How to Reduce Operating Expenses Without Sacrificing Quality in Multifamily Residential Investing in Chicago

As a property management company specializing in multifamily residential properties in Chicago, we understand the challenges of managing expenses while maintaining high standards for tenants. Operating expenses can quickly add up, but it's crucial to strike the right balance between cutting costs and preserving the quality that keeps your residents satisfied and your buildings in top condition. Here are some strategies we use to reduce operating expenses while ensuring the best outcomes for our clients and residents.

1. Optimize Property Maintenance and Repairs

Routine maintenance is essential for keeping your properties in excellent condition, but inefficiencies in this area can quickly lead to higher costs. One way to reduce maintenance expenses without sacrificing quality is by proactively scheduling preventive maintenance. Regular inspections can help catch minor issues before they become major problems, reducing costly emergency repairs. Additionally, using a reliable network of skilled contractors can often result in better rates and faster service.

Our property management team has established relationships with trusted vendors, ensuring that we get the best pricing for services like HVAC repairs, plumbing, and landscaping. This helps to keep your property in excellent shape while maintaining budget-friendly repair costs.

2. Negotiate Vendor Contracts for Better Pricing

In Chicago, where vendor pricing can vary greatly, negotiating with suppliers and contractors is a key strategy to reduce operating expenses. We regularly review contracts with service providers such as cleaning companies, landscapers, and security services to ensure we’re receiving the best value for our clients. By consolidating service contracts and negotiating bulk discounts, we’re able to secure more competitive rates while maintaining the quality of service that tenants expect.

For landlords, property management companies can also absorb a significant portion of your cashflow. We offer our services for just 5%. While self-managing can be the lowest cost option, it’s important to balance the time allocated to routine maintenance and to other areas of your business. If it makes sense to partner with a trusted property manager, you may end up saving money over time through improved tenant retention, proactive maintenance, more effective rental pricing strategies, and improved reputation.

3. Embrace Technology for Efficiency

Leveraging technology can significantly reduce operational costs. From automated rent collection systems to maintenance tracking and communication apps, technology can streamline processes, reduce administrative overhead, and enhance tenant satisfaction. For example, by using an online portal for rent payments we can eliminate paper costs, reduce late payments, and improve cash flow for your business. It also makes it easier for tenants to pay their rent, communicate with us, and submit requests.

For property management, implementing property management software can help with budgeting, tracking expenses, and improving communication with tenants. By using these tools, we’re able to be more efficient in managing your property and identifying areas where savings can be made. While it may not always make sense to make this investment for a smaller business, you can also explore different vendors to see if this may be a good fit for you if you plan to self-manage.

4. Implement Energy Efficiency Upgrades

In a city like Chicago, energy costs can make up a large portion of operating expenses. Implementing energy-efficient upgrades in your multifamily properties can not only reduce utility bills but also increase the long-term value of your building. From upgrading to LED lighting and installing low-flow plumbing fixtures to investing in energy-efficient HVAC systems, these improvements can save you money on utilities without sacrificing tenant comfort. Tenants also stand to benefit from lower utility bills which can contribute to lower tenant turnover.

Our team frequently works with property owners to identify energy-saving opportunities that are both cost-effective and environmentally friendly. The upfront investment in these upgrades often pays off in lower operating costs and higher tenant retention.

5. Outsource Non-Essential Tasks

Certain tasks may be more cost-effective when outsourced to third-party specialists rather than handled in-house. For example, tasks like marketing, bookkeeping, or even snow removal in Chicago’s harsh winters can often be more affordable when outsourced to experienced professionals. If waking up early on the Monday after the Super Bowl to go shovel snow and salt your sidewalks sounds unappealing, outsourcing may be a good option! Pricing can be on a per removal basis or a flat fee (monthly or for the entirety of winter) depending on your needs.

Our full-service property management offerings include everything from handling tenant communications to coordinating outsourced services efficiently, so you don’t have to worry about juggling multiple vendors. And yes, we’ll even show up the Monday after the Super Bowl to shovel your snow.

6. Maximize Occupancy and Reduce Turnover

One of the biggest operating expenses for multifamily residential properties is vacancy. Minimizing turnover by focusing on tenant retention is essential for keeping operating costs low. By offering a high level of customer service, addressing maintenance issues quickly, and keeping rents competitive for the market, we aim to maintain high occupancy rates and long-term tenants.

We use our knowledge of the Chicago rental market to ensure that your property is always competitively priced and appealing to potential tenants. Keeping your building full reduces vacancy-related expenses like advertising and cleaning between tenants.

7. Foster a Positive Resident Experience

Happy tenants are more likely to renew their leases, which helps reduce turnover-related expenses. By fostering a positive and responsive relationship with tenants, we ensure that your property remains a sought-after place to live. Regular communication, prompt maintenance responses, and attention to tenant needs can go a long way in improving retention and reducing operating costs associated with turnover.

8. Understanding Evolving Regulations and Laws in Chicago

As far as ease of operating, Chicago is not among the easiest for landlords. There are several new regulations that have gone into effect in 2024 and it’s important to stay on top of developing laws and regulations to avoid costly legal disputes and potential reputational damage. While a law degree is not required to run multifamily residential properties in Chicago, it sometimes feels like it is! If this is an area where you feel like you need assistance, working with a trusted real estate attorney or a property management company with real estate attorney relationships could be of use to your business.

Conclusion

At Teton Property Management, we specialize in managing multifamily residential properties across Chicago, providing full-service property management that focuses on reducing operating expenses without compromising the quality of service or tenant satisfaction. By evaluating your property’s expenses, leveraging technology, maintaining proactive maintenance, and optimizing staffing and vendor contracts, we can help you run a more cost-effective operation.

If you're looking for a property management partner who understands the unique challenges of Chicago’s multifamily market, contact us today. We’re here to help you maximize your investment while providing your tenants with the exceptional living experience they deserve.