The Problem
Most property management companies that manage exclusively multifamily properties (apartment buildings) pass-through their staff cost to the property owners they represent.
When they lose a big account, they have 2 options;
Lay off that staff member (a major loss for the company).
Recalculate salary allocations across the remaining properties.
This results in apartment owners seeing an unnecessary increase in labor. At Sleep Sound we call this “salary creep”.
Are Labor Increases Bad?
No, labor increases are legitimate. Common reasons for labor to increase include; but are not limited to;
Market rates increase as a result of expected inflation.
The property requires more attention and therefore more labor is allocated to it.
The quality of the manager improves e.g. a more experienced manager is hired or promoted to the property.
Solution for Safeguarding Your NOI (Net Operating Income)
Review your building budget and ask questions. Determine if these are legitimate increases e.g. investments in your building’s performance, or if your property management company is using you to subsidize their losses elsewhere.
If you are worried about being overcharged by your property manager, or the numbers in your budget seem off, we invite you to contact us and we will happily review your financial statements with you.
