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Raising your condo maintenance fees is one of the toughest calls your condo board makes. If you are not working with a property management company, you lack the valuable insight that can actually reduce condo fees. Here are six cost saving opportunities you are missing without the guidance of an experienced property management company.
Opportunity #1: Reducing Overhead By Performing Energy Audits
Property management companies use energy audits to introduce energy saving solutions that reduce operational costs. They understand important energy management details such as power factors and Building Automation Systems. They will introduce the following energy saving opportunities:
- Installing power factor correction devices: Power factor compares the real power used to the actual power supplied to your circuit. Correction devices can reduce your power factor. This is important because if your building has a power factor below 90% you are charged by Hydro One.
- Building Automation Systems (BAS): Building automation systems control your building’s electronic systems to not only improve efficiency, but to also keep units more comfortable for residents. As a result you save on gas and hydro charges as well as complaints from residents.
- Boiler Controllers: Choosing the most effective boiler controller reduces energy and maintenance costs.
- Reducing Air Leakage: A complete inspection of your building envelop including windows, sealants, and over-cladding identifies opportunities to make repairs or replacements that impact overall building energy efficiency and unit comfort.
- Using Variable Speed Drivers (VSD): Using VSDs for HVAC systems increases operating efficiencies by decreasing energy consumption. You use the minimum amount of energy required to power the compressor.
Cost savings can also be found in less cost intense installations or replacements such as installing energy efficient lighting and light bulbs or installing automatic doors with improved seals. Your audit will be specific to your energy consumption so upgrade investments see the highest ROI.
Opportunity #2: Improving Reserve Fund Health By Prioritizing Energy Efficient Upgrades
Property management companies understand the importance of prioritizing upgrades that focus on reduced energy costs. You can save up to 60% in energy costs with energy-efficient projects. Therefore, reserve fund studies should work in hand with energy improvements and put those cost savings back into the fund. Energy savings also allow your property to afford increasing utility rates without increasing maintenance fees. Bundled retrofits become even more effective and optimize your ROI. Proactive improvements that consider climate change such as increased risk for power outages, garage flooding or leaks also help avoid costly damage. This whole building approach avoids costly one off projects and repairs.
Opportunity #3: Using Your Condo Declaration to Identify Ways to Offset Costs
Property management companies take the time to review your condo declaration to spot savings opportunities. It is not uncommon for condo boards to cover costs for repairs that should be paid by the owner. Financial onus is often placed on owners in condo declarations on unexpected costs such as HVAC repairs. Property management companies ensure you adhere to your declaration and the Condo Act, while only paying for costs outlined in your specific declaration.
Opportunity #4: Making the Most of Government Grants
Condo boards often miss out on grant opportunities available through the Ontario and federal government to reduce maintenance fees. Money saved from retrofits puts more savings in your operation and reserve funds.
Opportunity #5: Leveraging Condo Management Company’s Network to Cut Costs
Vetting and negotiating with vendors, contractors and suppliers is a skill property management companies bring to the table. They have a network of trusted suppliers and contractors that can save you money because they buy in bulk. However, their relationships also include banks and insurance companies where you can leverage better interest rates or insurance premiums. Access to better pricing lowers overhead and in turn can reduce condo maintenance fees.
Opportunity #6: Reserve Fund Planning to Maintain a Sustainable Reserve Fund
A healthy reserve fund is the best way to avoid maintenance fees increases and dreaded special assessments. Property management companies use reserve fund planning to avoid underfunding. Reserve fund planning requires an understanding of engineering and building mechanics in hand with financial strategy. Management companies consider three important factors:
- Average Contribution Per Unit: This number is critical to healthy reserve funds. The average condo requires contributions of around $2000 per unit each year while a newer building can be much lower at about $500. The key is matching the contribution to the age and condition of the building so your board avoids one major increase at any given time. Instead, property management companies look at incremental increases, so future owners don’t carry the brunt and current owner fees remain manageable.
- Earning Interest: Using phase-ins/exponential plans don’t earn interest. Interest contributes to your reserve fund health. Property management companies use linear increase plans to reduce undo financial burden on owners, while earning interest. Growth through interest and incremental increases is more likely to allow for fee decreases.
- Introducing 40 or 50 Year Plans: While a minimum 30 year plan is the norm for reserve fund planning, this increases risk for underfunding. Instead, 40- to 50-year plans address the higher cost replacements buildings encounter beyond the 30 year mark. While this might seem like a small detail, a few decades impacts a buildings condition in a major way.
Effective reserve fund plans also look at the specifics of your property including the number of floors, age, and location to reduce risk for underfunding.
Experienced Property Management
The condo experts at CPO Management Inc, a full-service property management company in Toronto and the GTA, looks for opportunities to reduce maintenance fees. They have tremendous success helping condo corporations identify energy inefficiencies, create effective reserve fund planning and develop linear increases that avoid the need for sudden maintenance fee increases. We can implement modifications and strategies which result in cost savings for your corporation. Reach out to us today to learn more about our condo services.