Increasing profits is often about improving efficiency and decreasing needless expenditures. When managing properties it can feel like there is a lot going on but keeping things clear can help you spot areas to improve. Make things as simple as possible and don’t fall into the common pitfalls of property management.
Simplify property management with the right tools and some creative thinking to save time and money. If you’re looking to increase the profitability of your property management business we have seven ideas to get you on your way.
1. Keep Your Accounting Simple
Good accounting is the backbone of any successful company. Keeping track of what your money is doing is the best way to find underperforming areas of your business and make improvements. Solid accounting is essential to sound finances so don’t overlook this area of property management.
The easiest way to keep your books simple is to use accounting software that is developed for property management. A program designed for the unique challenges of your business will keep better records and remove the need for workarounds. Invest in good accounting software from a reputable vendor.
2. Don’t Get Involved With Dilapidated Buildings
Buying old and dilapidated properties may seem like a bargain but they are often more trouble than they are worth from a property management perspective. These units tend to require more rigorous maintenance schedules and more costly repairs. The time investment and the additional costs can end up being a burden on your bottom line.
Simplify your investment portfolio by flipping and selling old properties. A homeowner will be better able to stay on top of the care an old home needs rather than a renter with no sense of responsibility for the building. The money you make selling the home can be reinvested in a property that’s easier to care for.
3. Automate Collections
A business can’t have profits without income and in property management that income comes from tenant rents. While most tenants will pay their rent on time, those rents that go unpaid can have serious repercussions. Without income a business can’t pay its expenses and fall in arrears on its own bills.
Collecting on unpaid rents can be challenging, time consuming, and uncomfortable. The process can be simplified with automation. Send invoices before the rent is due, reminders when tenants begin to fall behind, and messages with next steps on overdue accounts. All of this can be done simply and easily with automation if you use the right software.
4. Buy High Quality Fixtures
It may be tempting to skimp on fixtures and appliances but the initial savings often end up costing you more. Low quality items tend to need replacing sooner, are more prone to breaking down, and can be more expensive to repair. When weighing the upfront costs of purchasing more expensive equipment, consider the cost of repairs, replacements, and unhappy tenants who may choose to leave.
High quality fixtures tend to be more eco-friendly. Saving energy can translate to big savings for you if utilities are included in the rent of your units. Sometimes governments offer incentives for installing energy efficient appliances as an extra reason to invest in better fixtures. It’s good for the environment and for your business.
5. Stay On Top of Maintenance
Doing routine and proper maintenance is cheaper than waiting for things to go wrong. Having something break can lead to further damage to a property and emergency repairs are costly. There is also the cost of disgruntled tenants who may need to be compensated for loss of services or might even choose to move out.
Schedule routine inspections of your units to look for potential problems. Keep track of schedules for regular maintenance of the fixtures and equipment at your properties. Take care of any issues promptly to prevent them from getting worse or causing further damage.
Tenants are in the best position to spot issues so get them involved. Educate tenants upon move-in on the operation of equipment and how to care for the property. Make it easy for them to report issues and automate the opening of maintenance tickets with property management software.
6. Screen Your Tenants
Bad tenants can be costly. If you don’t take the time to screen tenants properly you can end up renting your unit to someone who can’t afford to pay. Furthermore tenants can damage your property and cause all sorts of problems that can end up costing both time and money.
Ask for proof of employment and income to make sure the rent you charge isn’t beyond a potential tenant’s means. Follow up on references and talk to previous landlords to get a better feel for the tenant. Do a credit and background check as a final step to cover all your bases.
7. Stay Connected
Never underestimate the power of good communication. Make tenants feel valued, appreciated, and supported by keeping the lines of communication open. This can lead to lower tenant turnover and fewer issues for you to deal with as well as a more satisfying relationship for both sides.
Make communication easy with the right tools and reap the rewards without investing a lot of time. Send automated emails and messages to stay connected and keep tenants informed. Provide a tenant portal where people can find valuable information and contact details for the right parties. Keep connected and stay on the same team with your tenants.
There are many moving parts to a successful property management business. All those pieces can make it feel complicated and muddled but it doesn’t have to be. There are tools to help simplify property management making it easier to see ways to increase profits. Keep it simple and efficient for the best use of your time and resources.