Maintenance Budget Woes!

The owner's rep and I are working on 2013 budget. We have to wait until late in the year due to so many repairs we have to make right up until December.

Last week, we repaired 3 busted water pipes and we have one more that will require a professional because it is under a sidewalk.

The property is a small group of 48 townhouses that are 30 years old. It has been neglected for years. I've spent most of the last 3 years doing needed repairs and deferred maintenance, mostly plumbing).

The owner's have had it 4.5 years and have lost a money on it. It is a "money pit."

I've been trying really hard to make them a profit, but next year isn't looking very good, again.

We have several capitol expenses that we need to do. Gutter downspout extensions, railroad tie retaining wall deteriorating, old HVAC units.

We have been able to increase rents since last June due to an excellent market.

I need advice on how to handle the owner's remarks when it comes to maintenance staff. They REALLY don't want a permanent,regular hours person for this property. They want someone to work "as needed" and not pay them what they are worth per hour.

I've had trouble keeping maintenance staff. I've had some really bad ones, too.

Right now, I have a fantastic maintenance man. He's HVAC certified and has apartment experience. He's probably worth $20-$25 per hour and we're paying him $15. He likes working with me because I'm laid back and flexible. He works the hours he wants and can do other things on the side where he can make more money (HVAC installs).

Average hours working "as needed" this year has come to 28 per week. I've budgeted next year for 20 and I know I'm going to get a debate over this.

Any advice to get the owners to see we need this person on a regular basis?


Thanks!

Sandy'

Well Sandy, what about having no one, and contracting everything? I would let your owner have a run at that concept, and see how long it lasts. You can call a $75.00 an hour plumber for a water heater replace, and then the next day to change a faucet in a bathroom. The result? You paying $75.00 an hour for a maintenance man and not the $15.00 your owner is getting from your current guy.

While this is simple math, I realize owners don't always do simple math. The whole of the thing is that your actually paying less than I am. While I paid $7.50 an hour for jobs, it always seemed funny that when a job took an hour or less, there was some kind of karma at the property that forced an hour job to become a two or three hour job. I wonder why? LOL. Common sense tells us that if some cheap PMC is going to only pay minimum wage, all of a big running sudden, the "gravity" experienced at the property is so much greater than everywhere else makes raising a wrench takes twice as long. I have seen work orders showing two hours to replace a light switch. I don't think I could even walk if the gravity was that stiff and heavy, could you? I don't think Newton's Law included that when I was in high school. (Could it be the gravity is the same, and someone is going "paddy, paddy, paddy?)

Your owner is lucky, and I mean really lucky to get what you have for $15.00. Seems it is that way as it fits the shoe of the guy to do it. I had a deal like that for three properties, and worked dirt cheap because I wanted to play around, and really did not need to make any money at the time. The average bear out there is after "money" and not having it all his own way.

Ask your owner to explain why the current guy you have is not the greatest deal going!!! I would need to have the answer to that if I were you. While your at it, also explain that not every Joe Doakes can change a light switch. (Of course unless the light switch itself is willing to change) LOL

Sandy, I am not sure I agree that you have to wait to do the 2013 budget, but that is neither here nor there. I would suggest adding a category with a 3/5-year plan for repairing all the plumbing issues. If you have such major issues now that you have to repair 4-6 major line breaks I would do a complete needs assessment.

If the Owners are wanting to get rid of the PART TIME on site maintenance tech, then you have bigger problems than the plumbing issues. It is NOT less expensive to have to call professional plumbers and other service techs since they charge drive fees, service call fees and the additional per hour charges. They might be able to contract with a Maintenance Company (a lot of property managers use these in Chicago) but I doubt they would be less expensive overall, plus it is a less effective tool for resident retention since residents may have to wait longer to have their work orders attended to, as well.

I wonder why your Owners are not seeking other investors who could partner with them to add money to the pot for some of the repairs? I wonder if they would consider refinancing the property and putting some money back into the property? I also wonder if they do not have any replacement reserves budgeted for any of the capital improvements? I doubt they could refi with a HUD loan since they have extensive problems, but maybe a different loan source could be found. To me, and I am a simple person, if the Owners are willing to sacrafic the loyal Maintenance Tech thinking they can save a few bucks, then there is something else wrong that is bigger than the both of us. In addition, if the Owners don't want to plan for the future in terms if getting money to install the gutter extensions, new windows, shore up the plumbing, and set aside something for new HVACs, then they are THOSE kind of Owners that take, take, take and give nothing in return. With funds to make some necessary improvements, they could at least position the asset for a sale.