Earning more fee income from your rent roll is not as hard or as allusive as you think!
When conducting Business Performance Health Checks we regularly come across departments who are only getting 70-90% of the total fee income they should be getting. These offices didn’t even know or in fact believe that another 10-30% of fee income was waiting to be earned!
So to get this extra fee income, here are five easy-to-understand strategies you can employ today to increase your profitability and cash flow, giving you more income and strengthening your company better when your sales income is down.
Remember- whatever extra income you generate with the business you have right now (without extra rent roll growth) is pure profit! It goes straight to the bottom line making these strategies really worth it!
Let’s take a look:
1- Rent Maximisation Strategies
Most property managers will ensure that all properties being let (finding a new tenant) are generally maximised to market rent levels. However, we do find to a lesser degree rent level are not maximised at lease renewal time and to an even larger extent any non-fixed term leases are not regularly reviewed.
Systematically checking and reviewing every property on a monthly to a three monthly basis as to a rent increase opportunity ensures your rents and management fees are kept maximised. Nothing ‘slips through the cracks!’
2- Reversing Fee Discounts
Let’s face it, most offices discount, however, the good news is these discounts can be reversed after the client has been with you after 18 months or so. When these discounts could have resulted in 10-20% less fee income overall, reversing these through a successful fee maximisation campaign will bring very surprising and pleasing results!
3- Adding More Fees
Don’t be scared by this one! Whatever you can justify, whatever you believe you are worth you will get! Adding a couple of new fees can be very successful done the right way, and add a very pleasing result to the bottom line!
By the way, we have never seen more than 2% of clients leave a business when these strategies are done right, however, this strategy alone can increase your fee income by another 20% or more. It’s really worth it!
4- Ensuring All Fees Charged
Organised and accountable departments usually do not have a problem here, but those lacking accountability with respect to manually charged fees at ‘end of the month’ like letting and lease renewal fees, routine and other fees have a huge improvement to be made.!
We find property managers commonly not charging fees that the company is entitled to include excuses like ‘I was too busy to charge them’, ‘sorry I forgot’ or ‘I was wanting to give the landlord some extra value’.
These excuses are not acceptable when we are doing property management for commercial and profitability reasons!
Working with several offices we have seen that when systems are put in place to ensure every fee is charged, we have seen dramatic improvements to the fee income by anywhere up to 10% alone! That’s a HUGE improvement!
5- Ensure Every Property is Profitable
Having criteria when taking on new properties that focus on quality and profitability is smart! However, taking on ‘anything with a roof and front door’ sadly we see as very common.
Have a policy in place that allows your staff to know what property is one that is right for your department, is profitable and will not erode your staff and profitability in the long run.
It is easier than you think!
Rent roll growth isn’t the only way to increase profit and income, however, you need to be willing to ‘think outside the square’, maximise the business you have right now and turn your rental department into a profit-generating powerhouse!
It is much easier than you think!