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How to Improve Your Operating Expenditure (OpEx) in an Inflationary World



With costs rising across the board, now has become an opportune time to sit down and evaluate improvements on a side of our investment properties that may not always get the attention it deserves - Operating Expenditure (or OpEx for short).


As opposed to making improvements through Capital Expenditure (CapEx) like updating or remodeling, there are many ways to make OpEx improvements that will both increase your return on investment and increase the value of your investment in the event of a sale.


If you don’t do so already, it’s important to track your OpEx each year to be sure you’re taking the proper tax deductions on your rental income. It also gives you a quick and easy guide to identify areas that could use improvement! While OpEx can be any number of costs, they typically fall into the following categories:


 
  • Marketing and Advertising – This is anything from online ads to the “for rent” sign you buy at the store

 
  • Tenant Screening – Fees you pay to run background checks and credit checks on prospective tenants

 
  • Leasing or Property Management Fees – If you use a property manager, include all of their fees in your OpEx

 
  • Repairs and Maintenance – Big or small. Include any rent deductions given to tenants for repairs

 
  • Landscaping and Pest Control – Don’t forget snow removal if provided

 
  • Utilities – Only utilities that you cover and aren’t billed to tenants

 
  • Insurance – Easy to miss when it is part of your monthly mortgage payment

 
  • Property Taxes – Spicy topic these days

 
  • HOA Fees – If your property is in an HOA, participate as much as you can

 
  • Professional Services – This includes fees paid attorneys, accountants (or tax software) and even a financial planner.

 

As you can see – there are likely dozens of ways that your OpEx could be improved!


To put it into perspective, you can equate each dollar you save in OpEx to raising rent by that same amount. So, if you save yourself $100/month in OpEx, it’s just like raising rent by $100/month. Only this way, you don’t have to worry about losing a tenant.


So far this year, I’ve been able to improve the OpEx on my own properties with savings that average about $200 per month. Each property and each situation will be different, so if you need some ideas give me a call or shoot me an email and we can get a personalized look at what might work for you!


I’ve also built a very helpful and easy to use spreadsheet to help you track your investment and visualize how these and other improvements can enhance your ROI and raise the overall value of your property. Call or email for a copy or simply follow the link and fill out the form to download!




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