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Feb 19, 2020

Dylan and Mike discuss operating expenses and the future risks of each

Key Information:

Management Fee= % of Income the property management in. Verify if other fees are included

Repairs & Maintenance are recurring maintenance such as turn costs, touchup costs,  etc

R&M should be increasing at the rate as the Consumer Price Index (CPI) due to material costs

General & Admin (G&A) includes office expenses, computers, technology, golf carts

G&A will increase due to your management’s view on technology moving forward

Contract Services include trash, landscaping, pest control, and other services

Contract services will increase due to increasing wages 

Marketing Costs have shifted from being physical ads to technology

Payroll includes salary, benefits, turnover costs, and continuing education

Payroll will continue to increase because labor markets are continuing to be more competitive

Utilities include water, electric, and gas for office, common areas, and vacant units

Natural resources continue to increase in prices and you have to build a buffer just in case 

Property Tax increase on the front end when you purchase a property due to the assessed value is increasing to the market

Property tax can also increase due to mill rates increasing

Insurance has been increasing substantially from last year due to more claims being created

Expert Pro Tip: Befriend property management companies


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