Deciding whether to employ a third-party company to take care of your maintenance, cleaning, pest control, or landscaping is often a daunting task. The prices can be steep, especially for larger facilities, and selecting the right one can easily become a confusing mess. While review sites such as Angie’s List or even plain old Google reviews can help determine how reliable a particular vendor is, you still have to figure out whether the cost is within your budget.

In this article, I will examine some of the hidden and not-so-hidden savings that hiring a third-party company can bring. The examples I use will largely reference maintenance companies, but the same ideas hold true for cleaning, pest control, and landscaping services, as well as any other tasks that can be outsourced.

Supplies and Parts

Take a look at your existing budget for cleaning and maintenance supplies. How much do you spend on parts for broken rolling doors, dollies, your HVAC system, and the like? How much do you spend on buying or renting equipment to make such repairs? And, most importantly, by how much can you cut that part of your budget by hiring a third-party vendor?

A third-party vendor is not an expense you make in addition to your existing budget; it is an expense you make in place of certain sections of your existing budget. Let’s say you hire a maintenance company for $400 per month, allowing you to cut your maintenance supplies budget by $50. You’ll still want some supplies on hand for the really small or really urgent repairs, but you can cut back quite a bit.

Let’s put that into a table.

Save money by cutting your supplies budget

We’ll add to the table as we find more savings and new revenue. Right now, we’re losing $350 every month by switching to a third-party vendor, but fortunately, cutting back on maintenance supplies is not the only way you can save money.

Free Up Your Manager’s Time

Maintenance takes time – your manager’s time. What else could your manager be doing instead of making repairs around the property?

Handling Leads

One of the nicest benefits of third-party vendors is that they allow your manager to stay in the office and answer phone calls. Let’s say that in an entire month, your manager misses eight phone calls from potential customers because he or she is out making various small repairs. The leads don’t leave a message or call back – they simply move on to the next storage facility from the phone book or search engine results page.

Those are potential tenants that just walked out of your life forever. Of course, not all of them would immediately rent from you. Perhaps only four would actually stop in for a tour, and only one of those actually ends up renting from your facility. That’s still another customer you let walk away because your manager’s time was occupied elsewhere.

Let’s assume this renter only rents a 5’x5’ unit, your smallest and cheapest space at $50 per month. That’s another $50 every month that didn’t exist before you hired your maintenance company. Adding it to our table, we have:

Save money by attracting new leads

We’re still down $300, but there are more savings to be found.

Tenant Management

When your manager is busy making repairs to your facility, he or she has less time to devote to important tenant management procedures, such as collecting bills. Because there’s a large repair project looming, she races through some of the delinquent accounts and misses a couple of alternative contacts she could have called or emailed. As a result, she doesn’t get a hold of the tenants with overdue accounts, and that money is lost until either the customer pays or the unit goes to auction.

Let’s say this customer rents a 10’x10’ unit for $100. That’s another $100 this month (and hopefully the following months, although maybe the tenant is a repeat offender), adding to our total savings.

Save money by better managing tenants

We haven’t broken even yet, but we’re getting closer, and our manager has other opportunities to make better use of his or her time.

Customer Service

Customer service is always important. When your manager is out and about making repairs to your facility, he or she is not available to field customer complaints or concerns. As with leads, he or she may miss phone calls or drop-ins and generally has less time to devote to making the customer happy.

If even one tenant stays with you because of the increased amount of time and attention spent on customer service, you could be well on your way to making up the balance on the cost of your third-party maintenance company. Let’s say this tenant rents an RV space for $150 per month.

Save money with customer service

Now you’re not far away from turning a profit, and there’s an easy way to push you into the black.

Revenue Management

With a new feature – professional maintenance – you can justifiably raise rent on current or future tenants. It doesn’t have to be a big increase. For example, you can start out by targeting your twenty 5’x5’ units. You raise the rent from $50 to $55 per month. That’s $100 in added income each month. When we put that into our table, we see we’re finally making some money:

Save money by raising rent

And that’s only when we raise rent on the 5’x5’ units. If we roll out our price increase to all of our tenants, the earnings will grow accordingly.

Is It Right for Me?

These numbers are, of course, very simplified and might not accurately reflect your individual situation. Running your own numbers, you might find your manager already spends very little time out of the office, making for a smaller potential return from lead management, tenant management, and customer service. On the other hand, maybe you were already planning a price increase and the addition of professional maintenance will serve to bolster your new rates.

It can also be difficult to know beforehand how much added revenue you’ll receive by freeing up your manager’s time. Logging how much time he or she spends out of the office is essential. Compare that with the number of calls from new leads each day, and you can estimate how many are missed when the manager is out cleaning or repairing.

For example, if your manager spends about eight hours in an entire month performing repairs, he or she will miss a whole day’s worth of phone calls. But how many of those phone calls would turn into actual tenants? Look at the average lead-to-tenant ratio to see how many potential tenants your manager is missing out on each month.

Gauging the benefit of better customer service is even harder. Would Tenant A have stayed if your manager had been able to devote a little extra time to solving whatever was at issue? Here the only surefire measure seems to be comparing the move-out rates from before and after hiring a third-party vendor. If fewer people move out after hiring a maintenance company, then it seems your manager’s increased time for customer service has paid off. If you can find a company that offers a short trial period or doesn’t require long-term contracts, this might be a great chance to test the waters.

You might find other ways that hiring a third-party vendor saves you money. Or maybe none of these savings will add up to very much. What’s important is making the right decision for you and your facility. There are opportunities everywhere to maximize your profits, and third-party maintenance might or might not be a step in the right direction. Only you can make the call.