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Why and How to Use Policy to Control Property Management Costs

June 26, 2023

A Policy for Maintenance?

How to get a grip on costs that just seem to evade control?  That’s our topic today.

In 2023, when business turns a little sour, cuts to maintenance are often the easiest, no-brainer response to lowering property management costs. Of course, that impacts residents and HOA members, if it’s applied in willy nilly fashion with no rhyme or reason.

Would it be better to create a policy governing maintenance services, so you can control costs intelligently, understand value generated, and prevent excessive spending?

If there are buildings, apartments or houses you’re likely going to sell when the FED rate drops in one year, then this helps you avoid wasting money on renos or new appliances.

Create Your Own Maintenance Operations Policy

Some small to medium-sized property management firms don’t utilize formal policies, but without one, they fall off the tracks, lose their priorities, repeat mistakes and learn little from their losses. Maintenance expenses weren’t guided by a strategy, analytics, or a preventative maintenance program. And prevention is a powerful word.

Optimizing asset management and serving tenants the way they wish are value-added activities. They contribute to continuous revenues.

Although this isn’t the ultimate maintenance policy guide, more like a summary and a pep talk, the intent is to put you in the driver’s seat so you can confidently prevent budget overspend, draconian cuts to budgets, and use maintenance activities as a driver of ROI. And you may uncover costs you weren’t even aware of.

Are you Streamlining Things that are just Wasting Money?

We, like so many software technology companies speak on automation, streamlining and more, however mindlessly streamlining expenses you could do without isn’t wise. And is cost management more in the what you cut rather than the how you manage?

What if your new maintenance policy forces you to focus on what matters, find expenses that are hurting your bottom line, and help you cut what doesn’t matter for ROI?

Just removing emergency costs alone over a two-year period could make a substantial difference in your rental property ROI. Cost alerts too, can make you pay attention to low-value expenditures (“breakeven is the best we’ll ever do with those units”).  And a policy can help you avoid getting price-gouged by contractors/vendors.

Eliminate Instead of Streamlining

Can you streamline unexpected emergency costs? No, you have to eliminate them. A maintenance expense policy can help prevent emergencies and repetitive calls. Add on smarter decisions from reports and preventive maintenance processes via ManageCasa, and property maintenance suddenly becomes a more respected part of your business.

Property maintenance companies will have a good maintenance policy. It’s applied to materials and parts purchases, inspections, vendor selection, tenant communications, and more.

It’s how they speed up service, prevent work bottlenecks, such as roof repairs, plumbing visits, pest management, water pipes, and HVAC maintenance, especially during high seasons.


“You can’t be amateur on the expense side of business — you have to kick it up a notch to use policy standards, and precise cost attribution using some good analytics tools.”


More Questions

Questions arise when you investigate with a new view of maintenance. Questions are business tools.

Key questions to ask are:

  • are certain properties and types of tenants causing most of your maintenance expense?
  • what’s the cost breakdown of each type of maintenance and repair?
  • overall is your maintenance cost improving?
  • which contractors/vendors have too high cost profiles?
  • which tenants cause the most maintenance and emergency costs?
  • which properties will present the most cost going forward?
  • are contractors playing you to use too expensive parts?
  • which properties will cost too much in the next 5 years and are better to sell?
  • can we upgrade maintenance procedures using digital tools?
  • what maintenance-related qualities make potential new properties worth buying?

Most landlords don’t have the data to answer those questions, which is where Property Management Software comes in handy.

There is no rental property financial software that does it all for you. You just need to get creative and do it yourself using a solution such as ManageCasa.


‘Ultimately, what earns me money is where I want to spend my maintenance dollars. I need to know and monitor the bottom line, LTV of all maintenance expenditures. No more money leaks and I want to be clear as a bell about where I should spend for the future of my business.”


Use ManageCasa to Optimize Maintenance

Within a comprehensive reporting platform (ManageCasa), spending on asset maintenance, parts, materials, labor, services, etc., can be governed by guidelines and alerts, and monitored so that cost overruns never happen. Whatever leads to cost overruns is discovered immediately and forces managers to take a hard look so it never happens again.

