1. How to Profit 180 - Property Management System€¦ · 4 Owner Ancillary Business Services...

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HowtoProfitinPropertyManagement

PropertyManagementSystem.org

1. Risk – how much liability is this going to create?


2. Profit – how much profit is this going to create?


2. Profit – how much profit is this going to create?

3. Ease – how much difficulty is this going to create?

A moral case for profit


Q: Can you provide a premium level of service to

your clients, without premium profits?


Q: Do more profits allow you to help more people?


Q: If you had a business savings account with 3 months worth of

expenses saved; would your personal stress level be reduced?

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Bankrup

t

Ancillary Business Services

Ancillary Business Service:

A non-primary function of the company that enhances the main service

Successful Companies: Successful Companies:

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Gabe’s Lawn

Service

2 foundational steps BEFORE you offer

ancillary business services

1. Define your scope of service 1. Define your scope of service2. Think like a business owner

2 Client Groups?

Marc Cunningham is not licensed to practice law. Any information provided in this presentation, whether verbal or written is provided for example purposes only and is not legal advice. An attorney should be consulted before relying on any information herin.

Owner Ancillary Business Services

1. In House Collections


2. Marketing

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3. Marketing: for non-clients


4. Negative Balances


5. Real Estate Sales


6. Buying direct or partnering on sales


7. Eviction Services


8. Miscellaneous Services


9. Property Tax Appeal

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10. Maintenance Oversight


11. Property Inspections


12. Lease Guarantees *Risk Mitigation


13. Bank interest or bank earnings credit


14. Lease Renewal


15. Management FeeFlat vs Percentage

100 doors x $1,000 per month= $100,000 rent / month= $1,200,000 rent / year

$1,200,000 x 8% mgmt fee

= $96,000 per year mgmt fee


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$1,260,000 x 8% mgt fee


$ 96,000 per year$100,800 per year

$4,800From 8 to 8.5

From 8 to 8.5

6.25% increase


$1,200,000 x 8% mgmt fee


$1,200,000 x 8.5% mgt fee


$ 96,000 per year$102,000 per year

$6,0004,8006,000

$ 10,800

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Use a client-value matrix

Tenant Ancillary Business Services Tenant Ancillary Business Services

1. Application Processing

Tenant Ancillary Business Services

2. Rent Processing

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3. Reletting


4. MTM Lease Term


5. Sec Dep Disposition


6. Lease Administration


7. Pet Administration


8. Add Pet to Existing Lease


9. Add Roommate to Existing Lease


10.Carpet cleaning / lawn mowing


11. Lease Renewal

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You must disclose!

You have an obligation to profitability

Don’t let perfection be the enemy of action

Knowing Your Numbers

CEO DashboardTotal managements fees collectedTotal leasing feesLeases signedLeases renewedMove outs

CEO DashboardMgmt Fee:RE Sales:M&R Profit:Leasing Fees:Admin Fees:

CEO DashboardDoors addedDoors lostRents delinquentTrust account balanceSecurity deposit trust balance

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CEO Dashboard

Compensation as % of gross income:

40.1%

CEO Dashboard

Profit Margin: Net Profit Total Income

Net Profit 1,000Total Income 100,000

= .01= 1%

TRENDSRetained Earnings

8 Common Owner Issues

Property Management Agreement

Copyright 2018 PROPERTYmanagementSYSTEM.org

Q1:Who should approve the tenant, the

property manager or the

owner?


Q1:Who should approve the tenant, the

property manager or the

owner?

The Property Manager


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Management Agreement Clause #1

Owner grants to Agent the following authority which Agent will exercise at Agents discretion:… Agent shall have sole responsibility for establishing the terms and conditions for tenancies of the property, including but not limited to approving applicants, …..


Q2:How can I oversee and deal with all of the maintenance

headaches effectively?


Q2:How can I oversee and deal with all of the maintenance

headaches effectively?

Have a maintenance tracking system in place and charge for it.



Any vendor invoice may be billed to Owner at a rate of cost plus ___%, or at current market rate, as determined by Agent.


Q3:What do I do when my owner asks me

to do things outside the scope

of my management

services?Copyright 2018 PROPERTYmanagementSYSTEM.org



of my management

services?

1. Define Your Scope of Services




of my management

services?

