Landlords often only rely on increases in the marketplace as a way to increase profits. But like any other business operation, profits can also be increased by reducing costs.
I’m not talking about being cheap here (buying the cheapest furniture, employing a painter at £10 an hour etc). Being stringent in these areas often end up as a false economy (eg, the cheap furniture item will need replacing within a year or less; or the £10 paint job will deter quality tenants and will need repainting by someone more skilled).
There are other, smarter ways to reduce costs, whilst still providing top quality accommodation and services to your tenants.
Here’s some tips for you based on our experience:
1. Keep on top of maintenance issues
There are a number of benefits to keeping up with maintenance. Most importantly, your tenants will feel respected, and so in turn, they will treat your property with respect, and they will be happy and recommend you to their friends. Keeping the property well maintained also attracts higher paying tenants, and preserves or even improves the value of your property.
2. Install LED bulbs everywhere.
Initially, they are a more expensive bulb to buy, but LED bulbs last much longer whilst using less energy. Balanced out, it saves you money in the longer term to switch to LED.
3. Install sensor lights in the hallways
Another energy saving tip. Best installed at the outset or during a refurb, halogen size, recessed fittings can be bought for less than £15 each.
4. Change utility suppliers.
The first time we did this across our portfolio, the annual savings was an astounding £3400. You can imagine how excited we were at the savings, but at the same time, how annoyed we were at the amount we’d been wasting over the previous years.
The discounted rates utility suppliers can offer vary for each region, so if you have properties in a number of different locations, be sure to check the best available deal for the specific postcode of each property.
5. Negotiate contract rates annually
It’s not just a change of utility supplier that can bring savings – negotiate your boiler’s breakdown service contract rates, negotiate the rebuild cost of the house for insurance purposes, negotiate your bank fees, your internet package…
A lot of these rates automatically increase each year, but can be easily brought back down to the original rate (or less) with a simple phone call.
While you’re in the negotiating mood, you may as well call your credit card supplier and negotiate those rates down too.
6. Install a TimeOStat thermostat & timer.
The TimeOStat is a genius invention by a fellow HMO landlord. It’s an easy to use tenant operated thermostat that cuts the heating off when a countdown timer runs out. This gives the power to the tenants to control their comfort levels in their home, but ensures heating is switched off when everyone is asleep or out at work or play.
We first tested a TimeOStat in a 4-storey, 7 bed HMO and found the power bill to be £50 cheaper each month in comparison to a similar 4-storey 6 bed HMO down the road.