Optimize Your Purchasing Program for Your Company
Optimize Residential Real Estate Property Management With the Right Maintenance Purchasing Strategy
5 MIN. READ
Revenue is king - the hallmark of residential real estate property management. But an optimized purchasing strategy should be queen.
Creating new streams of revenue, maximizing current income and cutting costs are what most property managers are concerned with. Indeed, the ever-present need to increase NOI is what the best residential property management companies focus on.
In this quest to drive revenue and increase profits, you need to implement successful strategies to achieve company goals. Often overlooked is fine-tuning and optimizing a comprehensive purchasing strategy. When executed properly, the right purchasing strategy can transform a mediocre or struggling portfolio into a successful one, without increased occupancy or rates. This is where Raiven Marketplace, a leading purchasing and procurement platform, comes in with a variety of tools to support you.
Where do you start?
As a property manager, take the time to evaluate your current purchasing strategy. Go in-depth and understand your procurement program from top to bottom:
Do you have transparency at all levels of your supply chain?
Have you negotiated the best discounts with your suppliers?
Are you familiar will the key employees on your buying team?
Analyzing these areas will help launch your company to a different level.
Procurement management is your overall purchasing approach for your business. It involves all levels from research to the acquisition of the materials, goods and services for your company. Optimizing your purchasing program will lead to smooth operations for your multifamily portfolio.
Who buys for you?
To fine-tune your strategy, you need to work closely with the people who are at the root of the process. In many residential management companies, 1-2 individuals are the purchasers. Normally, the requestors are administrative personnel or the lead maintenance manager.
Lead maintenance manager. Your maintenance team members are the most intimate with the supplies and products that your property needs. They instantly know which filters are needed for your HVAC units and which power tools are of the best quality. They are the ones with the hands-on experience, so their judgment and input are crucial. However, they may not always know what the best prices are or which suppliers are within your network, which can lead to overspending.
Office manager. The office manager or other administrative personnel may not have hands-on experience with all types of supplies, but they usually know the approved vendors to purchase from, and they are more connected to the pricing and terms associated with each product.
Hybrid approach. You can get the best of both worlds when you utilize both the maintenance tech team and the administrative team. Have the maintenance manager recommend the right products, and then the office team will place the order from the approved suppliers.
Understanding the mindset and motivations of each team and utilizing each to your advantage will streamline your business and ultimately save you money.
How flexible is your team?
The last thing you want to do is slow your team down when they are managing your multi-family portfolio. Your job is to set them up with the right framework and tools, and then get out of their way. Trust that they will utilize the training and software that you have implemented and will make the right decisions when purchasing.
To help establish a flexible process that enables your team to work efficiently and independently, be sure your framework:
- Institutes purchasing authorization levels. There should be tiers in your purchasing strategy. You should have strict buying parameters that will control spending but also allow the teams to get their jobs done. For example, having a $750 limit for your lead maintenance tech and $250 for the rest of the team will ensure that they can get the tools and items they need but not go overboard on spending.
- Channels purchases through an authorizedpurchasing program. Fortunately, optimizing your purchasing program does not have to be difficult or cumbersome. Raiven's multi-family purchasing program allows you to leverage their buying power, outsource supplier contract negotiations and gain visibility into property spending to drive efficiency and lower expenses.
Raiven Marketplace works by aggregating your suppliers and contractors into an online platform to eliminate rogue spending and streamline operations. This allows for complete transparency at all levels. Your buying team will know exactly where they can shop and what suppliers they should buy from, all from a universal shopping cart.
Even if they forget or innocently try to purchase from unapproved sites, Raiven's browser extension will pop up and show them the same or similar products that they can purchase instantly from approved suppliers.
The right purchasing strategy eliminates waste
As you zoom in on your residential real estate property management purchasing habits, you will want to ensure compliance when buying and encourage your team to reduce waste or excessive spending. Here are a few strategies to help you do so:
- Set limits for product lines. You can set up usage limits and parameters per month or per quarter. So, you can pinpoint how much you will need, down to the last filter or faucet.
- Complete inventory audits to help reduce waste.Carefully auditing your inventory will keep you intimately close with your supply status. You will know what you need, what you already have and when the next order can occur.
- Run purchase analyses to identify rogue purchases. The ability to run reports that show where every dollar is spent is invaluable. It allows you to identify rogue purchases and helps you put an end to them in the future. This creates transparency and allows all team members to see the impact they have on the bottom line.
Optimize and grow your residential real estate property management company
Implementing Raiven's purchasing and procurement program will help you gain the visibility and control you need to decrease waste and verify a purchasing strategy that keeps costs in line. With an established framework that promotes compliance and transparency, you can rely on your strategy to support NOI and future growth. To learn more about how Raiven can help you, contact us today.