Creating a Profitable Property Management
Being good at property management doesn’t necessarily mean you’ll be adept at running a profitable property management company.
Many landlords can attest to poor profitability, and they’re likely hiring your firm to rectify that issue. Because business really is about profit. It’s not a hobby and you wouldn’t risk your life savings or wealth just for the sake of owning rental property.
And earning profit is no easy task for any business. And right now, companies will focus on profit, just to break even.
As it turns out, you can get exactly what you focus on. If you focus on profit, you’ll get it. If you focus on stability, growth, efficiency, quality service, or comfort, that’s wonderful, yet without profit, what do they mean to you? If you’re breaking even and giving your landlord client cheap service they can profit from, then perhaps you’re your own worst enemy.
Profit isn’t a dirty word. In fact, profit proves the business is worth it, and will likely exist continuously.
Attend the Apartmentalize Conference
Announcement: ManageCasa will exhibit at NAA’s Apartmentalize Conference in Atlanta, on June 9th. We’re in booth #912 and looking forward to meeting you and learning about your apartment management needs.
Apartmentalize Schedule | Apartmentalize Exhibitor list | Learn More About the National Apartment Association | Apartmentalize Educational Sessions | Trade Show Tips for Attendees | Apartment Management Tips
In 2023, New Challenges Appear
The pandemic period increased financial and legal challenges for landlords and property managers. Now the pandemic is easing, with a new recession appearing. As interest rates rise, rent defaults grow, rent prices fall, taxes increase and tenants appeal to governments for protection from eviction, profit margins are getting squeezed.
It seems that companies in our industry must put profit back where it should be in the hierarchy of our business model. Because profitability across the industry and in the economy is on the downside.
Right now, would you say your company is sufficiently profitable? Are market changes in 2023 going to drop your revenues, increase your vacancy rate, and raise your costs?
What Do Your Accounting Reports Say?
Using your ManageCasa dashboard, you’re able to produce some insightful property management financial reports, and you’ll discover what’s wrong with your firm against industry performance benchmarks.
That’s an important comparison, because your company could be hemorrhaging money big time. Just tightening up your budget and operations could fix the issue. Other times, you might have to look deeper at the properties, cities, and tenants you’re involved with. Sometimes finding new properties in the cities with the highest yields is the way to go.
It could also be your lack of automation in managing accounts. Using smart automation helps you cut labor costs, attracts landlord leads, and helps you see the status of your business without self-deception.
Improving your Profitability comes down to 6 Criteria:
- optimizing budget and operating costs using data — be guided by your financial reports and then compare to industry benchmarks if possible. Do you need more money, or are your daily operations out of date?
- setting and raising rent prices appropriately – set the best price possible, and raise it according to your requirements to stay viable (it’s not about profiteering)
- acquire better tenants – improve how and where you recruit new tenants from listing ads to syndicated advertising online, to the kinds of leases you offer to retain tenants
- automate and manage time as a precious resource – use ManageCasa to digitize and automate as much as possible which cuts staff labor costs, and lets you reallocate staff to more important profit building tasks
- scale up and improve your service mix – adding services and improving them (e.g., online rent payment, tenant portals, marketing automation, accounting, and adding digital amenities) impresses owners and creates additional revenue streams
- market your business professionally – get more done and bring your leasing activities inhouse. Automate marketing and leverage the power of a property management website. Online marketing is absolutely essential. Your company website and lead generation sources should be market leaders always providing a rich source of landlord leads and renter leads. Marketing says: “we’re ready and eager to do business.”
What are Your Biggest Challenges?
Assess and Optimize How You’re Doing Business
Like most property managers, you’re heavily focused on what you’re doing day to day. But that kind of focus gives you tunnel vision. You may need to review your property management business model, scale up to improve profit margins, and improve your competitiveness.
Today, you would be wise to reassess how you’re running your business. You’ve likely suffered reduced profit margin on all your units. Given the economy, inflation, supply issues, you’ll be forced to do more with the operations budget you have.
Streamlining, improving profitability, increases in services, buying more rental properties, improving maintenance, and lowering staff and contractor costs are all part of thriving in property management in 2023.
Profit-minded managers know that the whole of their business creates profits. Gimmicks don’t work for long. It comes back to why you’re in business and the power of your value proposition. It’s time to bear down and improve your value proposition. Consider how the value you provide is delivered via everything you and your staff do.
From service quality, to communications, to automation, to tenant comfort, your profit is relative to what landlords believe your services are worth, and for landlords, what your tenants believe their rental experience is worth.
A Few More Management Tips:
- use software messaging tools to communicate well with your staff and tenants
- communicate with tenants with a plan, and make it easier for them to listen to you and pay you
- automate any work that can be automated to free up your time
- grow your profit centers and entertain the idea of digital amenities
- create a mission to minimize work and effort and convince staff of the process
- use a simplified property management platform – an online management platform streamlines your work raising efficiency, while enabling convenient services for tenants, and helping you avoid the losses of your bad business habits
- keep your work and personal life balanced so you have quality energy
- advertise your available units well on your marketing website — build its power to create visibility via Facebook and Google and show rental suites
- market your business consistently and strongly for market leadership
- establish a property management brand that says you offer the best property management company
A Passion for Excellence
Successful SMB owners have a passion for what they do. Their desire powers their intent to succeed and surmount obstacles. It gives them optimism to look at their firm differently to build their brand, serve customers well, and run the business better. It can help you turn the mundane, boring, tedious, and difficult into a catalyst to improve and take chances to grow.
With a new, better business model and attitude about efficiency and automation, you’re creating a company your staff will like too. That could solve your staffing issues. Happy staff do more and better work, and they learn faster.
Is there any one asset or tool that can help you run your business better? Yes, it’s called ManageCasa. Take a good look at this simple and powerful system for managing rental properties.
Property Management Topics: Property Management Software | Rental Property Accounting | Management Financials | Simple Property Management Software | Property Management Companies | Property Management Business | Start a Property Management Business | Landlord Software | NARPM Convention | REALTOR Conference | Property Management Conferences 2023