For a property management company to increase profits, it must increase revenue or decrease costs. While doing either will increase profits, doing both simultaneously will lead to the greatest gains. A property management business should try to achieve higher profits but still strive to provide excellent service to tenants and property owners. If you sacrifice service quality for higher profits, you will ultimately hurt your business in the long run, not help it.
Employee Efficiency
The single greatest cost for almost every business is employee compensation. When trying to cut costs, this is the first and best place to look. Are there ways you can make your employees more efficient so you can hire fewer? You might be able to give more responsibilities to employees, make their processes more efficient or use new technology to eliminate positions. Remember, you are trying to improve efficiency, not run a bare bones company that cannot provide adequate service.
New Revenue Sources
Finding new revenue sources isn't just about getting more properties to manage -- it's about coming up with creative new revenue streams at existing properties. For example, you could offer a concierge service at your residential properties. At commercial properties you could include a business center. Your property management company can profit from ideas like this. Be creative with additional services you can provide to tenants or property owners.
Treat Expenses as Investments
It is best to pay a little more upfront, and save money in the long run, than to pay less now and have problems later. When it comes to repairs and building maintenance, treat expenses like long-term investments. Select higher-quality parts and have them installed by the most qualified contractors. You will pay more today, but over a five-year period you will be saving significant money and time.
Effective Marketing and Tenant Qualification
Marketing expenses can be significant for a property management business. Make sure you get the most out of your marketing budget by using very focused and targeted marketing. Only advertise where your ideal tenants will be looking. The cheapest forms of advertising are often the most effective, and word of mouth is always best. Try offering incentives or rewards to tenants who refer their friends. You can incur significant expense from bad tenants -- ones that cause damage or do not pay their rent timely. Invest time in qualifying your tenants with interviews and credit checks.
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