Helping Businesses Beat Inflation
It’s not only consumers and renters who face business pressures related to rising prices on goods and services.
Property managers too are seeing higher materials, fuel and energy costs, contractor fees, staff wages, and more expenses eating into their bottom lines.
Zillow reported rental property management operating costs ranging from 35% to 80% of budget. These added costs are posing threats to the vitality of their property management service firm and perhaps leading to unwise decisions which may lead the business down the path to failure.
Keep Your Head Since This is Temporary
Obviously keeping your head in response to inflationary losses is wise. In fact, some see inflation as a business positive such as having their price rise faster than their costs. As you’ll see in the tips below, there’s a lot you can do to help your company thrive including reducing costs, using automation efficiency solutions, making asset changes, and using marketing and creating new profitable services.
If a recession does take hold, rent prices will drop and management budgets will fall, so a proactive stance now is smart management. You can defeat the inflation monster by following a path to better profitability and business sustainability, and we’d like to help you find it.
Build your business via continuity, sustainable profit, and disruption-free operations
Forget Pessimism and Focus on the Opportunity to Improve Operations
Pessimism can weigh people down. The news media paint a gloomy picture and make managers reactive rather than proactive. Manager’s focus gets skewed, so we need to accept the cost situation as a short term problem (one year).
If there are unavoidable financial pressures, we can streamline, and use automation/help systems that get more out of our current staff and deliver better service.
Yes, inflation is scary and may be persistent, which means you’re going to have to deal with it.
Inflation reported by the BLS last month for the United States came in at 8.5%, down from 9.1% in June 2022. While it’s nice to see the drop, the reduction in fuel prices might have been the sole reason. Food prices, materials, construction costs, and wages are all up.
Maybe We’re already on the Downside and It’s Looking Better Ahead?
Still, some economists believe peak inflation is behind us and this economic downturn will be shallow. They’re more likely to forecast better times ahead. And maybe good times are ahead. Some of the economic fundamentals are strong (consumer spending, savings, employment, and Covid is receding).
The presence of inflation tells us demand is strong so the dire prognosticators might not be looking at the US economy clearly. Supply is the current issue and that might get worked out in 2023.
What’s needed for your business is a thorough strategy to guide expenditures and contain costs, solidify staffing, discover new business and revenue models, and adopt new technology to streamline operations.
What’s Raising Your Business Costs?
Wage costs are the key and property management software is the right solution.
- staff wage growth and contractor fee rises
- vehicle fuel and maintenance
- office rent
- emergency response and repairs
- vehicle and equipment repair, and equipment rental
- rising mortgage rates and interest costs
- equipment and construction material prices
- rising taxes and service fees
A property management software subscription and property management services are not a cost, they’re an investment.
Labor costs and staffing challenges are to outdated business practices and from demands by workers for work that pays well and suits them. Optimizing service delivery may free up the funds to pay talented property management staff and keep them on your payroll.
If you’re using ManageCasa as your property management and accounting software, you at least haven’t suffered rising costs with it. In fact, ManageCasa continues to be your best investment in technology reducing your staffing demands and giving workers the exposure to advanced technology they want.
Here are recommended actions you might need to take:
- review your current property management software platform and consider whether a less expensive solution might be a better choice
- review property management automation technology and strategies and use tenant communications and reporting tools to fend off untimely expenses
- adopt a more affordable SaaS cloud powered property management platform that makes work easy for your staff
- reduce your exposure to contractor/staff issues, rent defaults, evictions and rising mortgage rate losses
- revise services with a new business model that enables, fees for use, and promotes tenant self-help resources
- ensure equipment/appliance warranties are maintained, extended where possible
- move to a virtual business where in-person visits are coordinated and minimized
- automate your leasing, turnover, and tenant experience activities
- reduce rent price related tenant churn with incentives to discourage tenants from leaving
- raise your property management services costs to reflect higher costs (avoid profit erosion)
- negotiate a new service fee model with your landlord owners based on higher service times
- ensure rent and fees are processed online
- sell your poorest performing, high cost assets so you have the cash to keep the rest of your business alive and flourishing and avoid further cost liabilities
- communicate more frequently with tenants about potential issues in their units that might pose future work and costs
- move tenant communications, complaints, information and maintenance requests online to your SaaS cloud based tenant portal
- monitor staff time spent on all projects
- move your head office to a low tax state and buy best properties in cities without rent controls
- hire specialists on an as needed basis (tax accountants, maintenance contractors, marketing agency)
- improve your marketing to grow tenant demand, attract staff talent, keep occupancy rates high, and show landlord owners you’re the best company out there (avoid lost owners due to them seeking a cheaper service)
- avoid new construction projects where cost over runs are likely
- take your property management franchise private to reduce revenue drain and out of control franchise fees
In other posts, we discussed new sources of property management revenues, reducing operating costs, reducing administration costs, controlling property management expenses, and reducing rental property tax exposure.
More property managers are reviewing their business models to discover ways to create and deliver more value, raise revenues, and minimize costs. All of that won’t happen by magic, but we can say confidently that property management software will play a key role in a better performing business.
Look at the value of SaaS software and the features provided.
The Final Thoughts on Inflation Threats
Don’t overreact to this economic downturn and cut your way to losses. Instead hang onto your strengths, optimize operations, and position yourself for a strong recovery. The years ahead might be much more profitable than you imagine. Recessions pass. Remember the mid terms are in November and a Republican government would likely cut taxes and regulations.
Given the housing shortage, worker migration, immigration, and tech revolution, rental property in some states/cities enjoy a positive outlook for at least 5 years. Demand and revenue isn’t the issue — your competitiveness is!
Take a closer look at the full value of ManageCasa’s amazing SaaS cloud based platform and discover how it is the key to your company’s success.
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