Strategies on how to scale your property management portfolio without increasing your company’s overall overhead
Scaling your property management portfolio without increasing costs
Date Published: Dec 30, 2019
Like most business owners, your goal is to build a sustainable and scalable enterprise. The best way to achieve this is to develop proper systems that allow you to manage daily processes with minimal oversight. That way, you can work on your business instead of working in it, while minimizing overall operation costs.
If you feel stuck wearing multiple hats in your property management company and are struggling to scale without minimizing costs, you’ve come to the right place. We’ve got some valuable tips on how to scale your company to increase revenue without a corresponding increase in expenses.
What does it mean to scale a property management portfolio?
For the most part, taking on new clients almost always leads to increased costs. For instance, you may need to hire additional staff to handle the increased workload or a professional who’ll bring specialist knowledge to your business.
However, the cost of hiring a legal advisor, an accountant or an additional Portfolio Manager can take its toll on your profit margins. It’s not sustainable to handle all the responsibilities in your business because you’ll not only experience burn out but it’ll limit your ability to take on new clients.
The point of scaling your business is so you can focus on the bigger picture instead of being stuck in the “daily grind”. That’s why it’s important to distinguish between scaling a business and growing a business.
Growing a business:
Growing a business refers to adding new clients and increasing your bottom line. This requires you to hire additional staff to handle the increased workload.
Scaling a business:
Scaling refers to improving the operational efficiencies in your business. This allows increasing your operational capacity without an increase in payroll.
Think about it; if your expenses have to increase every time you take on new clients, you’re not really scaling your business but rather growing it. The goal of scaling your business instead of growing it is to increase your efficiency so that it costs less to gain new business.
You need to use the right tools and put processes in place that allow you to add entire communities in your portfolio while maintaining the same overhead costs. Not only will your bottom line increase, but you’ll effortlessly keep all of your clients happy.
How to sustainably scale a property management portfolio
Now that you know what it means to scale a property management company, we’re going to share steps that you can take to do so effortlessly.
As mentioned previously, all it takes is building an efficient operation that allows you to replicate certain aspects of your business prudently.
1. Build a quality team
In the property industry, you’re only as good as the people you employ. No matter how much you automate your operations through technology, you still need people to manage certain aspects of your business.
That’s why it’s important to build a team of experienced and talented professionals that’ll help you increase efficiencies. A bad property management team can prohibit your ability to scale your business and even slow your growth. Here are a few red flags to look out for:
Poor quality performance
Poor quality performance from staff can be identified as an inability to handle increased responsibility. It doesn’t matter how efficient your systems are if the people in your team struggle to improve performance you won’t be able to see the improvements needed to scale your operations sufficiently.
Having poor quality staff also means that you’ll need to hire someone new every time you take on a new client because they won’t be able to handle the extra work.
If your staff is unable to handle anything besides administration and bookkeeping, then you need to find a new team. You need to find people who can wear multiple hats and handle financial, accounting, compliance and legal responsibilities.
A talented team that has a versatile skill set will make it easier to scale your business and step away from daily operations. That way, you can focus your energy on acquiring new clients and improving efficiency.
An experienced and talented property management team will leverage the tools and systems you’ve put in place to provide top-quality service to all of your clients. This leads to increased capacity and revenue without expanding payroll.
Lastly, it’s important to encourage and foster collaboration between employees to improve effectiveness. Establish proper workflows between different departments in your company and encourage transparency and communication.
2. Use technology wisely
Property managers nowadays have a wide array of technological solutions to choose from, including cloud-based software and customized tools meant to help a business reach its potential.
However, it’s important to choose the right property management software for your needs, considering things like ease of use and reliability.
Basically, your software should have an intuitive interface that’s easy for your team to use, and operate 24/7, 365 days a year.
The great thing about property management tools is that they won’t ask to take sick leave or days off during public holidays. However, it’s important for your staff to leverage these tools properly in order to save time and money even while taking on more responsibility.
3. Implement several comprehensive operational efficiencies
Since you’re paying for the property management software or tool that your business uses, make sure that it’s versatile enough to handle different tasks. It should make life easier for your team, and simplify the process of incorporating efficiencies.
After all, technology is meant to enhance your team’s talents and support their responsibilities. Here’s a checklist of questions you should ask before you pick any property management solution:
- Does the solution allow you to process your finances?
- Can it issue penalties and warnings?
- Does it allow you to issue documents like letters of consent and clearance certificates?
- Does it allow you to manage maintenance tasks, arrears, and compliance?
- Does it facilitate easy communication while allowing you to maintain a clear audit trail?
- Can it facilitate smooth collaboration between portfolio managers, auditors, trustees, etc?
4. Communicate your offering effectively
It doesn’t help to offer incredible service if you can’t effectively explain to people how it works. You must be able to show both prospective and existing clients that you offer what no-one else can. Communicate your value proposition so that people understand what they’ll get when signing up with you.
This means your value proposition should clearly communicate what you bring to the table. Being able to qualitatively communicate your competitive edge will make it easier to secure and retain clients no matter what your rates are.
5. Have a clear growth strategy
You should put processes in place that make it easier to attract your ideal customer base. This means that it should be relatively simple for people looking for a property management company in your area to find you. Here are a few helpful tools and strategies that you can use to get the word out on your business:
- Digital marketing: A good quality website, social media content strategy and SEO optimization can go a long way to help you generate new leads.
- Strategic acquisitions: A great way to expand your business without increasing overhead costs is to take over another property manager’s portfolio. While acquiring an active portfolio can cost a lot of money upfront, it’ll increase your cash flow. Plus, if you inherit a going concern with efficient systems in place, it can be a great way to enter new markets.
- Strategic partnerships: If you’re serious about scaling your business, you should definitely cultivate relationships with successful and well-known developers. This strategy is a great way to get first dibs on new projects.
However, you need to knock it out of the park with every project that a developer entrusts you with. If you can show them how reliable and valuable you are, they’re most likely to trust you with new community developments they’re involved in. Cultivating a relationship with seasoned developers could help you increase your portfolio by up to two or more developments a year.
6. Maximize cash flow
You have to do more than just take in more work to scale your property management business. The goal is to increase your portfolio and your profit margins at the same time. To achieve this, you need to invest capital in tools and systems that will help you improve efficiencies.
This means reinvesting some of your newly acquired cash flow back into your business by hiring the right people and acquiring tools that’ll help you maintain the same level of service quality throughout.
Well, there you have it! With the right systems and tools in place, it’s relatively easy to grow a property management portfolio without a corresponding increase in running costs.
Improved efficiencies allow you to manage the demands of scaling a business to facilitate increased revenue and exponential growth. The key is to hire smart, create systems and leverage technological tools so you can improve operational efficiency.