In the Portland and Salem metropolitan areas, I am seeing more trends toward decreasing expenses for 2013 other than decreasing repair expenses. In many cases, decreasing repairs costs more in the long run as repairs typically get more costly as time passes. Here are the top 5 trends towards decreasing multi-family expenses for 2013:
1. Property Tax Appeal – While we have seen only a few instances of appealing property taxes in 2012, the owners that have appealed have been successful. Each property has a “Real Market” value and an “Assessed” value which Portland residents can view on their tax bill and on www.portlandmaps.com. If an owner believes their property values is below the values listed on the real market and assessed value, it is a good idea
to appeal. See appeal guidelines here, and I can certainly help collate the data for the appeal process.
2. Water Usage Audit – While only a few owners have been successful reducing their taxes, I helped many more property owners review their water usage with the Portland Water Bureau. Owners can call the Bureau at 503-823-7404 and ask to review the water usage at their properties. The Bureau will tell you how many CCF's are used each month, and you can compare each monthly (especially the same month in prior years) to see if you have a leak or a dramatic increase in usage. Each CCF costs approximately $11 in Multnomah County (including water and sewer), so you can quickly calculate if their is wasted usage and how many dollars are wasted. Best of all, the phone call is free so it is silly not to check at least twice a year.
strong>Property Insurance Audit – The successful investors review their insurance coverage annually with their providers, as there is a HUGE difference between companies (and even individual brokers!) for coverage. One key is to find an insurance broker who specializes in apartment coverage, as their expertise can really help not only to decrease cost but to purchase the most applicable coverage. Often, owners purchase with a low deductible of $1,000 but they will never file a claim with that amount so ask the broker if $5,000 or even $10,000 is more appropriate for the building coverage. We often see Farmers (Lori Stegmann), American Family (Travis Willson) and Country Insurance (Brian Rust) as companies that insure apartments regularly.
4. Management Company Switching – With apartment occupancy up and vacancies and time vacant down, owners are becoming more critical of their property management companies. There are a ton of choices for property managers in the metro area, and choosing the best management company for each specific property is a challenge. We witnessed owners switching property managers (especially below 50 units) more often in 2012 than in any recent year. Some owners sought out companies who manage other properties in the immediate vicinity with hopes they have a higher level
of expertise for that specific sub-market.
The keys for many investors on choosing a manager: how does the management company charge on repairs? Who does the lease up? Also, marketing is factoring in more than ever.
5. Create Property Website/blog – While many owners hire property managers to advertise, some individual owners are creating their own blog/website for advertising. Since vacancy rates are down, it is difficult to see if creating a blog is beneficial to renting up a building, but the owners that have
created their own site seem to be obtaining substantially higher rents. This trend is fairly new, and I expect it to occur more and more as tenants are searching more on the internet for apartments. With a site, tenants can see more photos, read about the property and owner's philosophy, and learn more about the property prior to viewing.