Where Are You Saving/Where Are You Spending?

The age-old question becomes even more important in a tough economy...where should you be saving, and where should you be spending? Any thoughts? What is your company doing to reduce expenses, and where are you actually investing more in order to improve performance and profits?

Saving money where you can is NOT rocket science (and I know a little about that; being a former Pershing Missile veteran)....

Here are a few ideas:

1) When purchasing office supplies; use STORE BRAND items, as opposed to national brands. I was with a company that had a contract with Staples and when placing our weekly order, I would have the standard web portal open and in another window, the contract window. If I find a product that the contract gives a higher price than to the regular customer, I contact our rep for a price adjustment. Doing this adds items to our contract at our pricing agreement. I used to work for Staples and this is relatively easy to do; and I know that the Store Brand items are, in reality, national brands anyway.
2) With Supply orders (HDSupply); I have worked with our maintenance manager in determining what parts and supplies we should standardize on. This allows quantity purchasing. If I can order 1 toilet seat for $15, but if I order a 6 pack of the same toilet seats for $72 (this works out to a price of $12 each); I not only saved $18, we have built in an inventory of them for future use.
3) With contractors for regular ongoing needs (like landscaping, pest control, pool maintenance, etc); I review contracts on a 6 month basis. I get 2 additional bids for the same scope and schedule of work; if I get a lower bid, I go to the current vendor and ask if they can match it. I connect this with asking vendors for updated insurance information.
4) With marketing; I look at whatever I can do for little or no cost. If a particular marketing venue is not working, I discontinue using it.
5) I also tend to favor retention strategies over outreach marketing. If it is only going to cost $1500 to replace a carpet for an existing resident, as opposed to over $2000 to turn PLUS marketing costs for a vacant unit for an indefinite period of time, I am absolutely going to spend the $1500. Yes, I understand that I will need to spend money on outreach marketing; but if I am at 98% occupancy, I am not going to need to spend as much on outreach than if I had 90% occupancy. When I am at 98%, I am going to be very selective about outreach marketing and choose low cost means like Craigslist to fill those vacant units.

"What is your company doing to reduce expenses, and where are you actually investing more in order to improve performance and profits?"

Hi, it's me, Green Landlady. I bet you already know what I'm going to say. . . .

In order to reduce expenses, it helps to know where your money is going. To that end, I strongly recommend that property managers 'benchmark' their properties using Energy Star's FREE software program called Portfolio Manager. This will allow a building manager to measure how much energy and (optionally) water they are using at a property.

I stress benchmarking or measuring because once you know how much you are using, you can then measure how much you are saving via energy efficiency and water conservation measures.

If you have not already done so:

1. Retrofit existing common area fixtures with CFLs or, better yet, LEDs (light emittting diodes). LEDs are expensive but so worth it in terms of reducing electricity consumption.

2. Install aerators in bathrooms AND kitchens plus low flow showerheads in all units.

3. Key all hose spigots. This is your water bill, residents should not have unfettered access to this precious resource.

4. Rethink landscaping. Are you watering during the summer?

5. Laundry room -- go front loader. NOW!

Good luck to you and keep us posted on your progress.
--GreenLandlady

Kimberly Madrigal wrote:

"What is your company doing to reduce expenses, and where are you actually investing more in order to improve performance and profits?"

Hi, it's me, Green Landlady. I bet you already know what I'm going to say. . . .

1. Retrofit existing common area fixtures with CFLs or, better yet, LEDs (light emittting diodes). LEDs are expensive but so worth it in terms of reducing electricity consumption.

5. Laundry room -- go front loader. NOW!

Good luck to you and keep us posted on your progress.
--GreenLandlady

I deleted most of the prior post because I think that many local utility providers may be willing to finance these changes in the form of rebates and other incentives. It is worth investigating. If they are willing to pay you to make these changes, why not let them do so?

I had one other thought that often gets overlooked in the nickel and dime game that is energy efficiency.

Make sure that your on-site or off-site leasing office is doing its part to keep expenses down by turning down thermostats in the winter and keeping the office a bit warmer in the summer. (Often the HVAC systems need to be reset with the seasons.)

