Fleet Manager Perspective on cost analysis

[Leland Barrow]

I have been a fleet manager/ director for awhile. Managing fleets of 150 to 13,000. I am looking at houses the same way I look at fleet vehicles and I would like to know if my thinking is flawed. See below: I buy a standard setup because it is easier to run analysis and predict costs. For example I currently manage a medium sized construction fleet. Every foreman gets a crew cab truck, backhoe, trailer, generator etc. I try to buy the same models every time. So I want to focus on 3/2 houses of similar construction. No pier and beam, and nothing older than 1960. When it is time to plan fleet additions and analysis I pull current value, lease, service, and utilization analysis charts. I am looking at standard deviation and pinpointing outliers. If the value is high and service cost is low then I may sell it just as much as a value low and high cost unit. So in real estate terms I would sell those that have the highest equity every year and those that have low equity and higher costs. This way I am not losing money only offsetting costs as I focus on liquidating outliers and maintaining close to the standard deviation. In fleet management I have moved away from reactive maintenance to what is called predictive maintenance. Predictive maintenance is simply using available data to do repairs before they occur. It is based off of averages. For example the data shows that the mean life cycle of an A/C system is 12.3 years. An A/C system is 93.2% likely to fail between June 15th and August 17th. The average A/C replacement price is 22% lower if properly negotiated between November 1st and March 9th. The value of complaints and exposure by having an a/c system fail in summer on a renter is calculated at an additional 8%. Taking that into account all a/c systems would be replaced no matter what condition in fall/winter at 11 years old or more. This is a crude example. I am a newby to real estate but maybe predictive maintenance has the ability to lower costs like it does in the fleet industry? The idea is to always be in control and always avoid unpredictable situations. I want to know what my expenses are next year and be able to forecast out five years with greater predictability. What do you think?