Every April 15, after I’m disappointed by the estimated size of my tax return check, I tell myself I am going to rein in my spending for the coming year. Only one dinner out a week. A less extravagant vacation. Fewer trips to BCBG and Urban Outfitters. It seems impossible—almost like trying to pass a universal health care bill in this country. Oh wait, that happened, didn’t it? Damn. Now I have no excuses. Turns out apartment owners and operators ran out of excuses a while ago as well. For nearly two years now, multifamily firms have performed budgetary autopsies looking to extract excess cash and deliver cost savings. Indeed, with the economy in flux, markets unstable, transactions at a standstill, and investors hoping for 10 percent to 15 percent returns by 2012 (which most owners say is unrealistic), controlling costs—and overall expense management—is a critical business tactic. Even at most REITs, which are, to a certain degree, flush with cash compared to their private peers, there was money to be found. In fact, some firms have deployed entire task forces to find every last dollar. And where did the money come from? Operations, HR, technology, vendor contracts. Even at the property level, there were cost savings to be had. For example, Highlands Ranch, Colo.-based UDR has moved to electronic payment and renewal processes, thereby significantly slashing the amount of paper the REIT deals with on a monthly basis as well as reducing its turnover costs.

Still, the law of diminishing returns has now reared its head—most firms are at the point of having trimmed all the fat and now risk slicing into muscle if the cost cutting continues. Why? Because firms can only cut costs for so long. Eventually, they will have to fork over the cash—whether for ongoing taxes, higher energy bills, or past-due maintenance fees. That’s why most REITs predicted in their fourth-quarter 2009 conference calls—to the dismay of analysts—that their expenses company-wide would likely increase in 2010.

Except JRK Property Holdings. The Los Angeles-based value-add developer and owner/operator of some 44,000 multifamily units says it does not believe in “fixed expenses.” Nothing—no insurance fee, tax, or utility cost—is off the table when it comes to negotiating lower rates. And their intense, no-holds-barred expense management philosophy seems to be working: JRK regularly reports returns that far outpace its value-add peers and continues to achieve comfortable margins on its assets. The firm’s dynamic micro-managerial approach to the business is captured in detail in “The Apartment Whisperer,” which begins on page 26.

Of course, also critical to JRK’s story is the fact that rehab and value-add work is one of the few development niches that has seen some level of activity despite the dearth of the past couple of years—even as rent returns fall to levels that may not justify the upgrades. These difficulties are why, this month, Multifamily Executive debuts its first Apartment Renovation Index (ARI). (The story, “Slow Transformation,” begins on page 34.) The MFE ARI will serve as an annual metric to help apartment owners gauge the per-unit investments and per-unit rent returns that can be expected for any given redevelopment. In our inaugural report, we surveyed a number of prominent redevelopers to determine the types of returns they’ve achieved. The results: While a few companies turned a tidy profit, last year was not a good year to count on value-add rehab. Thankfully, by 2011, that should change.

And of course, we’ll be there to document the evolution. Now if only I could find a way to better document my retail therapy by 2011. Of course, for that to happen, Jimmy Choo would have to stop making shoes. And that might be even more disappointing than a puny tax return.