In order to make their business more thriving, property management service providers occasionally need to trim and prune their menu of offerings, much as in gardening.
To advance and increase profitability, managers should also increase productivity and create new products, services, and income streams.
Of course, your company and clients are unique, therefore the key is to focus on profitability and grow your company.
It's difficult to dispute that greater profitability, commercial opportunities, and market presence are undesirable for any company.
We should look into these and other things right away. Once you start the procedure, you'll discover a lot of fresh chances to increase revenue based on your local market, technology, and owners' wants.
Property management companies of all sizes have the same overarching objective: to increase their revenue. This objective is shared by enormous companies that manage tens of thousands of apartments, shopping centres, and commercial complexes as well as by small companies that only manage ten or so vacation rental homes.
If you are thinking of starting a property management company or growing the one you already have, you should know that there are many different ways to achieve your goals and make money doing so.
For a consultation on property management, please get in touch with us as soon as possible at (03) 9998 1940 or team@clearpicture.com.au.
Multiple properties are managed by effective property managers
Landlords and property managers who are successful typically have multiple streams of income, which enables them to bring in more money overall.
The majority of property managers and landlords generate income from their rental properties through anywhere from three to five distinct income streams. On the other hand, if you can scale, your performance will be significantly improved.
Landlords that have a qualified team on hand are able to manage more than ten properties effectively using the most up-to-date property management techniques. They might broaden their range of cash streams by expanding their property management business and creating an empire.
When it comes to managing rental properties, it is essential to keep in mind that you should not take on more than you are able to successfully do. You are going to want assistance in order to effectively manage all of the rental properties that are part of your growing portfolio.
As a result of the fact that most property managers would rather handle everything on their own, they are reluctant to look for support from outside sources. If, on the other hand, you engage individuals one at a time, your management team will be able to grow over time, which will enable you to better manage your properties and maintain your profitability.
In order to manage properties, property managers are often compensated with a fee equal to ten percent of the monthly rents collected.
If you manage a complex that charges higher rents, you will make more money while working the same number of hours as if you managed a complex that charged lower rents.
Include some high-rent homes in your real estate portfolio because doing so will be to your advantage.
Property managers can more profitably manage their properties thanks to technology
Being a property manager, landlord, or real estate investor is now more lucrative than ever thanks to technology.
The majority of the process might be automated, which gets rid of the most of the nightmare scenarios that used to be involved with managing rental properties and tenants. This is a huge step forwards in the industry.
With the new digital technologies at our disposal, it is significantly easier to handle challenging situations involving renters, payments, evictions, maintenance, and communication like a seasoned professional. Rental property owners and managers can now manage a greater number of properties with the same amount of effort.
Using software applications, you are able to securely manage rental properties located anywhere in Australia without having to leave the convenience of your own home. To make use of these new programmes, all you want is access to a computer and a smartphone.
Owning your properties will increase your income
Real estate is an investment that is both physical and under your control.
In contrast to other types of investments, such as handing over your money and crossing your fingers that it will be managed well, rental properties are a concrete asset that may produce tangible income.
If you manage your properties, you may increase your revenues and keep your investment safe at the same time.
When someone else is paying the mortgage on the property, it is much less complicated to own it outright. Rental property owners and managers have the opportunity to own multiple properties outright while yet maintaining a good residual revenue stream from those properties. As the owner of the rental property, you are only responsible for dealing with your tenants, not the tenants of the other owners.
Property managers who are professionals have safeguards in place to protect their rental properties from tenants who cause problems and from the stress of impending repairs, both of which have the potential to entirely wipe out their profits.
You may lessen the risks involved in the management of your properties and increase the amount of money you make if you approach it like a company.
How to Run a Successful Property Management Company
Successful property management firms make quality hires
As a company owner, one of your most important responsibilities is to select employees for your company. All too familiar with this topic are those of us who have ever made an unwise choice regarding who to hire. How much more successful would your business be if all twenty of your employees were considered to be A+ players?
In competitions of both a sporting and commercial nature, success often goes to the group that possesses the best individuals. Therefore, the next time you are on the market for a new employee, make sure to take your time conducting candidate interviews.
Consider the relationship to be that of a marriage. Why would you ever consider hiring someone after just one interview, when you wouldn't even consider getting married on the first date you were on? The following are my top tips for hiring:
- Plan a number of interviews. Stop talking and let them speak for themselves about why they are the greatest candidate for the job. Never be scared to pose challenging interview queries.
- Instead of looking for justification to support the candidate, you are searching for justification to reject them. You have your new hire once you have located the applicant to whom you simply cannot say no.
- Keep your technical talents in perspective. We frequently place too much importance on experience and aptitude for the job at hand. Start by focusing on "soft skills," which include the capacity for successful communication, likeability, and energy. "Select for personality; develop skills."
Four filters should be applied to your candidate:
- Character: Do you feel comfortable entrusting them with your customers?
- Chemistry: How do you feel about them?
- Culture: Do they embrace the one-of-a-kind approach that your organisation takes to conducting business?
