How to Maintain a Rental Property on a Tight Budget

As a property manager, you probably don’t like to hear the words, “No, we don’t have enough money in the budget.” This is especially true when the rental property you manage needs major repairs or updates. It can be difficult to raise rents, sign leases, or retain resident satisfaction if you cannot even afford the rental property maintenance.

Don’t worry, you’re not alone and there are solutions out there! In this article we provide you with 5 tips to maintain your property when funds are tight.

Not every property manager has control over their budget, but for those that do, you have a big opportunity to determine where you need to spend money vs. where you want to spend money.

Sure, it would be nice to add an upgrade like a state-of-the-art fitness center, but you must address your leaking roof first. If you have to choose between one or the other when creating your budget, go with the necessary repair costs. Your residents would much rather drive to a local gym than deal with constant ceiling leaks.

Budgets typically go through an approval process with corporate managers, property owners, or real estate investors for your property. They will often give you a range in which you need to stay within for a budget to be approved. In other cases, they will tell you to allocate the amount you feel you need for each line item, and they will either approve it or ask for edits. If you do not have any cap for how much you can request, the best way to estimate a range is to collect bids for projects you know you need to budget for, and to review your previous year’s budget to see where you may have under or overspent.

Even if you do not set your budget, you are still responsible for communicating what the property needs. As a property manager, you will know best what areas your property is suffering, and it’s your job to advocate for those repairs in your maintenance budget.

When working with a limited budget, there may be times you would like to spend money in an area that is not accounted for in the budget. That doesn’t mean you need to pump the brakes on an exciting new idea — but you may need to find the money for it elsewhere.

For example, you believe that adding a new coffee bar in your clubhouse would really improve the resident experience, but you don’t have enough in the budget to make it happen. You review your spending and find areas where you can scale back service without diminishing the resident experience, allowing the money you save to be spent on the new coffee bar. Let’s say you have $100 a month budgeted for office supplies, but you only really need $50. You can take the additional $50 you are saving on office supplies and move that money to your coffee bar budget.

You may also even be able to renegotiate the terms of existing contracts with service providers that you feel are not as beneficial and do not need as much spending. For example, you are currently spending $160 monthly for a company to deliver business essentials such as uniforms, toilet paper, and paper towels, but you don’t need their service as often or as much product. You may be able to adjust your contract so that they bring you less items, bringing your costs down. Just don’t skimp on investing in necessary renovations, upkeep, or maintenance expenses.

It’s easy to stick with a familiar vendor, but you may be missing out on better deals. Whenever you need to renew a contract or hire a contractor, always collect quotes from several different companies so you can compare costs or leverage the competition.

Training staff to complete specialized tasks so that you do not have to outsource the work can drastically reduce cost. For example, paying the one-time fee for your maintenance manager to be a Certified Pool Operator is going to be much more cost effective than hiring a third-party pool company. Handling minor repairs and regular maintenance tasks yourself, like small roof repairs or fixing leaky faucets, allows you to retain more of your budget for larger and unexpected repairs, like entire roof replacements. Other costly repairs that you may not be expecting can include: roofs, HVAC (such as air conditioning, water heaters, and heat), building or apartment plumbing, or electrical issues. If you are able to avoid having to call a vendor for smaller routine maintenance issues, such as minor plumbing clogs, appliance repairs, gutter cleaning, or even issues like window replacements, can free up money to go towards those larger-ticket items.

It’s important to use caution when determining what should be handled by on-site staff and when you should call in the experts, despite the cost associated. For example, there are certain HVAC system repairs that legally require a certified contractor who operates under a contractor license to complete repairs. Make sure you do diligent research, search for local or online training courses, and provide your staff with the proper tools and equipment if you are planning to complete maintenance requests in house.

Having a strategic plan for net effective rent growth, which refers to the percentage your rent prices increase each year, can help you provide more money for your budget. However, it’s essential you do plenty of market research before raising your prices. You do not want to out-price competing apartments in your area, nor do you want to hike up the price so high that it upsets your renters and makes signing or renewing leases more difficult.

There are other strategies besides drastic rent increases that you can use to increase profitability:

Maintaining your rental property on a small budget doesn’t mean cutting corners. It’s about being smart with your spending, maximizing your cash flow, and finding savings where you can. By using our tips, you can manage your property effectively, even with a small budget.