We don’t have to tell you that 2020 has been a big year of change for property managers. This 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.
But even outside of newer responsibilities related to the pandemic, owners see value in PMs who can provide other services. 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 were (indicates percentage of owners surveyed seeking this service):
- Rent collection (90%)
- Maintenance (81%)
- Evictions (77%)
- Leasing/marketing (69%)
- Property inspections (67%)
- Cleaning (55%)
- Accounting/bookkeeping/taxes (45%)
- Construction/renovation (37%)
- Outdoor services (32%)
Additionally, property owners said they wanted some service offerings traditionally less common in property management:
- Financial reporting/benchmarking (37%)
- Property sales (21%)
- Legal advice (31%)
- Financial/investment advice (17%)
- Interior design/staging (15%)
- Insurance services (12%)
This trend presents a compelling opportunity for new property management revenue streams—one that some property managers have already jumped on. Between 2017 and 2020, according to the report, the number of property managers surveyed who were adding services rose 17 percent.
In this article, we’ll explore five services owners are looking to their PMs to offer, as well as some other services popular with residents, and how these often unexpected opportunities can add revenue streams for your business in new ways.
#1: Cleaning
As the pandemic crisis continues to unfold, more owners are turning to their property managers to supply cleaning and sanitation services for their properties.
In fact, the number of owners looking for cleaning services from their PMs has risen 13 percent in the last year. And property managers have responded.
In Buildium’s survey, 54 percent of respondents said they have units professionally cleaned between tenants, 24 percent have spaced out showings so they can clean units in between appointments, and 35 percent clean high-traffic areas on a regular basis, with particular attention paid to areas like entrances and laundry rooms.
“My strategy,” one PM told Buildium, ”is to provide the security tenants and owners are looking for by taking extra care in cleaning, using products safe for the environment, and continuing to offer activities that keep morale high.”
Property managers can offer cleaning services to residents, as well. Some PMs offer housekeeping as part of their concierge package.
#2: Construction and Renovation
According to the industry report, many owners are making the best of extended vacancies by renovating empty properties. And the number of owners who want their PMs to handle renovations has increased by 14 percent in 2020.
There are two ways to offer construction and renovation services to your owners. The first is to bring your own contracting service in house. To do that, you’ll need to make sure your business is property licensed and insured.
The second option is to partner with an existing contractor. Then, you’ll simply act as the middleman and collect a referral fee.
#3: Legal Advice
According to the industry report, “Property managers’ expertise in local laws grows more valuable with each passing year; and in 2020, 24 percent of rental owners agreed that regulations have made running their property on their own too complicated or risky, motivating them to seek a property manager’s help.”
In general, PMs must be well-versed in state and local laws that govern rental properties. However, officially offering legal services can be tricky.
If you’re not a licensed, practicing lawyer, there’s little more you can do than raise issues that may run afoul of the law.
“State law prohibits a real estate broker from giving legal advice, but I have many attorneys that provide legal service to my clients [for a referral fee],” one PM told Buildium.
Drawing up legal documents, litigating or arbitrating, or representing your owners in legal matters is obviously illegal. But states have also passed laws making some services property managers previously provided, such as sending demand letters or advising an HOA on state or local laws, illegal.
To offer legal services to your owners, it’s best to partner with a law firm you can bring in when questions concerning rental law come up. You can then collect a referral fee from the firm.
#4: Insurance Services
This is another service where, like legal services, you could partner with an outside firm for a referral fee.
In the industry report, one PM told Buildium: “We have increased our insurance referrals and have been intentional about making sure our owners and tenants have insurance.”
And insurance is a service you can offer both owners and residents. In fact, Buildium even offers renters insurance through their platform.
“We have a referral service for renters’ insurance. We receive $40 per referral,” said one PM.
Offering insurance is a win-win for everyone. You grow your revenue, while your owners and residents have peace of mind that their properties and possessions are protected from the unexpected.
#5: Outdoor Services
Some of the property managers Buildium spoke with were looking to expand their services by offering outdoor services to owners: “We’ve added a cleaning crew, lawn care company, and carpet installer to our team of vendors.”
Others looked at services for residents, particularly those in single-family homes: “For tenants, we are looking at offering regular home maintenance usually reserved for owners, such as lawn care for single-family homes and residential cleaning services.”
Either way, property managers can use their own in-house outdoor maintenance crew (if they have one), or partner with one to offer their services for a referral fee.
Other Services to Consider Providing
Aside from those top five property management revenue streams, there are other services property managers told Buildium they’re planning to add in the near future. Here are just a few others mentioned in the industry report.
HVAC Filter Replacement/Cleaning: “We started an AC filter service with monthly mailed filters. We make a small profit from the service.”
Pet Care and Pet Screening: “We have a sister property that offers concierge services (house cleaning, pet care, mail shipping, etc.) that has created a revenue stream.”
Collection Services: “We offer collection services for owners who are owed back rent and damages.”
Accounting Services: “We really utilized the Buildium bill pay and accounting services this year. The bill markup was a HUGE help.”
Utility Payment: “One of our properties offers a utility fee option. This allows the resident to pay one monthly bill (rent, water, electric, trash) for a set fee each month.”
A Note About Resident Invoices and Billing
Of course, you have the billing process for your owners down to a science. But invoicing residents effectively may be new to you. If you decide to expand your revenue stream through resident services, you’ll have to set up a separate billing system for that.
You could make your own invoices, send them, and track them, but a third-party billing system can take the work out of that process for you. Buildium, for example, allows you to send one-off bills to residents for services. The critical calculation is to still weigh the pros and cons of adding those additional services. Sure, you could generate more revenue, but will it be enough to offset the additional costs and resources you’ll need to implement them? It could help to create a business case for any proposed new services so you can judge if it wouldn’t even be worth it in the first place. If you decide to move forward, having those projections in place will also help you measure the impact when you’re ready.
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 be ballooning and the conditions uncertain, you can still seize the chance to adapt and drum up new revenue streams to everyone’s benefit.
Read more on Growth
