Posts Tagged ‘increasing cash flow’

Often we come across properties that have expenses that can be trimmed down.  That is by removing the expenses or changing providers, a duplex/property owner can realize hundreds of dollars more net income per month.
For example, a fourplex in north Austin had the garbage service paid for by the owner.  The owner was paying for garbage service for 4 units and therefore 4 trash can receptacles each month.   Each trash can cost about $22 month x 4 = $88 month.  That doesn’t include taxes and related city fees.  We cancelled that 3rd party private service and switched to the city of Austin garbage.  As each lease ended, we started new lease terms of the tenant paying for their own garbage service.  Within a year or so, the owner quite paying for garbage service 100% and now the tenants pay for their garbage service.
Another area of reducing expenses is water service.  Some fourplexes and even duplexes have a single water meter.  While this help cut expenses at construction time due to less plumbing materials and less labor to construct, it creates a long term problem:  Does the owner/landlord just keep paying the water bill or how to bill the tenants back?  Some owners have been simply paying for the water bill for years.
In the Austin area, tenants expect to pay for their own utilities.  Paying for water really is an unnecessary expense for the owners.  I recommend creating a water chargeback agreement in the lease.  That is either prorate the water bill each month based on number of occupants or similar.  Or figure a flat fee to charge with a variable contingency.  Note that prorating the bill each month can create some overhead and be a hassle.  A flat fee is easier to administer but can have more discrepancy on water use in relation to charge.  By switching owner paid water to tenant paid water, a landlord can save $80 to $175+ per month.
There are even more areas to reduce expense:  let’s discuss lawn care, repair deductibles, home warranty services, to name a few and other options next.
Thanks for reading.
Hong Lee
The DuplexDianne.com team

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