What may look like an easy endeavor from the outside actually has its own unique challenges and hurdles to overcome. Property management – while fulfilling and enjoyable – can be stressful and draining without the right resources, people, and strategies. However, when properly approached, property management companies have the potential to become very successful. You simply have to know what matters and what’s better left alone.
Keys to Profitability and Success
In order to maximize value and increase profits, it’s important for your property management company to focus on the following five keys.
· Find a niche. In crowded industries – which professional property management is becoming – it’s important to find a specialized niche and stick with it. For example, instead of positioning your company as a property management company in Los Angeles, you should target property owners with multi-family apartment complexes in three or four adjacent zip codes. While it may seem like you’re limiting your target market, you’re simply making your efforts more cost-effective.
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· Screen your clients. Much like a landlord would screen tenants, you need to screen your clients (landlords) to ensure they’ll be valuable to your business. Check for things like credit history, number of properties, tenant satisfaction, and experience. You’ll find that bad landlords actually cost you more than they benefit you, so eliminate the risk of working with bad clients from the start.
· Automate accounting. Thanks to the rise of the Internet and cloud-based solutions, automation is available for almost every aspect of your business. While most businesses aren’t able to afford full automation, you should pick a couple areas where you really need help. For most property management companies, it’s a good idea to find a reliable online accounting software to handle finances, automate reports, and track billable hours.
· Handle tenant screening. Most property management companies offer tenant screening as part of their service offering to begin with, but if you don’t – make it a requirement. By screening tenants for your clients, you can increase your control over cash flow. In other words, you can make sure your clients are getting paid on time, which helps you get paid on time.
· Hire a legal team. As a property management company, you’re required to handle a lot of serious legal issues. In order to reduce the amount of risk you and your clients take on, hire a full-time lawyer or legal team to draft contracts and take care of legal matters.
· Measure everything. Marketing and advertising are probably two of your biggest organizational expenses – and unless you’re tracking and measuring your efforts, you’re likely wasting money. Measurement matters in all aspects of marketing, so work hard to define specific goals, develop accurate tracking processes, and continually test any and all efforts.?
Build a Healthy Property Management Company
By adapting these keys and using them in conjunction with a unique, well-defined strategy, you can increase the profitability and long-term success of your property management company. And above all else, remember to focus on developing healthy business relationships and to always stay current with developing industry trends.