Property Management: Sams Club Syndrome

Property Management: Sams Club Syndrome
As property managers we are directing the spending of significant dollars every day. Products we use in property management daily are common to have on hand. However, there is a carry-cost with having too much inventory.

Sam's Club is a great place to buy in bulk. But let's face it; most of us do not need three mega-jars of Ragu sauce at one time. The same is true for supplies inventory at the property level. Whereas cleaning supplies are a necessity, procurement of 55 gallon drums of Simple Green is over the top.

Just enough, good. Too much, bad

Its important to have inventory on hand, but not so extensive that shrinkage (stealing), spoilage (loss of use) or functional obsolescence becomes an expense category. Eliminating all three can increase NOI without raising rents or reducing service levels.

Example: a unit sustains water damage. The low-man in maintenance is in charge and order's drywall- enough to do a small house. In a miracle of engineering, it takes 55 sheets of drywall to repair two walls. And "low-man" trucks off just enough to finish his garage or basement at home. Thus, while "low-man" is in charge of the job, YOU are in charge of the property... this one's on you.

At the property level, from a bookkeeping perspective, in your minds eye separate Cap ex from regular maintenance from turnover expenditures. Although we order material and supplies for each of these categories, where can we find savings? The line gets gray sometimes if supplies for all three categories are ordered from the same suppliers. Divide and conquer(!) these categories.

The American industrial revolution produced more goods in less time than any other period in history. Part of the evolution of production included delivery of raw materials "Just in Time" for production literally eliminating the need for inventory.

The best we can do is learn from our mistakes. Protecting the property, delivering revenue and costs containment is a focal point our responsibilities.

About This Blog
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit:

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