Updated and republished 6/5/2020.
Property management is a specialized field that requires above-average intrapersonal skills, patience, and organization.
Choosing to run a property management business means hard work and perseverance, but it is also very advantageous. With all of the heart you put into your property management business, you should be sure you are not leaving your hard-earned money on the table. Here are six things you should review in your internal operations to tighten up your earnings.
1. Double-Check Your Work
Use checks and balances when you manually enter your fees into your property management software. If you don’t have a system in place for ensuring you entered everything correctly, small mistakes could be leaving big money on the table.
One of the most valuable moves you can make when running a property management service company is investing in cloud-based automation software for your accounting. Property management process automation software allows you to upload pertinent data and match payments with invoices.
You can perform two and three-way matching to ensure all payments are correlating with the proper invoice. In doing this, you can pinpoint which invoices are past due. Even better, you can use the software to manage invoices due to you and invoices you owe to someone else. The software provides a clear picture of income coming in and cash going out.
Keep in mind not everything to do with property management is about receiving payments from your clients. You're going to have several expenditures that you owe for, too. Property management software gives you the chance to see which invoices come with early payment discounts. You can use payment prioritization to pay those invoices early and receive a discount, which puts more money in your pocket and leaves less money left out on the table.
You'll also find cloud-based software beneficial because it enhances data security. A traditional software program isn't going to receive updates unless you manually apply them. The cloud-based software automatically updates itself when its developers create new updates.
You also don't have to worry about a computer crash destroying all of your digital data. Be sure when choosing cloud providers for accounting that you are looking for their SSL encryption certificate. You do not want to transmit sensitive data over an insecure connection and become the reason your property owners or tenants have their identities stolen.
Some property management software programs come with optical character recognition (OCR) scanning capabilities. This means when you scan paperwork from a client, the OCR technology automatically routes and organizes the data in the most appropriate manner according to intuitive intelligence capabilities.
Imagine not having to sort through stacks of paperwork to locate an invoice and being able to direct your clients to an online portal that allows them to pay settle invoices using ACH, PayPal, e-checks, and more. All of this increases productivity and allows you to focus on core tasks that aren’t accounts payable and receivable related.
2. Present Value
You charge fees for a reason, don’t waive them because of pressure from potential tenants. Instead, present value to your tenants. Use your UVP, or unique value proposition when discussing fees, so tenants understand why you’re charging them.
An excellent way to showcase your UVP is by creating a document that specifically outlines what you offer that other property management service providers do not. For example, 24-hour service, optional add-on services, and payment collection services are all features that some property management companies don’t provide.
If you provide an online portal where tenants can make their monthly payments, this is an excellent UVP to present to potential and existing clients when they try to get you to waive a fee. Using clear and unequivocal language on your application and listings pages will help tenants see these fees beforehand, so it is no surprise. Lump fees that benefit the tenant together into a resident benefit package and present how these fees pay for amenities and aren't just a cash grab.
When you refuse to waive fees, you keep more money in your pocket and leave less money on the table.
3. Use Referrals
Ancillary service providers can be your partners in more than their services; they can provide you with referrals. If you run a great operation, they will be able to spread the word on your behalf.
There are a ton of organizations and companies that you can partner with to obtain referrals. One of the best ways to approach these organizations is by providing something of value in exchange. Contact a company that you believe has access to your target audience and make a deal that for every referral they send your way that signs a contract or obtains services from you, that you will give them a cash bonus. There’s no reason a company wouldn’t want to take advantage of this type of deal.
Run a realtor referral program and partner with local realtors who work with investors. Use networking and inbound marketing to make these connections and keep in touch using a long-term drip, so your name stays at the top of their mind the next time an investor gives them a call.
Run tenant and owner referral request marketing as well. Remind your owners from time to time of the value you provide and ask them if they could recommend you to their colleagues who own rentals. These emails can be automated, so it takes no time from your team while potentially bringing in new business.
4. Improve Cost of Goods Sold
- Your cost of goods sold (COGS) is how much it costs to provide your services.
- To increase profits, you reduce your COGS.
- Use technology and service providers when they can help you reduce your COGS.
Decreasing your COGS is another area of operation where automated software will prove beneficial. For example, Rently can save you time and commissions through their self-showing solution. By having all of your data stored in a single software application, this reduces the amount of time it takes you to locate pertinent information. It also gives you access to all data while you’re on the go as long as you have an internet connection, and the information is stored in a cloud-based software application.
Automate your operations as well. Think about your employees being able to log in and update a service order as soon as they finish a job from their cell phone. This significantly decreases post-job activities and allows them to transition to the next task in a seamless and efficient manner.
Property management process automation also makes it easier for your team to collaborate. Gone are the days of having to host a weekly meeting to keep everyone on the same page. Instead, with process automation, your entire team can collaborate in real-time with one another around the clock. This also helps everyone have a clear picture of all operational activities, which reduces costly errors.
Think about it: with access to real-time information, your workers can log in and see which tasks are a priority, which tasks are late, and they can optimize their workday to complete the most critical tasks first. Property management process automation also easily takes hours out of certain positions by doing repetitive work such as collections calls. Use at a glance reporting to know where your team is, so you can spend less time managing them and more time growing your business or relaxing for once.
5. Embrace Inbound Marketing
Inbound marketing is your smartest choice for marketing spend in 2020. Traditional marketing means high spending on paid ads and other interruption-based tactics, but that is not what consumers appreciate. Using inbound will bring customers to your business when they are ready, which converts better into sales with less time and money spent.
Inbound marketing aims to send the right message at the right time to the right person. How? Letting that person come to you. Inbound marketing uses content to answer the questions people are asking on the internet. When combined with SEO, you rank higher and meet the needs of property owners in the area. By giving away information freely, you can start to build a relationship with that owner and then use marketing automation to lead them further down the funnel until they are ready to talk to your sales team.
Using marketing automation to nurture leads means your sales staff will spend less time chasing owners who aren't ready yet and more time talking to the ones who are ready to sign. Prioritizing the right leads means more owners who want to do business closed in less time, ensuring that money is not left on the table.
6. Adhere to Your Policies
If you charge late fees or penalty fees, don’t waive them (unless otherwise required by law). All fees and fines that enforce policies should always be strictly held for every tenant, with no exceptions. Plus, when you treat every tenant the same, you save yourself the potential for legal troubles as well. Waive one late fee, and you could end up with a cascade of late rent payments. These fees are a deterrent, so be sure to use them as such.
These six ways to not leave money on the table will help you tighten up your financial operations. What does RentBridge do? We:
- Build property management websites on the leading HubSpot CMS.
- Provide inbound & full digital marketing for property managers.
- Automate your property management operations to save you time and money.
- Help improve property management workflows.
If you would like to learn more about any of this, get in touch! If your company is still working remotely, you might benefit from our Business Development Handbook for Selling During Social Distancing. The more resources you equip your sales team, with the more money they will bring in and not leave on the table.