Property Management Beyond the Rent Roll
As the rental market continues to expand, there is more and more demand for quality property management. In a recent interview on the Best Ever Show, industry expert Tony LeBlanc provided some fascinating insight into how property management works. Tony is the owner and manager of Ground Floor Property Management, one of the biggest property management groups in eastern Canada. In his interview, he discusses the responsibilities of a modern property manager.
The Importance of Coordinating Various Services
In his 20s, Tony purchased and began to manage his own multifamily complex. This experience quickly made him realize that there were a lot of unexplored possibilities in the property management field. Throughout the next 10 years, Tony worked to build a property management company as well as six other businesses.
These six additional companies provide services that complement the main duties of a property manager. Tony’s business services include maintenance services, landscaping, snow removal, mortgage sales, commercial cleaning, and residential cleaning. Owning these companies allows him to better coordinate all the duties of a property manager. Instead of having to outsource tasks like keeping parking spaces clear, Tony can coordinate with his other businesses to get things done promptly and efficiently.
Tony has worked hard to create additional businesses because he feels that good property management is about far more than just collecting rent. Ideally, a property management team should be able to handle all the duties of a landlord. This allows landlords to take a hands-off approach while ensuring all the needs of their tenants are met. Furthermore, offering additional services allows a property management company to get more profit from a single client instead of having to go to the effort of hunting down more properties to represent.
Maintenance Work Is an Essential Part of Property Management
Out of his six additional services, Tony reports that the maintenance team is the largest earner. In fact, his maintenance services make almost as much as his property management services. The profitability of maintenance services is partially just due to the high demand. Every multifamily housing unit needs regular maintenance.
Tony points out that having a maintenance team incorporated into your property management team also makes it easier to scale your business. When dealing with a large number of units, it is more efficient to have a centralized maintenance service. Instead of spending time babysitting individual contractors, you can send out maintenance staff you can trust.
Maintenance is also profitable because it has a low overhead. Most of the costs associated with offering maintenance are startup costs, such as equipment. Once this is set up, property managers can easily increase the number of units that they maintain.
Multiple Services Allow Companies to Diversify Their Offerings
Tony’s setup is a little different from property management companies that employ a maintenance or landscaping staff. Instead of just delegating to various departments, each one of his services is its own, standalone company. This has allowed Tony to develop a lot more flexibility.
While his company primarily works with clients who hire Tony to manage their real estate properties, they also offer outside services as well. This allows the companies to maintain profitability even when Tony’s clients do not need their work. Internal clients get priority and special prices that are not available to the public. However, when there is less demand from internal clients, Tony’s companies can get additional business from the public.
Some Non-Profitable Services Might Still Be Worthwhile
Interestingly, Tony’s experience shows that profitability isn’t the only way to calculate a business’s success. He characterizes his landscaping business as being almost a sort of loss leader. Landscaping is very labor-intensive, with a lot of small margins and high overheads. However, even though the landscaping company might not result in massive profits, it still helps Tony to achieve his business goals.
First of all, landscaping can just be simpler to handle internally. Even if it doesn’t result in big profits, it can save time and keep a property manager from constantly having to micromanage contractors. This can end up allowing the main company to focus more on expansion and client satisfaction.
Another big thing to keep in mind is that landscaping is closely related to snow cleaning. Tony has found that clients who use his landscaping services are more likely to trust him for their snow cleanings during the winter, and this is a highly lucrative field. Essentially, offering one barely profitable service allows the property management company to attract customers to another, highly profitable service.
A Good Relationship with the Owner Is Key
In addition to offering more services, Tony reports that another big factor in his business growth is the type of landlords he works with. Like many other property management startups, Tony originally started as a manager for casual landlords with one or two single-family homes. However, he quickly found that this could be challenging. These types of non-professional landlords often didn’t have the funds to properly maintain the property, and then the poorly maintained property could reflect poorly on Tony. Over the years, Tony has pivoted towards contracts with larger investors who primarily focus on properties with multiple units.
Though it can be harder to win and keep this type of contract, it’s often more lucrative. Not only do larger real estate companies use more of the additional services Tony offers, but they are also often easier to work with. Despite having higher demands, these companies are typically more willing to let property management offer the best possible service to residents.
Ultimately, Tony feels that the relationship between his company and his clients is the key to their success. When clients know they can trust their property manager, they are more likely to give the property manager access to the funds and services that will make the property a success. By collaborating closely with clients, property managers like Tony can improve their own profits while keeping customers more satisfied.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.