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How to Grow Profit Margins

July 24, 2022

Increase Profit Margins

For most business owners, the topic of how to increase profit margins is an obsession and they keep a keen eye on their financial statements as the score card.

After all, the purpose of any business including a property management business is to earn a good profit.

Profitability isn’t built through gimmicks, but rather making a great value proposition available to the best audience. With a solid customer base in place, it’s easier to win repeat sales and grow revenue.

Whether it’s building profit for owners, or growing your company’s profit, the process is the same. And when you grow your profitability, it will help you make them more profitable. When they’re more profitable, you win too.

3 Ways to Ramp Up Profits

Sure there are some specific ways to ramp up profits (some good ones below), but owners who take comprehensive profit generating approach create sustainable, improving profit.

Without getting theoretical, there’s three ways to grow profit:

  1. increase efficiency and cut costs
  2. increase services/quality/price
  3. scale up properties managed

But how to achieve all three simultaneously?

Missing the Sweet Spot

Conservative business owners who are too patient and let time do the work, miss out on key opportunities. These are key events and actions such as adopting technology, acting on launching new services, and using blitz marketing to dominate visibility and actively promote in the market (to ensure visibility, timing to prospects, impact and brand power).

⊕   With conservative approaches, competitors come in and swipe away the best fruit. What’s left is not so hot. Conservatives are very efficient at harvesting these less valuable customers and opportunities.

⊕   With the get rich quick crowd on the other hand, a failure to painstakingly build a powerful business model and UVP, strategize marketing, and build a loyal customer audience over time means engagement with the market is weak. Each day, they have to start all over again, which is not profitable.

⊕   Combining both these profiles means creating a solid customer base, plus being ready to grab the cream of the crop customers when they’re accessible (these are your top profit centers). Constant visibility though solid marketing and sales analytics, great service mixes, automation, simplicity, solid customer service, good business development and sales practices, and good pricing gives every advantage.

These companies are always positioned and ready, and they can capitalize on free, organic sources of new customers.

Reversing the Squeeze on Profit

Keeping an eye on market trends is wise. Just taking note of why profit margins are sinking can help you avoid them. Instead, you can be fortifying weaknesses, and building strengths against competitors who are withdrawing.

If we are entering a recession, it could be a golden opportunity to grow your property management business and help landlords grow their profitability.

This recent stat chart from suggests profit margins sunk considerably during Q1 2020 and operating margins in particular. Q2 might be a more alarming statistic and the outlook for the rest of the year is cloudy.

Profit margins in rental industry. Screenshot courtesy of

One formula suggests that a 5% improvement in profit margins creates a 20% increase in profit. That makes the topic a whole lot more interesting. In fact, in the world of property asset leveraging, profit margin optimization is essential.

Profit Margin Hacking

This topic of engineering or even hacking of rental property profit margins has some interesting challenges. You won’t find property rental margins or property management margins discussed online much.

In other blog posts, we’ve touched on how to improve tenant retention, introduce digital amenities, be more efficient and now we want you to focus on profit margins, to raise revenues and lower expenses.

It’s worth it to keep improving your profit margins.


Taking Initiative to Optimize Returns

Are you showing your property owners sufficiently well what you’re doing to grow margins and begin the process to better profit performance in 2021? A quicker return to profitability might be a welcome statistic to them. Creating a system that gets this message across is a big asset to your company — to strengthen your relationship.

Part of that profitability growth may entail new digital services and digital amenities. Simply adopting digital property management accounting, communications and maintenance solutions puts you on a path to digital mastery.

Digital is the biggest property management trend and it’s the most exciting.

Where Can You Grow Owner Revenues?

Where Can you Cut Owners Expenses?

  1. find new mortgage refinancing sources to help with better refinancing terms, lower rates and help with the  tighter lending restrictions from banks
  2. help to lower property taxes and reduce capital gains losses
  3. cut tenant turnover losses and raise occupancy rates
  4. reduce property management fees
  5. cut some low performing services
  6. cut emergency repair/response costs
  7. reduce renovation materials, labor and inspection costs
  8. reduce costs for meeting building codes, inspections and regulatory compliance
  9. automate bookkeeping and accounting
  10. reduce situations requiring paying legal fees

Collaboration with Property Owners

Helping them tackle these big challenges, may keep them from switching to a bigger property management firm near them with a more full range of services.

By creating a framework of collaboration, owners might reveal their issues and allow you to understand better how to help them. Right now, you might be in the dark yourself. Your property management software platform creates a medium of collaboration. It shouldn’t just a reporting tool, but rather a medium that helps you tack shrinking profit margins and high turnover rates.

And although raising rents is the most popular revenue generation solution, rents might be headed the other way this year and occupancy rates falling (multifamily). So fighting the trends with digital solutions and solid property management services is the right way to go.

16 Techniques To Raise Profit Margins

  1. create service packages that focus on highly desirable services but also include the essentials so it makes sense to owners or tenants, and reduces their price sensitivity
  2. offer digital services (digital amenities) such as online portal, emergency rent grace period, late fee waver, free 5G, digital washing machines, digital controlled storage, since today’s renters wan them.
  3. keep occupancy rate optimized near 100%: keep renter prospects interested via visibility marketing , lease extension incentives, and build continuous new renter leads who are eager to rent suites.
  4. advertise vacancies for all properties aggressively: write excellent ads, promote well, and ask current tenants for referrals to let them know their unit is in big demand too, and they’re lucky to be occupying it).
  5. set the right rent price:  after forecasting market conditions carefully
  6. buy more properties: help owners find more units or properties so you can grow revenue
  7. search for better mortgage refinancing sources:  to access super low rates and more flexibility
  8. tenant experience management: educate tenants more on how to keep their living situation stable, how to maintain their unit, their lives balanced and healthy, and to manage their personal finances well (a company blog and help section can contribute to positive messaging).
  9. use online marketing: to create continuous, persistent renter inquiries and awareness of your rental properties and increase your brand image
  10. use digital Proptech to increase business efficiency:  — use digital tools to go virtual and reduce paperwork, meetings, and time loss from face to face relations. Young renters love technology.
  11. make your online property management platform the center of your property management services: the software is an immediate and constant reminder of your connection to owners. (A solution like ManageCasa makes it pleasant, upbeat, and reassuring experience for owners. While other enterprise level property software makes the relationship mechanical, alienating, complex and stressful, ManageCasa focuses on a pleasant user experience. That makes digital property management more desirable to owners and your own staff).
  12. introduce a uniquely valuable digital service:   which cannot be acquired in competitor’s rental buildings: (e.g., free wifi , bluetooth touchless entry doors , high speed internet ).
  13. increasingly interact and manage tenants via all in one digital communications tools:  (use ManageCasa) to show fairness, professionalism, courtesy and civility, consistency, and to keep spirits up — poor communications and negativity contributes to tenant turnover
  14. be an increasingly mobile property manager:  so you can manage more properties in real time and attend to matters in person when it’s most important
  15. find a cheaper, smaller company office space: lots of them available, to cut your own costs so you can improve your own fee structure
  16. go virtual with contractors:  hire contractors who can manage themselves to delivery reliable, timely service.

2022 is Here!

2020 was the year of the year of cutting expenses while 2022 is now the year of rapid growth.  Certainly raised rents are a big part of that, but many landlords can’t raise rent prices.

Take a Demo of the ManageCasa Platform. It’s a great way to learn all the ways it can help grow your profit margins.


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