Looking for profitability in property management
Running a property management business over the last decade has escalated in overheads with the advancements of technology and layering apps.
Sure, it can be done on a budget at the beginning, but as the business and team grow it will be essential to run the right systems for efficiency and service.
When I first started my career, apart from office rent, our printing costs were the biggest overhead.
Fast forward 20 years, and we’ve now got subscriptions to:
– Trust programs
– CRM programs
– Inspection Programs
– Maintenance programs
– Advertising platforms
– Time management programs
– Letter systems
– Electronic signing systems
– Mobile phone accounts
– Internet accounts
– Website developments
and many more.
It feels like new tech start-up companies are always popping up and promoting yet another program or system that assures us of being the market leader for a big juicy cost, while silently killing our business by also promoting the tech to investors wanting to cut out the real estate industry.
While having a point of difference is required to stand out from the pack, having one solely based on technology can be a risk. How? If that technology – the only point of difference your business has – breaks down or becomes clunky, it will irritate clients and have a negative effect on repeat business.
And the one element of these overheads that disheartens me the most is that with all these costs added on to running a business, there is still the pressure to reduce fees and some agents are feeding the beast.
So, how do we make a profit?
It was once a very simple strategy –
- Reduce overheads
- Increase fees
I hear the static already – “If we increase fees, we’ll never get new business!”
My answer to this is: “Don’t compete on fees.”
I’m not anti-tech – in fact, I am pro-systems – but do we honestly need every layering app in the marketplace?
Many of these apps have the basic same offerings that many of their older competitors have, but with a shiny new dashboard and a few extras that usually come at a further cost.
I also find we don’t use the programs we have to their full potential. This could be due to a lack of training or understanding, but we find ourselves getting sold to by another provider who shows us what we need – even though we actually already have the ability and just don’t know it.
We seem to be in such a rush to grow our businesses that we actually don’t stop to evaluate the return on investment, or the running costs.
To avoid this, business owners need to know their systems back to front before trying to grow and expand – you may be surprised at how much money this can save your agency.
Another element of the property management sector that baffles me is the fact that so many of us are eager to give away a portion of our commissions.
The negative feedback on social media among property management forums seems to be growing, describing the dissatisfaction of tech companies promoting DIY measures and taking our market share.
Yet we are the ones still providing these companies with the data they need to connect with the investor market – why?
It seems that some businesses would rather pay a platform to generate C grade leads than develop a strong relationship with quality organisations and organically accumulate A-grade client leads. In many instances, this process won’t turn into profit.
In summary, there are NO shortcuts. While technology can help us gain leads and referrals, you still have to go out and form quality relationships, build professional respect and cement yourself as the industry expert.
If you want a profitable business, understand and appreciate the business you are in, be comfortable with the tools you incorporate into your business and make sure you invest in products that support you, not replace you – and certainly invest in products that do not create a negative perception of your business.