welder install window bars inside the windows and they are designed to look like the French windows where the metal is between the double panes of glass. We do not install bars on bedroom windows, but we always use the French windows with the metal between the panes of glass and we give tenants a bar that fits tight so the windows cannot be opened from the outside.

We save a lot of money by rehabbing every rental property only one time and the right way so they are almost maintenance free. We like to make them so we can get in an out within 3 days when someone moves. My wife manages all our California properties and she visits, checks and cleans every property 6 days per week. She is on top of every tenant, knows what vehicle every tenant drives, knows when a tenant has visitors and for how long and she knows who smokes and throws their cigarette butts on the ground.