Use power strips and shut off machines that are not in use. If a machine has a an LCD display and it is lit, then that machine is using electricity. You might find it easier to use a power cord, so you can shut down several machines at once.

When it comes to saving and spending the number one step has to be measuring. It important to know your numbers and be able to manage expenses according to a plan that goes beyond just cost of good. It has to incorporate the time factors. Factors such as how long does it take to revisit my marketing every month and what is that worth.
More often than not we see spending being cut but potentially creating other long term costs. I think the whole idea of managing expenses by buying more "green" materials is great. The key is to know where to spend in order to save in long term.
It is all about having a plan!

Because it has been mentioned, something to keep in mind when going 'green' is that there may be financial incentives, tax credits, and rebates available to at least partially finance the change; so the effect this would have on your bottom line may be minimal at best. Also, the expenses incurred by changes are one time expenses, where potential savings would be ongoing. I would want to see projected savings after 'green' initiatives are put into place. For example; if I were to change my landscaping for landscaping that does not require as much water (or better, requires none at all), I would want to see how much I would NOT be spending on water to compare against what I am ACTUALLY spending. Recently, I did see an artificial grass that looked and felt real; and was safe around kids and pets. Obviously, since this was artificial, if I had this installed; I would NOT need to irrigate it (saving water expenses), NOR would I need to have landscapers ( cutting at least some of that expense). After the initial expense, these savings are measurable and it would be easy to figure out how many months it would take before the savings would exceed expenses over the current landscaping costs.

Now, if I could remember the name of that grass; I will report later on that becuase I may see it again in the coming week (I should be where it was installed sometime soon).

Great comments and easy ideas to implement.

We have really tightened our belt here as far as unneccessary spending. It's more than just looking to find something on sale or finding the best overall price it's really about training. My maintenance man knows about cost effectivness and he utilizes it every time he works on anything in the property! As we all know, maintenance men love to replace instead of repair, but that needs to stop and it's only going to stop if management gets hands on. Common sense does dictate if something is going to have to be replaced and we do replace things but only if it is COST EFFECTIVE and only after he has given me a good reason as to why it needs to be replaced!

The other way we have saved money is by shopping at the actual store instead of ordering ordering ordering. This will only work if you have maintained and kept great inventory of the products that you use the most. I still order from HDSupply and Wilmar (usually only once a month though) but I do shop every two weeks and my maintenance man knows to have a list ready. I save easily about 30% by just going to the store and not to mention the quality is much better versus the items from the warehouse. I make the time to do this and I don't miss calls because I have the calls transferred to my phone and I never miss appointments. The money we save by being proactive is amazing.

The other cost cutter is I actually clip coupons for cleaning supplies and only buy or order the supplies they actually use. How many of you can walk in your maintenance room and count numerous cleaning chemicals that were never or barely used? What a waste of money! If it works don't fix it!

Speaking of HDsupply etc it only takes 5 minutes to request priority pricing. Within 1 week of starting here I called HD and asked for their best pricing and my rep was at my door with the paperwork. I get the best pricing and no shipping charges. Save save save!

I try to do as much in house as possible. Including landscaping. We experimented last year on edging and mulching because we were unsure if we would do a great job but found out that we are great at it! We saved over 50% by doing it in house and we did a better job. Plus the guys loved the fact that they got to spend the day outside and out of the apartments!

We still spend money on advertising and we have actually increased our advertising budget this year. We are still spending money on large upgrades such as roofs, siding, and redoing our parking lot. But it doesn't hurt so bad because we have saved so much money all around. It's always good to hear from the owner, "I think we have a problem with our account because there is too much money in there!" True story!

Thanks for sharing your cost-saving tips, as well as a note about the places you have actually increased your spending--in advertising and in apartment upgrades. It looks like you are trying to work smarter and pick the "low hanging fruit"--in other words, the easy savings--so that you can reinvest those dollars where thy can actually make money for you in higher occupancies and higher rents.

