In today’s pandemic world, the environment presents a compelling opportunity for new property management revenue streams—one that some property managers have already jumped on. This last year, more than any other, property owners are looking to their property managers to go beyond the usual run-of-the-mill services. The COVID-19 pandemic has redefined the owner-PM relationship as owners have turned to their property managers to take on new responsibilities, including compliance with cleaning and social-distancing protocols and working with residents who are having trouble paying rent.
In the last year, according to The 2021 State of the Property Management Industry Report, the number of rental owners looking for PMs who offer additional services rose 11 percentage points.
The most common, sought-after services by property owners are Rent collection, Maintenance, Evictions, Leasing/marketing, Property inspections, Cleaning, Accounting/bookkeeping/taxes, Construction/renovation, Outdoor services. These are services owners are looking to their PMs to offer, as well as some other services popular with residents. The following are a few unexpected opportunities that can add revenue streams for a PM business in new ways.
Security Deposit
In some states you may hold your security deposit in an interest-bearing escrow account. At the time of leasing, property management companies have the tenant sign a form stating they are entitled to any interest earned. At move out, the tenant may elect to be paid interest collected. If they do so, the management company will charge a $60-$100 admin fee (accounting fee) to account for and pay this out to the tenant. Interest earned per deposit is usually in the range of $20-$50/deposit. Ultra-high end real estate may have to charge a higher fee for this. You will also want to determine a pricing sheet for typical move out charges. 1 bag of trash costs $100, carpet cleaning costs $250 etc. The idea is to cover all your bases at lease signing.
Redecoration Fees
This goes back to the pricing sheet for typical move out charges previously mentioned. You may also charge a redecoration fee at move in. Some companies charge anywhere from $300-$500 for an "easy move out" package. This package includes basic cleaning, and painting. You will want to know your average cost to turn a condo for a new tenant before charging at the beginning of the lease.
Trash
Often overlooked, this is one of the potentially largest money makers on the list. Recently "Valet Trash" services have exploded in apartment communities throughout the nation. The typical setup is simple. Management firms will pay for and install bins near the front door of each unit. These bins look just like a small bench and provide a good look to the community. The bins hold 2-3 full size bags of trash. For a fee… Often $20-$30/month trash will be picked up from the tenant’s bins and delivered to the compactor by a team member. By doing this you will limit the overuse of the compactor by tenants while making a healthy profit.
Storage
This is straight forward. Great investment returns can be seen from storage units and garages. If storage is separate from the unit, its recommended that this be made a rentable item.
Water
If you manage a large community, there are a couple of ways to make money here. Each unit can be sub metered and each tenant billed individually plus a service charge. Large communities may elect to pay the water for the entire property and flat rate tenants. Budget forecasting is especially important for the latter option.
Electricity
For this to work, you really need to know your average costs per month on electricity. Bringing the entire fee in house and charging tenants directly is a great way to increase cash flow.
Washer/Dryer
This is one of the most used ancillary services for property managers. The idea is simple. Provide washers and dryers to tenants to use for a fee. There are companies that will install and service the system in exchange for a percentage of monthly income.
Pest Control
This is a must and another most used service. All tenants should be billed a monthly fee for pest control. Not all tenants will use this service, but it is a must in the event of a large pest problem. This is both a money maker and protection policy.
Short Term Lease
You should always charge more for a shorter-term lease. Typically, this is income to the owner. Management companies have been seen to charge an additional fee for the shorter term.
Miscellaneous Property Amenities
If you manage a property with great amenities, or many amenities, it may be a good idea to monetize these items. For example, maybe we have 3 parking spots that are the perfect spots. You can make those VIP spots. Tenants will still be assigned a parking spot, but if they want VIP parking, they will need to pay an additional $20/month.
AC Filters
In warmer climates, AC maintenance is imperative. Trusting each tenant to keep up with Filter replacements does not work. Why not order and deliver filters directly to your tenants? Management companies typically charge $15-$20/month.
Whilst you have the billing process for your owners down to a science, invoicing residents effectively may be new to you. If you decide to expand your revenue stream through resident services, you will have to set up a separate billing system for that. As needs change among owners and residents, the role of the property manager will naturally shift and expand with them. And while the number of responsibilities may increase and conditions are uncertain, you can still seize the chance to adapt and create new revenue streams to everyone’s benefit.
Property Management, LLC
9480 NE 2nd Ave #128
Miami Shores Fl, 33138.
https://www.pristinepm.com?tcid=FB
#residentialpropertymanagement
Eddie Miller, Partner of PPM, is the Past-President of the SE Florida Chapter of the National Association of Residential Property Managers. NARPM® promotes the high standards of business ethics, professionalism and fair housing practices. The Association has a structured educational program and certifies its members in the quality standards of the residential property management industry.
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