Increasing income without increasing expenses will go straight to the bottom line -- and I'm sure that will put a smile on your face! And the best part? These ideas won't cost pots of cash to implement -- just some time, thought and effort!
Rationalise your Landlords: Identify any “C” class landlords; these are the landlords who are very demanding; call the office on a regular basis wanting your staff to do everything for nothing. You could be servicing four or five other landlords with the time it takes to keep one of these clients happy. So, they either have to pay an increase in fees commensurate with the level of service they are expecting, or they are politely asked to find another managing agent to take care of their property.
Who isn’t paying their way? Identify all those landlords who are paying less than your average management fee percentage across your portfolio. Then starting with the lowest, contact them and explain that with the downturn in the economy you can no longer manage their property for such a low fee. Prepare a letter and a new agreement for each one, then send them out in the post one at a time. Make sure that you note in your diary to follow up personally by phone several days later. You may have to negotiate, but remember every percentage point you achieve is in effect going to your bottom line.
Maximise your Ancillary fees! Also remember to look at you ancillary fees for improvement. Every dollar earned is a dollar you didn’t have before. Ancillary fees should include:
- Letting and Lease renewal fees
- Property Inspection fee
- Maintenance and repair fees (if you arrange quotes and oversee the work done)
- Landlord fund payment twice a month fees (offer a mid-month payment for a small fee)
- Attending the tribunal fee
- End of financial year, summary statement
Advertising is a Landlord expense! We see a lot of agents that are not recouping all of the advertising spent in finding a tenant. Advertising should be treated as a client expense just like in sales, so make sure your landlord is being charged for all advertising that is done.
What do your competitors charge for that you don’t? Being the cheapest isn’t always the best, and finding new income streams is a great way to improve the cash flow. Here are some of the items you could consider charging for:
A percentage of the cost of arranging property upgrades: Many landlords expect their property manager to arrange for major work on their investment properties, for no charge or a nominal amount. If there is a request for a significant spend on a property, (i.e. re-roofing, or a new kitchen/bathroom), this goes beyond the normal maintenance and repairs and can take a large amount of time to organize. So, make it worthwhile by charging a percentage of the project cost for arranging and project managing the work.
Arranging Insurance claims: Again, this can be time consuming, and therefore should incur a fee, regardless of it being a building claim or a Landlord Insurance claim.
One important warning: Landlords won’t mind paying a little more provided they are getting a satisfactory level of service in return. Don’t expect them to pay more for a less than average level of service. If you are not sure how you are performing, do an old SWAT analysis with your staff and look for ways to improve.