Managing Apartment Expenses with A Good Staffing Plan - Multifamily Real Estate Investing
With Percy Nikora, Co-Founder
Then, when it comes to expenses, we look at a number of things; namely ... Obviously, payroll is a big part of that. As part of the due diligence, we come up with a staffing plan with our property management company. We make sure that the number of people that we have is right-sized, so to speak, for the property and for the vintage. If it's an older property, you may need slightly more maintenance people on staff. If it's a newer property, you may not need as many maintenance people. We try to get the right balance of the leasing personnel in place.
There's a number of things we do in making sure that we have payroll optimized. We have vendor contracts are scrutinized. That's part of our due diligence process, as well. We quite often renegotiate vendor contracts, especially if we have multiple properties in that specific area. We try to leverage economies of scale. Within one of the markets, we have four properties, and we try to make sure that our contracts go across those, and we get deeper discounts with the vendors.
By doing things of that nature, we can decrease the expenses. So, when you combine the additional income coming in to the top line versus decreasing the bottom line that has a nice impact on the net operating income. As we said before, this has a multiplying factor and the returns you get through that are just exponential.
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