As a consultant we see most companies wanting rent roll growth, to increase their size, workload and ultimately their income. However, most neglect the fact that they can boost their income and double or even triple their profit margin without taking on any more properties by simply focussing on activities that generate just profit.
Profit generating activities occur when we are simply adding on extra income without increasing our workload or department overheads, like adding new staff, more workstations etc. The structure and expense is already in place, so any income boosting activities simply become pure profit!
There are eight income generating activities that you can do that will boost your department income and profit right now. Having worked with departments installing these profit strategies we have seen amazing results, and in one case generating an extra 40% extra income (that is growing the rent roll income by an extra 40% without more properties!) and also doubling and even tripling the department profit margin.
Here are our top eight tips to boost your department income and profit right now:
1- Rent Maximisation- most departments ensure all newly rented properties are rent maximised, as well as a renewal of the lease. However what about leases on a non-fixed term, that are not recently rented or renewed recently? We find when doing business performance health checks, a lot of tenancies fall into a rent review ‘black hole’ and are not reviewed for maximum rent until the tenant gives notice, or the landlord brings it to your attention. Print off and go through your entire tenancy list and ensure all properties are reviewed for maximum rent and adjust rents accordingly where they have been missed, thus boosting your management fee income.
2- Discounted Fees- this is a major one! Property managers discount fees for all sorts of reasons and a quick check of 20 or so management agreements should let you know whether your original fee structure has been compromised. Increasing fees works very well when done properly and thoroughly, provided the right strategy and tools are in place.
3- Adding New Fees- like increasing discounted fees, adding new fees should be done at the same time. A rule I teach to departments is ‘add two new fees, and increase two fees’. With the fact that most clients tend to focus on the management and letting fees, adding other fees are widely accepted and only a very small minority of landlords complain, or pull their management in protest. Read more on why increasing and adding fees works.
4- Fee Charged at End of Month- I have seen so many departments not receiving fees they are entitled to as their system to ensure all fees are charged each month is either non-existent or not monitored correctly, or they simply have the wrong system in place to ensure all fees are charged. When principal suspects they are not receiving all they should be earning, by focussing on tightening these systems will definitely bring a great reward of increased income.
We continue in our next issue with another four ways to boost your department income and profit right now in part two.