Group Buying Platform

What is Group Buying for Property Management?

Now that you have assembled a real estate empire with steady cash flow, it’s time to take a look at how things are operated in the portfolio or Group Buying Platform. Maintenance and upkeep are a day to day activity at any property, no matter the size or location. Whether it’s turning a unit, treating a pool, or repainting the curbs, facility managers are buying apartment supplies on a regular basis.

As a savvy property manager, you realize that your portfolio of multifamily buildings buys a lot of stuff every week to maintain and enhance curb appeal. Logically you think that if you are buying a lot of stuff from the same stores or vendors, then you should be receiving price breaks for your volume. With your portfolio buying power in your briefcase, you meet with the stores and vendors to negotiate better prices.

What happens next may surprise you.

The vendors are definitely eager to earn your business, and they are definitely eager for margin (aka profit). If they are going to grant lower prices, they may request a variety of conditions including:

  • yearly spend minimums for the company
  • lengthy contracts to ensure more business
  • specific core product lists to limit deep discounts
  • terms of payment and late penalties

After your first meeting, you return to the office with a headache. You realize that negotiating this vendor contract is going to take time and involve additional internal and external resources. On your drive home that night, you begin to think about the different vendors where your maintenance staff goes to buy products. That’s when it hits you…”How will we get through the negotiating process with all the suppliers? Do we have the time and resources to do this? And are the savings going to be worth it?”

There has to be a better way.

The next morning you decide to do some research; surely your peers have run into the same issue and you look to the internet for guidance. You run some searches around “negotiating vendor contracts”, “apartment supplies best pricing”, “apartment supplies best practices”, “buying supplies for property management” and so on. You discover buying groups for property management, and like what you see.

As you dig more into Group Buying Platform for apartment supplies, you realize it’s getting you pricing based not just on the number of your buildings, but on all of the buying group’s properties and locations. This means everyone that is a member can attain discounted pricing from the vendors that they would otherwise be unable to achieve on their own. When you click to see the vendors that you can buy from, you see that several of the places your team normally shops are on the list. So far, this makes sense and you read on.

“What about the negotiation of the contracts?” you ask yourself. You saw how it can be painful to negotiate with one vendor, let alone 10 or 15. Plus you don’t have the time or resources to properly consult an attorney on lengthy contracts. After visiting a few websites on group purchasing organizations (GPO) in property management, you discover that each one handles contracts differently. Most of the GPOs require you to still negotiate contracts. Yes, you are part of the master account of the main buying group to obtain discounted pricing, however there are still a few details each company must iron out with each vendor (think payment terms, length of contract, and rebates).

By now you understand how group buying power can drive savings across your properties. That part is great, and ideally you would find a plug-and-play type of solution where the buying group would do the dirty work of negotiating pricing, terms, and contracts for all members. Since negotiating is not your expertise, you dig a little deeper.

One buying group catches your eye.

You land on a site that has a technology focus. You have a soft spot for technology in property management since it has helped you build your empire and be more efficient in leasing and accounting in the portfolio. You read that this buying group specializes in property management, and understands the pains of operating multiple apartment buildings across a region. As you investigate, you see that their website fits the one piece of your real estate puzzle where technology is lagging…purchasing. This Group Purchasing Organization goes beyond best pricing. They actually negotiate on your behalf!

Call it outsourced vendor contract management or just plain brilliant, this company negotiates pricing, terms, and contracts at one time so everyone benefits. Not only are they saving you time and headaches, their website also makes it easy to see all the vendors in a centralized marketplace and place orders with one checkout. Plus, you can actually see what your property managers and maintenance staff intend to buy before it happens. You can make sure they are buying the right products with the best pricing (thanks to the group buying power). You sigh a breath of relief and say, “This is exactly what I need for my portfolio.”

Interested in finding out who this company is and how eProcurement can help your portfolio? Click HERE.


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