Group discount buying is employed by many different businesses to create a win-win scenario for the customer and service provider. Go to a Phillies baseball game with a group of 50 people -- fans get a 15% discount and your own usher to make your game experience as special as possible. The Phillies are thrilled because they now have 50 more fans in the stadium for the game.
At SlateHouse Group, we have started implementing the same group buying business principles for our owners to save them money on maintenance. We are able to save owners 10-20% a year on maintenance through making use of our scaled maintenance operations, which is a huge savings each year. Here are some examples of tactics we are employing at SlateHouse Group:
Buying parts in bulk: There is a huge opportunity to save money by buying parts in bulk. The obvious example is the discount that Home Depot gives us for buying parts at scale from them. But the more interesting discount is that we save precious maintenance time by storing the parts in storage units in each city we operate. By keeping the parts locally in a unit, it saves countless hours of time from our maintenance team --- that in turn saves owners money.
Full-time laborer: When turning over a unit, a significant amount of the work that needs to get done requires low skill, but is highly time consuming. For example, evictions often lead to a large amount of things that need to be cleaned out of the house which takes a lot of time for the maintenance team. A full time laborer saves a ton of time on these low skills tasks -- rather than using the same maintenance person to do everything. The other advantage of full time laborers is that you don’t need to wait 3 weeks to get on their schedule…. Which could cost you hundreds of dollars in missed rent from a house that isn’t rent ready.
Full-time Specialized maintenance: Let’s say you have a simple plumbing issue to be fixed, a leaky sink just for an example, that takes an hour to fix. If you call a local plumber, the first issue is it might take the plumber a week to get over to fix the issue -- while the leaking potentially damages other parts of the house. Once the plumber does get over to fix the issue -- they may charge a $100 house visit fee, followed by $45 - $65 per hour of labor at a minimum of 2 hours. So your simple leaky faucet ends up costing $300, plus the lost rent. At SlateHouse Group --- that same issue should cost $50! These savings add up across roofers, electricians, plumbers, etc.
- Network of Preferred Contractors: When we sub out specialized jobs for a new furnace or a new roof we get special rates from local contractors. We get preferred rates because of the volume of work we give the contractors. We also get top notch performance/results because they want to keep our business. We don’t mark up any of these jobs. You’ll see a copy of the invoice they send us. We bill you the exact price on the invoice.
Even if you aren't using SlateHouse Group there are ways an investor can use this concept on a smaller scale to help minimize expenses. Start by trying to buy in bulk and use a smaller sized contractor who appreciates your repeated business.