How about attacking the sources of your costs with your self-generated policy that makes excessive or unwise spending really difficult? That’s getting control!

Inflation’s Death Grip on Your Budget

Current downward economic conditions with parts shortages, delays, and materials supply issues, high labor costs, high financing costs, and persistent inflation eroding wages, the cost side is creating business pressure for landlords.

Easy profits were the norm for 2022. Yet as rent price growth eases and goes negative in some regions, and as tenant churn and unit turnover costs increase, and inflation persists, managers must get a grip on expenditures.


“It’s the lack of set policy on controlling expenses that leads to constant financial bleeding that erodes both profit and maintenance quality. The worst cost sources must be illuminated.”


Separate the Nice to Have’s from the Must Have’s

For property management companies, their landlord/owners will be asking pointed questions about what they’re spending on. And on whether it’s helping their business’s bottom line and meaningfully serving tenants. The nice to have’s will be separated from the must have’s. On that note, consulting with a professional property accountant and giving them access to your ManageCasa accounting reporting tools will help you establish where money is leaking out.

Accountants love the depth and accuracy that ManageCasa provides. Is there a policy tool that’s custom fit for your use? There may be some apps available, but you can use ManageCasa to fashion your own.

You’ll find more actionable information about the success of your spending priorities and budget allocation via ManageCasa’s professional-level accounting module. You can’t control what you can’t measure. And customizable, in-depth, real-time reporting actually is a vital financial management tool.

The Important Connection between Accounting and Maintenance

There’s a direct connection between cost-effective maintenance and professional level accounting. It helps you and your staff view purchases/costs differently and put the focus back on wisdom and profit.

Many years ago, we discussed preventative maintenance programs as the ideal way to manage assets. Getting ahead on all equipment, building machinery, meet with warranty requirements, mobile digital inspections, prepare for maintenance service, and recording conditions helps you forecast expenditures ahead of time. That’s much better than the “emergency situation” and all the big costs with that route.

What to include in your property maintenance policy and guideline document:

  • establish what your maintenance cost to rent revenue ratio should be
  • set alerts on costs that go above specified limits
  • set a specific percentage limit on maintenance costs for each property, which cannot be overrun except by specific management approval (set expenditures on a monthly basis in supplier/vendor agreements)
  • an automated preventative maintenance strategy with asset IDs recorded with service dates established
  • monthly automated, dedicated reports on maintenance time spent, costs of replacement parts and supplies, cost of transportation, and contractor costs
  • find a vetted, single supplier of parts at lower prices (e.g., volume purchases due to special supplier agreement), refurbished machinery and parts, and have consistency in brands so make it easier for service people. And it makes price gouging or fraud by anyone difficult.
  • one maintenance source with definite limits on expenses
  • electronic purchasing, directly integrated with supplier’s supply system
  • electronic invoice processing and online payments to vendors/suppliers
  • generate a list of alternate service providers and create a new message of efficiency and that you must get costs strictly under control
  • generate reports on all costs, and which properties and tenants are generating the highest costs and lowest ROI — considering selling those properties while prices are high
  • monetize big sources of costs — apply fees, surcharges, and fines to sources of costs to discourage inflation of those costs

After outlining your maintenance and procurement priorities, set a budget limit for all areas, and be forced to make profit-conscious decisions. You’ll certainly be more sensitive to where you’re wasting money on low value projects and that may be where the real ROI is.

With your expenses under policy and tight control, you’re able to monitor costs, and then evaluate your tenant satisfaction and experience and your bottom-line improvement.

More profit, protected key property assets and happy tenants are excellent outcomes.


Find out more about what’s possible using ManageCasa by scheduling a product demo with our sales team.


Property Management Software | Property Maintenance Companies | Cut Property Management Costs | Multifamily Technology Conference | Maintenance Inspections | Building Operations | Operations Handbook | Parking Policy | Property Maintenance Services | Maintenance Adds ValueHighest Property Taxes in US | Importance of Property Maintenance | Property Management Guide | Saas Software

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