Every NYC property has profit potential; however, it loses that potential if you are lax when it comes to cost control.
Commercial properties are prone to overspending, and overspending hurts profits. If you own a building in NYC, then reducing maintenance costs, keeping purchases under control, and maintaining cash flow are essential.
Having complete control over your expenses and optimizing your cost structure have become synonymous with proper commercial property management in New York. To assist property owners, Metropolitan Pacific Properties has identified three key areas that should be assessed to help you maximize your investment:
• Energy Bills – You can save a significant amount of money on your high energy bills by having them properly assessed. Companies that save the most money manage suppliers and monitor their bills regularly. Make sure you check for overcharges, errors, new unforeseen charges and verification of bill charges. A property management company can provide all of this and even recommend cost-saving alternatives, such as oil/heat, solar panels or converting to cleaner fuel alternatives.
• It is important for managers to pay close attention to service contracts. These contracts should be renegotiated and reexamined annually to be sure that your vendors are remaining competitive to other industry vendors.
• Supplies – Building superintendents tend to spend more money than necessary when purchasing supplies. Conducting a line-by-line review and audit can help prevent this major money waster. The purpose of this is to closely monitor billing errors and price spikes. The next step is to negotiate with vendors in order to get the best prices possible. You may also want to consider setting spending limits with staff, which can save you even more money.
• Insurance Rates – Your property owners’ insurance coverage should be analyzed in order to determine coverage sufficiency as well as optimal value. This should include comparing rates and checking to see if you are on the right plan.
Hiring a property manager to go through your accounts with a close eye will help you avoid money leaks and ensure your money is being spent wisely. Here are some common questions you should be asking yourself and the next steps to take.
|ISSUE||QUESTION||WORK TO BE PERFORMED|
|Am I overpaying for energy?||Are you using energy efficient energy? Have you reviewed all invoices for accuracy? Do you have a CPA scrutinizing bills?||Monitor energy deliveries and cross compare delivery quantities against amount charged. Review all bills.|
|Is my vendor pricing too high?||When was the last time you reviewed and negotiated vendor contracts?||Negotiate and maintain all third party vendor contracts.|
|Am I paying too much for supplies?||Do you have controls in place to cap expenses and a process to guarantee the best pricing?||Assess pricing models of all vendors and negotiate better pricing.|
|Are my insurance rates reasonable?||Do you know if you are over insured or if you really have the best deal?||Cull through insurance contracts and figure out if you have the right provider and the best rates possible.|
|Am I getting the maximum return on investment for my property?||Is someone knowledgeable, trained and experienced managing your property?||Work with a professional commercial property management company to develop a performance improvement plan.|
Because financial performance and your bottom-line are so closely tied to the quality of your commercial property management company, it is suggested to work with a company that uses in-house CPAs and prioritizes expense management. Otherwise, your property is at risk.
If you need assistance with a challenging or mismanaged property, call Metropolitan Pacific Properties at: (718) 626-4400.