Couverture de Maximize Property Management Revenue Part 1: The Truth Behind Fee-Maxing

Maximize Property Management Revenue Part 1: The Truth Behind Fee-Maxing

Maximize Property Management Revenue Part 1: The Truth Behind Fee-Maxing

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 Welcome back to The Property Management Show! Today kicks off a special three-part discussion on fee-maxing with Todd Ortscheid. In Part One of this important conversation, we will take a look at what responsible fee-maxing looks like, how it can double your revenue, improve your services, and ultimately increase customer lifetime value. When done right, it can also keep residents on your side. Expect to unpack some juicy math. Todd Ortscheid: Automation Addict and Fee-Maxing Evangelist It’s great to welcome Todd back to our podcast. He has worn nearly every hat in the property management industry. He’s a business owner and advocate, an industry consultant, and currently the chapter president of NARPM Atlanta. He’s also the CEO of Revolution Rental Management and co-founder of PM Assist. A bit of time has passed since Todd was last here, so let’s review who he is and where he comes from: Todd has been in property management for about 13 years.He started in the industry in 2012 and before that, he was an airline pilot for 14 years.Todd’s father was in the property management business, so as he got involved in that business and grew the company, Todd also became more involved in consulting for other property managers.He started and later sold a maintenance company.He did government affairs work for NARPM. Todd is still consulting, and he’s also a self-proclaimed automation addict and fee-maxing evangelist. That’s what we’re interested in talking about today. The A-Ha Moment for Fee-Maxing Todd began thinking about involving ancillary fees in his own property management business at a NARPM Owner/Broker conference in 2014 or 2015, where he heard Marc Cunningham talk about the ancillary fees that were available for property management businesses. It made sense because that’s exactly how airlines work. They make most of their money not on the plane tickets but on the extras. Later, he heard Alex Osenenko and Darren Hunter talk about this topic right here on The Property Management Show several years ago. By 2020, everyone was worried about revenue, so he put together an entire course on fee-maxing and leveraging ancillary services and fees. It’s been a passion of his for years, and when Lead Simple introduced what was possible with automation, he became really involved in that as well. Fee-Maxing Can Be Polarizing (But It Shouldn’t Be) When the topic of fee-maxing comes up, it can be polarizing. Like just about everything these days, there’s a camp that’s very much for it, and a camp that’s very much against it. Some property managers hear fee-maxing and they imagine that a property manager or an owner is nickel-and-diming a resident to death. We’ve heard the term junk fees thrown around. So, what does responsible fee-maxing look like? The first thing Todd wants to point out is this is not hoarding money or being greedy. Some people get that idea, but all you have to do is gather the math and run the numbers to realize these fees are necessary in order to provide good service. When Todd and his team first started running numbers for property managers, they found the average property management company had a single digit profit margin. It was 5 or 6 percent. That’s barely skating by, and it caused a lot of companies to struggle financially. Fee-maxing is not about trying to be greedy. It’s about making your business sustainable. You shouldn’t be struggling to provide the bare minimum. As a property manager, you’re trying to provide good service to owners and residents. You’re trying to hire and train better staff. You want to invest in better technology and increase your marketing efforts. To do that, you need the revenue that’s created by ancillary fees. The primary goal of fee-maxing is to improve the service you’re offering. Investing Ancillary Fees to Improve Property Management That’s an important distinction. If you can invest more money into your business, you can run not only a more profitable business, but also a more excellent one. You’ll improve the overall experience. Think about what property management looked like 10 years ago. How many companies had the technology we have today? There were no resident benefit packages. It was rare to find a 24-hour maintenance hotline. Now, everyone has these things. We’ve been able to radically improve the nature of the services we’re offering in this industry, and Todd says that’s due in part to fee-maxing and ancillary services. The boost in revenue has led to these services. If everyone providing property management has a 5 percent profit margin, you can’t do anything except collect rent and file evictions. Staffing maintenance services would be impossible. Fee-maxing is an invitation to move beyond the basics. Impact on Customer Lifetime Value In the spirit of unlocking better margins for property managers through fee-maxing, it’s also easier to increase or amplify the customer lifetime value for...
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