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Reading Room Articles Tips for Controlling Operating Expenses By Tami Siewruk Here are some ideas for you to consider using at your property; some are really obvious, yet, it's amazing how often the most obvious things get overlooked! Let's see how we can save a couple of bucks! Start with a legal pad and make one page for each budget category. At the top of each page, label the following columns: Under "opening balance", enter the annual amount for this budget category. Every time you spend money in this category, enter the date, explanation of the expense, and the amount. Subtract from the balance to get the amount of money you have left in this category. At the end of each month, subtotal your expenditures for the month and compare them to the budget for the month. You should also subtotal the cumulative dollars spent for the year vs. the cumulative budgeted amount for each category. By knowing where you are on a daily basis, you can make adjustments as needed to achieve your budget goals. Water and Energy Savers Keep a utility log for water, sewer, electricity and gas. Each month, enter the information from each bill, by account or meter number on the log. This is a simple way to spot any unusual increases in usage, such as a broken under-ground water pipe that can't be seen. Calculate utility usage on a per-unit basis and check against comparable properties to see if you have a usage problem. Make certain that lights and HVAC are not left on in your vacant apartments (except in colder areas to prevent pipes freezing.) Also, make sure new residents put utilities in their name by their occupancy date. Check your laundry rooms (lights and water heaters - if laundry rooms are closed at night, heaters can be off). Shut off lights in common hallways during the day if they receive enough sunlight. Check your pool heater, lights and filters (they don't need to be running at night if the pool is closed). In many rooms (including laundry rooms and lounge areas), you can use timers that replace the light switch and allow residents to "twist" the lights on for a period of up to one hour, or motion sensors that turn lights on when someone enters the room and turn lights off after the room has remained motionless for a period of time. Make sure your exterior lights are going on and off at the proper times, realizing that sunrise, twilight, and sunset changes throughout the year. For a customized table of sunrise and sunset times in your area, visit http://aa.usno.navy.mil/AA/data/docs/RS_OneYear.html. Post a copy in the Management Office and another in the Maintenance Shop and refer to it often. Also, don't forget to adjust timers after a power outage. According to a recent study, the average faucet leak can waste up to 5,000 gallons of water per month totaling an estimated $45.00 per year PER UNIT. If you have 50 units with leaky faucets, that's $2,250.00! A running toilet can waste between $20.00 and $40.00 a year; 50 toilets = $2,000.00! Excuse the pun, but that's $4,250.00 a year "down the drain". Recently, auditing utility bills has become a growing business. The auditors work on a percentage basis, getting paid a percentage of what they save you (in the future, plus any refunds you get) by confirming that you have been paying the proper utility rates and have only been billed for actual use. Cut the Cost of Communicating Record every long distance call noting the date, who made the call, who was called, why the call was made, and the phone number. Compare to the phone bill each month. There is no need to use expensive letterhead for in-house memos! Circulate memos around the office instead of making a copy for each person. For in-house memos, simply write your answer on the bottom or on the back of the original memo. It saves paper and typing time. When you call someone, leave a complete message, so that the person you called can call back with an answer even if you are out of the office. Likewise, train yourself and your staff to take complete messages, finding out exactly what the caller wants, so that you can respond to the person if they aren't in when you call back. Too many people wait till the last minute to complete reports or other assignments, using the fax or overnight mail to meet their deadlines. Start planning better to use the less expensive regular mail. By increasing the number of renewals, you save lots of money; Leasing Professionals shouldn't mind getting smaller new lease commissions if they can make it up on renewals. Exercise Smart Maintenance Make certain your Service Staff is optimally trained. If they're putting in a lot of overtime, the culprit may not be short-staffing - is the overtime coming from an increase in the demand for service, or too many callbacks? Do you have a preventive maintenance program in place: I hate to say it, but "an ounce of prevention is worth a pound of cure" - read on! Would you rather pay $100.00 for a minor roof repair today, or replace a section of the roof (as well as the ceiling and carpet in the unit directly underneath it) in 6 months? Is your team replacing items that could be repaired? Is there a breakdown in your preventive maintenance problem, which is causing more service requests (not changing HVAC filters, causing early failure of HVAC units)? Don't pay for repairs that residents should rightfully be held responsible for. Rightfully is the keyword here… be careful not to be too "hard nosed" in this area; you probably don't want to penalize someone and risk losing an otherwise good resident over something they may have broken inadvertently. Have your Service Technicians make a note on the service request of any problems that might have been caused willfully or by blatant negligence on the part of the resident (broken window, hole in door or wall, stopped up toilet, etc). It should be the manager's job to speak with the resident to determine if they should be charged for the repair or, in the case of a move-out, have money deducted from their security deposit. If your company manages several properties in one area, purchasing could be combined to get a greater quantity discount. It is sometimes cheaper and easier to pick the stuff up instead of having it delivered, or to have it delivered to a central location and then have each property pick up their orders. Here are some great maintenance purchasing and monitoring websites that you should know about: www.sitestuff.com,www.aptbiz.com, www.ebuyexpress.com, http://www.corrigo.com/. Make smart decisions about outsourcing. Examine your outsourcing contracts regularly, and ask: Is the service still needed? Is the service needed on the same frequency and scope now as when it was originally contracted? Could it be done cheaper AND better in-house? Could it be done cheaper AND better by another source? Look for Leaks in Your Budget! The tips above will get you started, but there may be several additional areas where you can save. The budget log that we discussed in the beginning of this article is a great tool for spotting leaks in your budget - places where money is running out faster than it could or should! Can you save MORE money in any of these areas? We tend to only look at the problem areas, letting the others go - look at everything! Contract with a firm that specializes in this area to appeal your bill on a contingency basis. Resources: www.retailenergy.com/mpd/mpd29.htm - The Energy Yellow Pages - a complete listing of energy auditing companies with e-mail and web site links! Tami Siewruk is the founder and Chief Imagination Officer of The Sales & Marketing Magic Companies, Inc. For more information about SMM products, publications and events, please visit www.smmonline.com today!