Property managers earn approximately 10 to 20 percent of the rental income they collect, with the rest going to the property owners. This percentage must cover staff, equipment, maintenance, insurance, advertising, applicable licenses, unexpected costs, and more. Once all the dust settles, there’s little money left to go around.
One of the expense multipliers is administrative work. Property management companies rely on countless processes for everything from managing their staff, communicating with tenants, collecting rent payments, and working with vendors. Processing one maintenance request requires a tenant to email a request, a staff member to respond to that request, back and forth communication to clarify the issue, coordinating with maintenance team members, ordering specific parts, scheduling a repair time, and rescheduling if there are any conflicts. The time spent not just communicating but gathering information and coordinating people can take hours, if not days, thus delaying the problem’s resolution and impacting a tenant’s experience.
Another inefficiency is long turnover times. Property managers have to squeeze several activities into the transition period between an old tenant’s departure and a new tenant’s arrival. This includes finding a new tenant, repainting the unit, and making any repairs or updates. The longer this takes, the longer the unit fails to bring in rental income. If your custom is to start all rental and lease agreements on the first of the month (for cash flow purposes) and you don’t get a tenant before the end of the month, you’d need to wait another 30 days.
Payment processing presents even more inefficiencies. When a vendor sends an invoice, a property manager’s administrative assistant needs to open that PDF, manually cut and paste the details into the billing system, receive authorization to release that money, and then process that payment. If there’s a dispute, an employee needs to sort through emails and folders to find all of the correspondence around that invoice. There is no centralized way for different employees to glance at a transaction and understand the context.
The result of this fragmented, decentralized approach to processes is unsustainable growth. As property managers respond to urgent requests and routine work, they struggle to find the time to document their processes and train others. They become overworked, overextended, and eventually unable to keep up with the demands of a property management company. The few employees who do have the training and context to respond to urgent requests wind up leaving, contributing to an industry-wide high turnover rate. An estimated 36 percent of all employees within the property management industry leave their roles each year. According to one recruiter, most property managers tend to last up to six months. Throw in the cost of turnover, which can be $10,000 per employee, and you’re looking at a very expensive problem.
The COVID-19 pandemic has only added to property managers’ time crunch. Enhanced sanitation requirements, a persistent renter’s market, late or partial rent payments, stricter eviction requirements, and more have increased property managers’ responsibilities while tightening their cash flow.
Technology offers several solutions.
A single source of truth
Property managers and their team members check multiple systems. An administrative assistant may look at one spreadsheet, before entering that data into an invoice generator, and then refer to their emails for the payee’s legal business name and address. Even if property managers have great software for different processes, some of these applications operate with a closed API, preventing these tools from communicating with each other and forcing employees to cut and paste information from one system to another.
The result is multiple sources of truth. How do you know what the final amount payable is? The number of vendors you’re working with? The amount of work you requested? A centralized platform creates a single source of truth. All the information and data related to a specific process gets entered into the same system.
Streamlined scheduling
It takes several touchpoints to schedule a maintenance appointment. An integrated project management application simplifies scheduling by automatically cross-referencing calendars and determining which technicians are available on a given day for a service job. Tenants can make a service request in the app and the system can easily assign an available technician.
Mobile management
Property managers, particularly the most experienced ones, are often in the field responding to service requests. When they need to access customer information or do anything administrative, they need to call, email, or text their office. In some cases, they’re forced to wait until they return to initiate a process. An app that allows them to view the same information they view at the office can save time.
Self-serve option for tenants
Today’s consumers are used to self-serve options, but this isn’t available to tenants. A robust property management platform can empower tenants to find the information they need, book appointments, and make rent payments all in one application without reaching out to a member of the property management team. This frees up administrators to focus on more complicated matters.
Streamlined workflows
Is there a documented set of repeatable steps for each process? In most cases, new employees rely on on-the-job training, which is done by another employee, subjective, not standardized, and susceptible to errors and inefficiencies. An integrated platform can break down the specific steps required to properly process an invoice, create a maintenance request, or put a unit on the market. An employee creating invoices would be prompted to enter specific details into the platform and the system would prevent them from moving on if vital information were missing.
Interested in learning more ways technology can increase your efficiency and profitability as a property manager? Download “The Profitable Property Manager” whitepaper to read more.
