Technology has helped transform the property management industry, making us far more efficient than ever before, but it’s also become somewhat of a double-edged sword and inadvertently resulted in many agencies sitting on a goldmine of unclaimed fees each year.
While there’s no doubt the software many rent rolls use automated many of the mundane tasks property managers had to do manually, it’s still only as good as the end user.
I recently audited a property management division that had seen their software fail to capture nearly $100,000 in fees that were rightly owed to them. All because they hadn’t taken the time to set up their software properly and understand what fees they should be charging.
While you might think that could never happen to you, it’s a lot more common than you might think.
What a lot of businesses forget is that technology is only automated to a certain point. You still need to fully understand how the software works and set it up correctly from the beginning, and with many systems, this includes spending some time upfront to enter all of the fees you charge and want it to capture.
I always remember a property management conference on the Gold Coast many years back where the guest speaker spoke about the merits of auditing the information entered into the software.
It was a lightbulb moment for me.
The rent roll in question was being divided and then needed to get a valuation.
The audit revealed close to half the data entered did not allow for GST – basically wiping 10 per cent of their profit away.
Unfortunately, it’s a common error many property management businesses make.
I’ve personally audited numerous property management businesses only to find them sitting on a goldmine, some tens of thousands of dollars, they didn’t know they had.
Another common error I see regularly within software platforms is that property managers only enter in fees that are automated. If they have to manually set up a fee they might not put that in.
It could be something as small as a statement fee, which is being captured monthly instead of fortnightly. While that might only be $2.75 per month, across 1000 managements that’s $33,000 per year in lost revenue.
Whilst technology is getting smarter – it is not quite there yet and a lot of fees have to be entered manually. If it is not readily available – i.e. sitting in the background in your software – it means that it becomes cumbersome to dig out and charge to the owner.
Many property managers will simply continue to operate with what they have in front of them and never dig too far into the details. You really need to be making the most of the software that you’re already paying for and get it to do its job.
For example, up until recently, the lease renewal fees weren’t something a lot of platforms automatically catered for.
When you think about how many lease renewals you do across your entire rent roll each year, it’s a significant number.
This all poses the question of just how much money is being left behind.
When was the last time you did a full audit of all fees in your database?
Most of the time it doesn’t get done because you don’t have time. It is on the to-do list but often gets pushed to the bottom of the pile when something ‘more important’ comes up.
Quite often the licensee of a real estate agency is in sales and the property management business can sometimes be a bit of an afterthought.
While the property management team are looking at the day-to-day issues and are examining where money is going out, they are not always looking at what is coming back in.
More often than not, it’s a good idea to give your property management department the attention it deserves because it just might make a big difference to your bottom line.
If you haven’t been keeping on top where your fees come from and whether your software captures them, then now is the time to start.
It’s often a really interesting exercise to create a spreadsheet with each property’s address and then examine what fees are on the managing agency agreement and what’s actually in the software.
You might be surprised to see how much your income increases if all fees are collected.
This is something you should do annually as there many new properties will be added to the rent roll in a year.
It’s also worth putting systems in place to help ensure fees that you are entitled to are not going missing.
When I was running three rent rolls, I used to have the property managers fill out mid and end-of-month reports. Then we could go back and double-check the numbers against our managing agency agreement.
You also need to really train your staff so that they are able to run those checks themselves so it becomes a part of your regular system.
At PMVA we have experienced staff that you can use in a full-time capacity who will write a report that compares the fees that are being captured in your software with what you are entitled to in your managing agency agreement.
We can also assist in putting all the fees into the software for you so that it is much easier for your staff to access the fees at their fingertips.
While technology and software seem to be the ongoing solution for property management if you don’t understand how it works, then it can end up costing you more in the long run.
Pay attention to the details and your income will very likely increase as well.
If in doubt, contact PMVA and we can help you perform an audit of the fees in your database and make sure you’re not missing out on thousands of dollars that you’re entitled to. We can also work on a strategy to help implement new fees, give you admin support and find more hours in your day so that you can concentrate on what counts the most – making personal relationship connections with your clients.
