Three Ways Landlords Can Cut Operating Costs on Rental Properties

December 8, 2021
Three Ways Landlords Can Cut Operating Costs on Rental Properties

What are the best ways landlords can reduce operating costs for rental properties?

How can landlords cut operating costs on rental properties? On average, landlords should estimate annual maintenance costs at 12%-15% of the rent.  As a landlord, when you are able to bring your maintenance costs down properly, you will be able to set a competitive rent price that will allow you to yield the best return possible. How can landlords reduce their operating costs?

If you’ve ever bought an older home, you know very well that those homes usually have not been upgraded in quite some time. For some properties, it’s been decades. This may mean that the original wiring is still there without any grounding, water line issues with the galvanized pipes and low water pressure, drain lines that lead to rusted cast iron, and more… If reading that hasn’t already alerted you to the high maintenance costs, then I’d like to reiterate that it will be expensive to maintain these types of properties. 

Most investors wouldn’t consider replacing these things outright, instead they’ll just do minor fixes. If you have had an opportunity to own an older home, you might have noticed that you’ve paid more to repair something multiple times than you would have if you had replaced it in the first place. The most important upgrades would be to upgrade heating and cooling systems, wiring and plumbing. It will save you a lot of headaches, otherwise, selling the old properties will be a better direction for you. 

Cut Operating Costs by Saying, “No,” to Unreasonable Maintenance

how to cut operating costs on rental properties

It’s one thing to be a good landlord, it’s another to be a doormat for your tenants. Just because your tenant has your number, it doesn’t mean they own you.

Sometimes, you will have tenants who will call to complain about everything and anything they can. They will call you endlessly about small things and demand immediate attention. When requests are reasonable, I recommend handling it. Especially when they are issues that might avalanche into bigger and more costly repairs. 

However, when they are normal wear and tear or if it is damage done by the tenant themselves, it’s best to put your foot down and say no. For example, if you rent a property with new windows and your tenant comes to you to have you replace the window because they broke it. You can say no and that they’d be responsible for the repair. If there are unreasonable maintenance requests, you can certainly say no and save yourself from unnecessary repairs.

Cut Operating Costs by Not Deferring Maintenance 

Unfortunately, some tenants will not care for the property as well as you would like. It’s not theirs, they don’t have a sense of ownership, and even if they did, they may not have the skills required for proper maintenance. So you can’t rely on them to take care of your property the same way you would. Therefore, it’s going to be important to check in on your property or your tenants to see if there are any issues you need to be made aware of. 

For example, if your sink is leaking, it will definitely ruin your cabinets. If your floor has any wooden components, then your floor will also be ruined. This is the cost of deferring maintenance on simple fixes.

If you’re already using all these strategies, then you’re ahead of the game and are probably looking for more investment opportunities. Grow your real estate portfolio, learn more about our investor kit. If you aren’t utilizing these strategies, then it’s time you did so you can start increasing your cashflow. 

Marko Rubel
Marko Rubel is a bestselling author, self-made millionaire, and master real estate investor. He immigrated to the U.S. from Croatia as a champion boxer in his 20s without speaking English and having little money.  He has been named a real estate expert by the National Real Estate Investing Association that represents over 40,000 investors nationwide. After years of trial and error in wholesaling and rehabbing, he created his own strategies. He is now considered one of America’s leading real estate experts— helping others on their real estate investing journey.