“Fixed” Expenses that Might Be Reduced
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We know that, in life, two things you can always count on are death and taxes. But did you know that the third thing you can always count on? Your co-op or condo building’s maintenance fees regularly increasing. With rising service costs and living expenses, the problem can seem inevitable, especially when the board and their property management firm insists these costs are fixed.
After helping many buildings throughout New York City, we have learned that these costs are not necessarily set in stone. Evaluate the following “fixed” expenses to leave no stone unturned:
Vendors: When the building has an electrical issue, who does the board call? What about an elevator upgrade? If the first call is the one to come, without comparison or negotiation, you’re doing it wrong. The best way to save money on vendors and ensure high-quality work is by evaluating multiple bids, negotiating with vendors, and building a relationship. Don’t rush to schedule the first contractor on Yelp or that is suggested by the property management firm; for large projects, reach out to multiple vendors for pricing. Once you narrow it down to 2-3 high-quality, cost-effective contractors, it’s time to negotiate your pricing. And don’t repeat the process next time: if you’re happy with the work, return to the vendor and work on building a relationship. Your building is more likely to get better deals and better work that way.
Taxes: Taxes are a significant fixed expense, especially for cooperative buildings, but did you know that your tax bill isn’t necessarily what you are obligated to pay? A Tax Certiorari can petition the city’s original claim, and often save tens or even hundreds of thousands of dollars. Even better, they only charge a percentage of savings, so there is no risk involved (sound familiar?). Buildings with a ground floor commercial space should also evaluate the type of lease - a “triple net” is most common and puts the responsibility of property taxes on the tenant. Why pay more than what you have to?
Overtime: A simple scheduling switch may help save you money in your staffing budget. Doormen, security guards, and site supers who work on hourly schedules earn overtime (1.5x their usual rate) after a certain number of hours worked. To avoid exacerbating your employees’ overtime, be intentional about scheduling shifts. A board committee or point person could be in charge of reviewing schedules and calculating any overtime.
Utilities: 2020 was New York City’s hottest summer yet and 2021 might beat it. This means Air Conditioning units will be on blast everywhere, exhausting the co-op or condo building’s electricity usage. Investing in energy-efficient solutions can seem expensive up-front but will pay for itself and create savings for years.
Expert Advice on Expenses: If your apartment’s co-op or condo building maintenance fees need a check-up, tell the board to talk to The Folson Group. We are the only contingency-based building consultants in New York and save your board money in creative ways.