“Which is More Important?” What do you think? Well, of course my blanket answer is that, it depends, however – I won't leave you hanging, I will tell you what I mean. The first question you need to ask is which has the most profitable payoff? If I raise my rents on my 100 unit property $25.00 per month that is an extra $2500 per month income OR $30,000 per year. This could have the potential of increasing the property value about $300,000. Just with the $25 increase.
Or, what if your insurance was $33,000 per year. You found a better carrier that can reduce it to $25,000 per year, saving you $7,000. You not only made a nice impact on your cash flow but your property value is now $75,000 more. Now, here is the nice thing. What if you did both of these at the same time? Wow!
The thing to keep in mind here is to be working on both simultaneously. And remember, you can have as much economic impact reducing expenses as you can by increasing income. It's really ALL about the cash flow and all about the NET INCOME that a property produces.
But I have Bad news. To be blunt, there isn't a service that you can hire, or a high-priced consultant that can do this for you. It is ALL going to be up to you and/or your management team. It would be great if you could just hand this off, but unfortunately these kind of folks have a hard time seeing it through the investors eyes.
Finally, for expense reductions, any kind of deals you make with vendors, such as cable, high speed internet, etc. should be negotiated by you at point of purchase with you getting a piece of the action – licensing rights is the best since his will consistently add to the Net Income of the property. My idea for you, even though it requires a bit of work, brainstorm every conceivable way to make money from vendors on a property. Laundry machines and vending machines are easy, but, it gets harder from there.
Once you have your list, contact the top ten to see what you can get worked out. I am sure you will be able to land a few. As time consuming as this might seem on the surface, remember we are ultimately raising the value of your property tens, if not hundreds of thousands of dollars…without any remodeling or rehab expense and headache. That's the real secret of investing in apartments and commercial real estate.
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