Maintenance is one of the top three expenses for most multifamily communities, typically following payroll and debt service. High maintenance costs can quickly eat into profits, prompting property managers to optimize costs wherever possible. Since many operating costs are fixed, managers often focus on controllable costs, like maintenance expenses.
Budgeting for maintenance expenses varies across properties, with common strategies including the 50% rule (50% of rental income), the 1% rule (1% of property value), or the $1 per square foot rule. If you frequently exceed your maintenance budget, you may be searching for ways to reduce these costs. Here are some effective methods for lowering maintenance expenses:
Implement a Preventive Maintenance Program:
A well-designed preventive maintenance program may require an initial investment, but it can save money in the long run by preventing emergency repairs due to neglected maintenance. Research suggests that preventive maintenance can significantly reduce maintenance operating costs for multifamily properties.
Screen Tenants Thoroughly:
Some tenants have a history of damaging rental properties or misusing appliances. Conducting a comprehensive screening process and requesting references from previous landlords can help you avoid higher maintenance costs resulting from problematic tenants.
Invest in In-House Equipment:
Acquiring equipment to handle many maintenance needs in-house can reduce costs. For example, purchasing a drain snake and a drain auger can save money by eliminating the need to call a plumber for every clogged sink or toilet. Sharing equipment between sister properties can also help reduce costs.
Provide On-The-Job Training for Maintenance Technicians:
Having your maintenance technician shadow contractors hired for plumbing or HVAC repairs can provide valuable on-the-job training. By learning from professionals, technicians can recognize and repair issues without needing to call a contractor, reducing maintenance costs.
By implementing these strategies, you can effectively reduce maintenance expenses and boost your property's bottom line.