- Competency: Ability to perform the duties of the position for which they have been hired
Although initially following this technique will require more time, in the long run, you will save yourself a lot of aggravation, money, and headaches if you take your time in the search for the best possible candidate.
The fast termination of employees is the opposite side of the hiring process that a successful organisation must go through. It takes courage to take the necessary action when an employee is underperforming or simply isn't a good match for the company, but leaders are the ones who do it.
Even if it won't be easy and you won't get much rest the night before, both your personal life and your professional life will improve dramatically the following day. If you continue to work with that terrible person, you are hurting not only yourself but also your business, the other people on your team, and even them.
If you are still undecided about whether or not to fire that employee, one question to ask yourself is whether or not you would hire them again knowing what you know about them now if you had the chance. If they give you a negative reaction, you are aware of what steps to do next.
Systems Are Used By Successful Property Management Companies
Why are there so many thriving low-cost fast-food outlets despite the fact that they serve food that is below average? People usually return because of the reliability of the service (even if it is consistently crummy food). There are far more advantages to use systems manuals than I could possibly describe here; however, the four most significant advantages are as follows:
- Your office's rotating door has to be stopped. Do your team members frequently ask you questions that you believe they should know the answers to? Your team members should consult their system documentation before interrupting you if they have those recurring questions. You'll be surprised at how much time interruptions may save.
- lower your liabilities. If the unthinkable occurred and you were served with a fair housing (or comparable) lawsuit, you might demonstrate that you had a training procedure in place and, despite the possibility that one of your team members broke it, they were trained on it. Even though you won't be totally exempt from responsibility, you will have some additional legal protection as a result.
- Boost the business's nett value. The simplest way for you to raise the worth of your company is to use system manuals. Otherwise, the value of your company is only derived from your property management accounts, which fluctuate. A systematised business, however, has a significantly higher market worth and may be sold for more money. A business that uses system manuals to reproduce itself and function automatically will fetch a higher price from a buyer.
- Hold the people of your team accountable for their actions. Your team members want and desire clear instructions on what is expected of them, and they want those instructions. Your group's conception of success can be deduced from the key result categories detailed in a system handbook with a sound organisational framework. You can make use of them to rapidly acquire an overall picture of how the individuals of your team are performing.
Multiple Profit Centers Are Found in Successful Companies
It has been brought to my attention that certain people grow angry anytime the word "profit" is used. On the other hand, the objective is not to take advantage of one's customers in order to make the most money possible or to operate in a greedy manner. You are accountable for ensuring that your company is successful from a financial standpoint.
Profits that are healthy will likely make it easier for you to get a good night's sleep because they will enable you to hire the best employees, pay them well, cover your mistakes, improve your customer service to your owners and tenants, save some money so you can take advantage of buying opportunities when they present themselves, and a variety of other things.
There are numerous chances available in the field of property management to provide a wide range of services to owners and tenants, as well as to set reasonable prices for those services.
- Discuss the breadth of your service offerings with the proprietors. If you don't let your tenants know where your services end, they will continue to enquire, and eventually, you will be making additional trips to the property to pick up their mail and take their garbage cans into the garage, among other things, if you don't let them know where your services end. When they ask you for a "favour" in the future, you should respond by saying, "Sure, I'd be glad to have someone do that for you, but they'll bill for their time." Examine the situation to determine if it puts an end to the requests.
- Consider the market for homes available for rent. Because they are essentially companies, apartment complexes are handled as if they were businesses. The vast majority of apartment complexes charge residents for a variety of services and amenities, including inspections, the addition of roommates, non-refundable pet fees, lease administration fees, and non-refundable pet fees. Do you mind if I ask? Take a trip to a local apartment complex on a learning excursion to learn about how they manage their community; you might get some new ideas from the experience.
- Quit passing up possibilities because of your lack of focus. What are some possibilities that have always interested you but that you haven't taken advantage of because you either didn't have the time or the courage to do so? Are you currently engaged in the process of buying a property from owners who want to sell it (at a reduced price)? Are you able to turn a profit from the maintenance and repair work that you are performing? Have you given any thought to taking over the management of the property belonging to the small business? Before you respond with "no," give it some serious consideration and ask yourself "why not?" Because lost chances are one of the hallmarks of a failing business, you should immediately begin looking for new ones for your organisation.
The profitability of your firm will be greatly impacted even if you only adopt these three behaviours, which are all that are required to succeed in the property management industry.
What factors contribute to your company's profitability?
Manage costs by making technology investments
The quantity of personnel you require to manage your portfolio represents the biggest expense to your profitability.
Initially, when we considered the increase, we believed that the corporate employees would need to expand.
But because of our technology investments, we can now expand our clientele without incurring more expenses or staff members!
Track crucial parameters carefully
We can now view and evaluate performance by property much more easily.
We may carefully monitor our data and keep a tight eye on our costs and earnings. I can check these reports from anywhere, which keeps me constantly updated on our progress.
Increase responsibilities and specialisation
Our support workers at the corporate headquarters can now perform even more tasks because of how effective we are. I think providing a wonderful experience for our residents is the top priority for our on-site managers. We hire excellent individuals, so I have no concern about giving them access to excessive amounts of information.
