Financial Insights – Benchmarking the Four Strategies

Lisa Pentland & Craig Heath

Why Benchmark?

▪ Property management is known to be a cash flow stabiliser - but is that the sum of it?

▪ Do more managements = more profit in your business?

▪ Is profit opportunity being lost?

▪ Can Property Management be a profit centre in its own right?

Collecting Accurate Financial Data

▪Different revenue streams of the business

▪Understanding cost per management & water-levels

▪ Staffing structures

▪Details around overheads

Business Profiles  130 Offices

                   

Number of Managements 23     Avg 460         2000

Weekly Rent $214     Avg 400         $700

Management Fee 4.75%      Avg

6.82%       8.30%                   

Actual Data

Management Fees84%

Letting Fees11%

Lease Renewals1%

Lease Preparation Fees1%

Admin Fees2%

Other1%

Optimisation

Management Fees75%

Letting Fees15%

Lease Renewals4%

Lease Preparation Fees2%

Admin Fees2%

Other2%

Revenue Optimisation

▪ Increase revenue by 14.3%▪ Average equivalent to $106,535▪ Equivalent to the average annual income of 69 properties

What is our cost of business?

48.6%

31.7%

19.7%

Staffing Structure Desk Costs Profit

Desk Costs - Premises Costs - Promotions & Marketing - Technology & Subscriptions - Professional Costs - Operating Costs

Average cost per management

$1,136

What do we know?

▪ We now know the average cost for each property▪ We know what income is needed to make desired

profit So...▪ Do we know if our business is profitable and when to

say no to bad business?

Waterlevels

Staffing Structure – Avg 460 properties

• Total Headcount – 6 FTE’s

• Leadership Team – 0.8• Property Management Team – 3.5• Administration Team – 1.2• Business Development Team – 0.5

Staffing Structure - Business Strategies

  Data Collected Hyper Growth Machine Run Lean

         

No. of Managements 460 500 500 500

         

Leadership Team 0.8 0.5 1.5 0.3

Property Management Team 3.5 5 4 4

Administration Team 1.2 2 2 2

Business Development Team 0.5 4 2 0

Total Number Staff 6 11.5 9.5 6.3         

Properties per person 77 43 53 79

Properties per PM Team 131 100 125 125

Staff per management

Four Business Strategies – 500 Managements

  Hyper Growth Machine Run Lean Other Priorities

         

Revenue 100% 100% 100% 100%

         

Staff Costs 65% 55% 35% 20% - 60%

Growth Costs 12% 5% 2% 0% - 10%

Desk Costs 32% 30% 28% 30%

Total Costs 109% 90% 65% 100% - 50%

         

Profit -9% 10% 35% 0% - 50%

Regarding PM as an independent profit centre for your business

Reviewing & monitoring your business vs benchmarks

Losing Money