Chrissy Surprenant wrote:

Speaking of HDsupply etc it only takes 5 minutes to request priority pricing. Within 1 week of starting here I called HD and asked for their best pricing and my rep was at my door with the paperwork. I get the best pricing and no shipping charges. Save save save!

Sometimes, priority pricing is NOT better than what they offer in store (in the case of Staples or HDSupply). In the case of Staples, this is easy to resolve. My last organization had a special web portal that automatically gave 'priority' pricing on many common products. When I placed orders, I had a window with this portal open, and another window opened to Staples.com; which I used to look up items. When I found the item I was looking for, I looked up the item (by SKU or part number) in the other window. Let me give an example:

Staples retractable ball pens, 50 pk (20 black/20 blue/10 red) item number 656534 has a current price on Staples.com of $10.99; but on the portal for priority pricing, I find it for $20. In this case, I contact our rep and ask for a price adjustment for this order (and future orders) to at least the $10.99 price.

I do the same thing with HDSupply. What I learned is this is more difficult because Home Depot is a separate company; however they WILL match prices if the PART/PRODUCT numbers are the same.

That's awesome! We purchase our office supplies from Wal*mart the majority of the time to save money. Who doesn't go to Walmart atleast once a month, right? I do it when I do my normal shopping and submit the receipt to my petty cash. It save a bundle!
I have tried getting the same price though HD Supply as I saw in the store and ran into the same problem that you did with it being two seperate entities. In most cases, from what I have observed, is that unfortunately the product number never matches what they have in the catelog or on-line or the product is not available. I have though never checked home depot online to see if there would be matches... what a great idea and that would save me some time. The other thing that I noticed with HD Supply is there flyers or small catelogs (seems like we get one every other day) has really great pricing in there that you WILL NOT get if you do not give them the source code on the back! I have saved a huge amount on some of their items in there (even better than the store itself). Thanks for the advice!!!

Personally, I am NOT a fan of Walmart; I have never gotten the level of service I expect. I often do not have the time to go shopping; so I do all my purchasing online (and get free delivery). Many companies do not use 'procurement cards' for purchases; so online shopping at Wal-mart is out. In fact, I only go to Wal-mart once every few weeks; and only when I know what I am looking for.

I DO, however, take advantage of any and all promotions thrown our way by HDSupply and Staples.

An idea when shopping locally:

I bought a $2 app for the iPhone called Red Laser that allows you to use an iPhone camera as a barcode scanner (I do not know if it is available for other smart phones or not). The application then looks for the best price for that product locally as well as on the Internet.

Some of the better prices I found using this were more than 30% less than what I thought was a good price.

I was so impressed with the results that I handed the phone to one of my staff members and had her go through our supply room. We had missed the mark on some items we use a lot by a lot.

It really saves a bunch of time too as it does the shopping for you.

All of the local big box home supply stores have account sales reps that will work at getting you their best pricing if your volume is high enough. At Home Depot ask for the Pro Desk sales rep, at Menards ask at the contractor desk. Lowes has a similar person, but we do not do much with them

Home Depot and Menards compete heavily against each other for our business as does Sherwin WIlliams. They come to us, rather than us having to shop them. In fact H-D and Menards both physically check our inventory and make purchase recommendations every other week.

To properly frame this our company spends ~$25k a month between Home Depot, Sherwin Williams and Menards (an upper midwest competitor of H-D) I know some of the smaller managers in our market that are spending $3-5k/month in materials and supplies get similar service, just not quite as good pricing

Wisconsin enacted mandatory carbon monoxide detectors for multi unit buildings that goes into effect tomorrow.. H-D's sales rep was able to get us the hundreds of detectors we needed at about 62% of retail pricing and much lower than Menards or Maintenance USA were able to do.

I shop at local thrift stores weekly. I take one lunch hour per week and go to the Habitat Resale Store and others that I know carry things I might need. I have purchased fence stakes for signs, cabinet knobs, light bulbs,mini blinds, locks, new range hoods, caulk and office supplies. It's definately worth the savings.