What blunders in profitability do property managers frequently make?
Not enough measurements
I like to look at our key indicators on a weekly (and even daily) basis so I can spot problems early.
Undervaluing investments in people
Payroll costs for our staff make up the majority of our operational costs. We can confidently state that thanks to the modifications made with Dynamic Residential, we will be able to complete the construction of our upcoming three homes without having to hire any new employees for our corporate team. Companies lose out on significant advantages when they disregard the potential cost of increasing productivity.
How can property management firms boost their bottom lines?
Multiple properties
As you add more properties to your portfolio, you should expect an increase in revenue. If operating margins are kept the same, generating a profit from each additional property will result in a higher percentage of total earnings. For example, if each property generates $10,000 in revenue and has a gross margin of 35% (representing the proportion of costs associated with that property), then there is an increase of $6,500 in the amount of profit produced.
Services Offered
Property management services often include advertising and marketing, maintenance and repairs, and renting out or selling the use of the property. Increasing the number of services you offer will drive up your profitability as long as the expenses you incur in providing the service are lower than the cash you bring in. It's possible that the property management company that oversees the apartment complex where the renters live may offer them concierge services.
Check-in procedures offered by companies that rent out holiday homes sometimes include the option of personalised meet-and-greet services.
Different Properties
Another strategy to boost profitability is to enhance the variety of properties. You might provide the same service for townhomes and condos if your company manages short-term sub-lease agreements for apartments.
Rates
Income for property management companies comes from two primary sources: the owners of the homes and properties that they manage, as well as the people who rent or lease such residences. When it comes time to renew the management contracts, increasing the fees charged to the owners can help raise income and, as a result, profitability.
Keep in mind that the current owners may choose to contract with a different party if the rate increase is deemed to be excessive. It is also a possibility to increase the rates that are collected from customers who pay to enter the premises or utilise the facilities.
Occupancy
Charging a rate or price that is multiplied by the number of spaces that are really being used to generate revenue. If only 200 of a building's 250 units are rented out, and the rent for each of those rented flats is $500 per month, then the total income for the property is $100,000.
With 225 apartments rented out, the total revenue is $112,500; a higher occupancy rate would result in an increase of $12,500 to the nett profit. If you rented such flats, however, any fees you incurred as a result of doing so will be removed from the original amount of $12,500.
Expenses
If there is no change in revenue but expenses are reduced, then there will be an increase in profits. In the short run, it is quite unlikely that it will, but in the long run, things could very well turn out differently. If there was less advertising, there might be fewer people leasing properties. A reduction in the amount of effort put into maintaining the property can prompt renters to look for homes elsewhere.
Another thing: "Never let action stand in the way of your pursuit of perfection." STOP putting off implementing your innovative idea until you can perfect it and start using it! A novel concept is implemented by successful companies as soon as it is practically possible, which is then followed by any necessary adjustments. Every new idea that we have presented has come with its own set of difficulties; nevertheless, by seizing those opportunities, even when we were hesitant to do so, it has helped us develop into the people that we are today.
Summary
Property managers need to increase productivity and create new products, services, and income streams. Increasing earnings is a goal for property management companies of all sizes. There are various ways to do so and make money whether you're thinking of beginning a property management business or expanding your current one. Rental properties are a tangible asset with tangible profits, unlike other investments where you hand over your money and hope it's managed effectively. Manage renters, payments, evictions, maintenance, and communication difficulties like a pro.
You may boost your earnings and safeguard your investment by managing your properties. The rapid firing of employees is the successful business's flip side to the hiring process. It takes bravery to take the required action when an employee is underperforming or simply isn't a good fit. Plan a number of interviews and focus on soft skills rather than aptitude for the job at hand. Property managers have a responsibility to ensure their companies are profitable.
The majority of apartment buildings impose costs for things like inspections, roommate additions, non-refundable pet fees and lease administration fees. A failing business is characterised by missed opportunities, therefore start searching for fresh ones for your company. Adopt these three behaviours to succeed in the property management industry. Property Managers often make mistakes when they disregard the potential cost of increasing productivity. Each additional property results in a greater percentage of profits if operating margins are maintained.
Services for property management often involve marketing, upkeep, and renting out or selling the property's use. Profits are generated by charging a rate or fee multiplied by the number of spaces occupied. If 200 out of 250 units in a building are rented and each apartment costs $500 a month to lease, the total income is $100,000. With 225 flats occupied, profits would rise by $12,500.
Real Estate is a regulated industry and you need DMIRS registration before you can work as a property manager. You need to have your certificate of course completion and your NPC before you can apply for registration with DMIRS.
The average property manager salary in Australia is $104,191 per year or $53.43 per hour. Entry-level positions start at $75,000 per year, while most experienced workers make up to $144,096 per year.
- Gain a qualification. Each state has slightly different requirements for property managers. ...
- Undertake further study. If you'd like to further your knowledge and skills, you can complete a Bachelor of Property and Real Estate at university. ...
- Apply for the role.