Are you charging fixed fees for property management? There may be a better way to structure your revenue model. 

If you’re a property manager or you oversee a rent roll within your agency, it’s more than likely you follow a fixed fee structure and charge rental property owners a percentage of their rent. 

Most agencies find this model works well but problems have arisen thanks to new players in the market. These so-called disruptors have been forcing a ‘race to the bottom’ situation by offering online-based solutions at a lower cost. While some of these brands have failed to gain traction, the influx of newcomers is a reminder to keep thinking differently.

With this in mind, there may be scope to structure your rent roll fees differently or pivot to a different model for generating revenue. 

Here are some options to explore. 

Service packages

Your agency could consider offering silver, gold and platinum packages with different options for rental property owners.

A platinum package, for example, could include more of a concierge-style service so the property owner never has to even think about maintaining their property, while ‘gold’ can provide the option to arrange their own gardeners and repair people in return for a lower monthly cost. 

Platinum clients may also receive more detailed reports, insurance reviews and insights about their property’s value and the current market as part of their package, or they could ‘earn’ regular strategy calls with their property manager. 

The aim with service packages is to guide people towards your preferred offering and package it up so they receive additional value but your team is not stretched to breaking point trying to keep up with deliverables. 

Add additional value for renters

You do have the potential to generate revenue from renters by finding ways to add value to their experience. For example, some may wish to opt into a services package which provides cleaning and gardening so they don’t have to arrange it themselves. Your agency can claim a referral fee from providers.

Be aware that you can’t technically generate fees from renters as well as property owners; the above option is an exception but you should disclose it to the property owner just in case. 

Another option if you want to diversify is to create a ‘renter agent’ service. Just as buyers agents represent buyers, you can help renters to find their ideal property in return for a fee. Many expats who are returning home from overseas find this helpful because they need somewhere to live and can’t attend open homes from overseas. If you don’t have a suitable place on your books for them to apply for, you can inspect and apply for other properties on their behalf.

A final option is for a renter to build loyalty or get discounts from other service providers or local businesses by demonstrating they have a relationship with your agency. This is more helpful in terms of referrals and partnerships that encourage more business. 

Customised service fee per property

Who said you have to charge the same fixed fee to every client?

Some properties (and let’s face it, some people) are harder to manage than others. Your agency may decide to have a price range rather than a one-size-fits-all fee, and base what people pay on the type of property and the time and effort your team will put in to manage it. 

It may be worth conducting an audit of your existing properties to analyse which homes cost your business more to manage, then working out a new pricing model with a few different categories. 

Add a consulting service

As property managers, your team doesn’t only know leasing, they know investing. If you find you are under pressure to reduce management fees, explore the idea of partnering with a local broker service to advise people on how to choose and purchase investment properties. 

You could also create and sell online courses or webinars to educate investors about the process to find and buy property.

Evolve with the times

If a fixed fee model is impacting your profits and you believe there are ways to do better, it doesn’t hurt to explore your options. Creating low and high touch offerings may work for your agency, or you may decide to base your fees on the type of home and client you are dealing with. 

What’s most important is to avoid the ‘race to the bottom’ mentality. Newer players may be experimenting with discount rates but if service isn’t up to scratch they won’t last. It’s not worth lowering your fees to compete because you will find your team and your customer service start to suffer.