1. Define Your Scope of Services

2. Charge for it



Reoccurring inspections, representation at court hearings, depositions, homeowner meetings, property tax assessment appeal hearings, insurance claim related paperwork, city or county building inspections, and other exceptional building, property or resident related events are not covered by the monthly management fee……



… Normal property management services also do not include showing property to real estate agents, inspectors, appraisers, or prospective buyers. Should agent perform services not included in the normal management fee, a fee of $___ per hour, with a one hour minimum may be assessed at Agents discretion.


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Q4:What do I do when my owner wants to

be called in advance of any

repair expenditures?


Q4:What do I do when my owner wants to

be called in advance of any

repair expenditures?

Set expectations



The expense to be incurred for any one item of maintenance; excluding work on hot water heaters, HVAC systems or roof; shall not exceed the sum of $______ unless such expense is specifically authorized by Owner,….



…..or is incurred under such circumstance as Agent shall reasonably deem to be necessary. Such repairs shall be made by Agent at Owner's expense without Owners prior approval.


Q5:What should I do if

my owner wants “no pets”, but the

applicant has a service animal?


Q5:What should I do if

my owner wants “no pets”, but the

applicant has a service animal?

Set expectations



Owner understands that state and federal law govern “service animals” and “emotional support animals”, and those animals are NOT legally considered pets, and therefore pet policies do not apply.


Q6:What should I do if my owner asks me

to do something unethical or illegal?


Q6:What should I do if my owner asks me

to do something unethical or illegal?

End the relationship immediately


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Agent may terminate this agreement at any time with a written notice to Owner.


Q7:What should be

the length of term of the

management agreement?


Q7:

What should be

the length of

term of the

management

agreement?

30 days

month-to-month



This agreement shall commence on __________ and shall automatically renew on a month-to-month term until either party terminates by providing at least 30 days written notice prior to the end of the month to the other party.


Q8:How do I get my owner to agree

to changes in my management agreement?


Q8:How do I get my owner to agree

to changes in my management agreement?

Don’t require a signature for

changes



At the expiration of the initial and any subsequent term of this agreement, all terms and conditions are subject to change by Agent, with a 30-day notice to Owner.


7 Common Tenant Issues

Lease Agreement


Q1:Should I charge a pet deposit?


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Q1:Should I charge a pet deposit?

Charge an increase in the

security deposit, but do not

classify it a pet deposit


Lease AgreementClause #1

NO PET DEPOSITS!


Q2:How often

should I inspect the occupied

property?


Q2:

How often

should I inspect

the occupied

property?

At least one time

per year


Lease Agreement Clause #2

Agent may enter property for any inspection purposes with a 24-hour notice to tenant.


Q3:What if my

tenant refuses to sign a new lease

renewal?


Q3:What if my

tenant refuses to sign a new lease

renewal?

Charge a significant month-to-month rental rate increase



If we have not received a signed written notice of intent to vacant from you, and your lease term has expired, you ill be on a month-to-month lease term.Your rent will increase by ___% on a month-to-month lease term.


Q4:What if my

tenant sneaks in a pet?


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Q4:What if my

tenant sneaks in a pet?

Don’t get mad,Inspect,

Consider allowing it



No pets of any kind are allowed (even temporarily) anywhere on the premises, unless we’ve so authorized in writing. If we discover a pet on the property you will pay us $ _______ per day until the pet is removed plus an inspection fee of $ ________


Q5:How do I deal

with marijuana in my rental property?


Q5:How do I deal

with marijuana in my rental property?

Do not allow it



Recreational marijuana use is legal in Colorado. However, both Colorado law and federal law give us the right to prohibit it. Marijuana use, possession, and /or growing is prohibited on the property and violators will be evicted.


Q6:What if my tenant is

considering suing me?


Q6:What if my tenant is

considering suing me?

Do not allow them to subrogate their claim to their insurance company



Unless prohibited by law, Resident waives any insurance subrogation rights or claims against Landlord, Owner, and their insurers


Q7:What if my

tenant wants to add a

roommate?


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Q7:What if my

tenant wants to add a

roommate?

Consider it, and us a lease assignment

form



Have a lease assignment form


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1. How to Profit 180 - Property Management System€¦ · 4 Owner Ancillary Business Services...

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