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How to Grow Profit Margins

September 24, 2022

Increase Profit Margins

The purpose of any business including a property management business is to earn a good profit.

It’s the number one goal of property managers according to surveys and whether through efficiency, revenue increases or scaling up with new accounts, you’ll find plenty of ways to make your business more profitable if you’re open to it.

One formula suggests that a 5% improvement in profit margins creates a 20% increase in profit.

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

3 Ways to Ramp Up Property Management Profits

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

  1. increase efficiency and cut costs (maintenance systems, technology, financing/interest rates)
  2. increase services/quality/price (value, branding, technology, staffing, renovation)
  3. scale up properties managed (marketing to new landlords and/or buying rental properties)

But how to achieve all three simultaneously?

It’s a good idea to list all of your services in one column, and then list the most profitable services in a second column.  You’ll discover that many of the services you provide aren’t profitable or valuable. The market changes and you need to refocus.

And you have a new view to what’s really needed to grow profit margins and profitability.

Innovate to Move with that Changing Profitability Sweet Spot

It’s the power of innovation that matters. Finding new ways to do work and deliver great service is a goal. Below we have some more specific services ideas that can help dwell more in that profitability sweet spot.

The experts often say, “try often and lose fast.”  By innovating and trying out new ideas/service procedures, you learn where your profit sweet spot actually is. Innovate where it matters to owners and tenants and if they’re happy they’ll be happy to pay more. Innovate to cut costs, raise revenues, and open yourself to new accounts.

Adopting property management technology is one of those innovations.  You try it and then learn how to use it for maximum performance.  When you do, cash flow improves, marketing and leasing improves, costs are reduced, and you become the well-oiled professional machine that can scale up your business. Lucrative owner deals spawn from this reputation for excellence.  Excellence generates profit.

Key events and actions such as adopting technology, acting on launching new services, using blitz marketing to dominate visibility and test results, and actively promote your brand in the market (to ensure visibility, timing to prospects, impact and brand power) are good to focus on.

  • With slow, conservative approaches, your competitors come in and swipe away the best accounts because you’re not innovating fast enough.
  • With the get rich quick crowd on the other hand, a failure to painstakingly strategize daily, a powerful business model, brand and UVP, and build a loyal, growth minded group of landlord property owners.
  • Combining both these approaches means creating a solid customer base, strong overall services, plus being ready to grab the cream of the crop customers when they’re accessible (these are your top profit centers).

Reversing the Squeeze on Profit

Keeping an eye on market profitability trends is wise. Just taking note of why profit margins are sinking (materials, staffing, taxes, fuel, rent, maintenance) can help you avoid being bled to death. Your ManageCasa reporting tools will help with that.

If we are entering a recession, it is wise to plan ahead to ensure your costs won’t outpace revenue.

This recent stat chart from suggests profit margins sunk considerably during Q1 2020 and operating margins in particular.  With preparation and service automation, you might breeze through a downturn, and perhaps pick up some new lucrative owner accounts. That is the best way to boost profitability.

Profit margins in rental industry. Screenshot courtesy of

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.

ManageCasa can help you visualize a path to higher profitability. You have all the operations and revenue data at your disposal. It’s designed to help you find profitability and orchestrate higher margins.

How to Cut Owners Expenses?

  1. find new mortgage refinancing sources to help landlords with better refinancing terms, lower rates and help with the tighter lending restrictions from banks
  2. reduce time spent on activities that aren’t generating revenue
  3. help to lower property taxes and reduce capital gains losses
  4. cut tenant turnover losses and raise occupancy rates
  5. reduce property management fees
  6. cut some low performing services
  7. cut emergency repair/response costs
  8. reduce renovation materials, labor and inspection costs
  9. reduce costs for meeting building codes, inspections and regulatory compliance
  10. automate bookkeeping and accounting
  11. reduce situations requiring paying legal fees

21 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. provide additional services for tenants (outsourcing services, benefit packages)
  3. provide additional services for owners (digital marketing and advertising services)
  4. charge for improved occupancy rates and renewed leases
  5. Charge for extra, long term guests in the unit
  6. offer new digital leasing services to improve releasing and cut leasing time expense
  7. charge more for late rent fees and eviction services
  8. 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.
  9. 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.
  10. 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).
  11. set the right rent price:  after forecasting market conditions carefully
  12. buy more properties: help owners find more units or properties so you can grow revenue
  13. 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).
  14. use online marketing: to create continuous, persistent renter inquiries and awareness of your rental properties and increase your brand image
  15. 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.
  16. 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).
  17. 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 ).
  18. 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
  19. 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
  20. find a cheaper, smaller company office space: lots of them available, to cut your own costs so you can improve your own fee structure
  21. go virtual with contractors:  hire contractors who can manage themselves to delivery reliable, timely service.

2023 is Almost Here!

The pandemic was a time of cutting expenses while 2022 was the year of rapid growth. 2023 may be a year of high interest rates, higher costs, along with stagnant rent prices. So a focus on profitability, in whatever way you can engineer it is wise. We hope your strategy is thorough and uses our technology.

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


Property Management Software | Home Prices and Rising Rates | Reviews of Property Management SoftwareFinancial Statements | Grow Rent Yields | Grow Rental Property Income | Growing Your Business | Credit Checks for Tenants | Rental Apartment Advertising | How to Write a Lease | Property Management Companies Near Me | Property Management Services | Lower Property Management Expenses | Property Management AppsWrite a Rental Ad | Rent Prices

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