Today, we are talking about maintenance services and how you can turn it into a competitive advantage for your property management company. Here with us to answer our burning questions on the subject is an expert in this realm: Curt Fluegel, the CEO and founder of PM Toolbelt.
About Curt Fluegel, the Founder of PMToolbelt
Curt started in the industry as a property manager, mostly fixing and flipping property during the recession. Maintenance is his specialty and had been a core part of his business — until he lost a lot of money on it. To combat this, Curt systematized his business and created PM toolbelt. PM Toolbelt is a software platform that helps property management companies manage maintenance services. Below are Curt’s tips for property management owners that are considering on providing maintenance services:
When Property Managers Lose Money on Maintenance
If any property management company provides maintenance services without thinking it through or having a process in place, they would most likely make more money by not providing it. A lot of companies have lost money this way, and it’s often due to lost receipts or not tracking expenses well enough. You may not realize you’re spending more on parts and labor than you are earning. You have to make sure your maintenance personnel are busy working and not spending extra time at Home Depot. Fixing homes and providing a good maintenance service is great, but to avoid losing money, you need to track better and charge more.
Managing Your Time with a Property Management Business and a Maintenance Business
As a CEO you shouldn’t spend any more time on this than you do on other tasks. The amount of time a CEO spends on a maintenance business depends on communication and scheduling. There are tools that can help with the actual oversight. You can look at profitability by property or by tech from a CEO level; it’s no different than spending time on anything else.
To control scheduling, getting the right systems is key. You can get away with a lot until your company grows too large. If you can alleviate the pain points like confirming that specific work has been done, or making sure maintenance coordinators, techs, and clients are all in the communication loop, then everything else can get pretty easy.
For maximum convenience, your software should allow you to drag and drop to schedule a work order. That way, there’s not a lot of task management activities except on your bookkeeping side. But, if you don’t have a dedicated bookkeeper, you may have a bigger load.
How a Maintenance Company Allows You to Take on Any Property
Curt managed to pull in 50 percent of his revenue last year with his maintenance company. A lot of factors accounted for that, especially the property choices that were made. Because he provides maintenance services, Curt’s company has the flexibility to work with both carefree easy-to-manage properties and properties that would make the maintenance company a lot of money. So that opened up what they could go after, increasing his revenue.
Everyone wants the high rent/low maintenance properties in their portfolio. But, you’ll see other properties a little differently when you have a maintenance company to run. Adding an older home with repair needs to your portfolio means that the maintenance division will make a lot of money – money you wouldn’t make offering nothing beyond standard property management services.
Curt took on a lot of properties from new property managers who felt overwhelmed with the amount of maintenance their investments needed. You can get away with a different management cost when you can come in as an expert and explain why the owner’s property will be a struggle to manage. Also, you can manage it better than a person who doesn’t know as much about maintenance. You can charge a higher rate and still bring in more profit from that investment because you bring stability to the property and to the owner.
What to Track to Start Saving on Maintenance Services
You need to track the location of your service technicians and where your parts are. If you don’t know how much time is spent on each project and you can’t say where each penny went, you’ll lose money every month. So you have to be firm with your service technicians. Service technicians are thinking only about what they need to do – you need to be planning their next move.
Tracking can be made easy; there are GPS apps or vehicle trackers you can use. There are cheap or free apps to help with time clock tracking such as Time Clock Wizard. QuickBooks allows for time tracking as well. The key is to track your employees. Software like PM Toolbelt helps property management owners achieve just that. Your service technicians are getting paid by the hour and you’re supposed to be making a profit. You need to know if they’re spending 30 or 60 percent of their time driving and what they’re spending on parts. Get very granular with it by tracking the details.
What details? You need to tie their hours to your money. Simple division can show their efficiency. If someone is working 40 hours a week, how many hours did he actually bill to you and how many of those hours are billable to charge back to the owner? If you get that one right, you’ll be in good shape. Look for efficiency in the 90 percent range.
Think of this not as a side business, but a good business in its own right. Everything should scale, including the number of workers you employ. While tracking is the biggest problem to solve, it can be simple to do with the right tools.
Communication, Reviews, and Customer Feedback
The next problem with providing maintenance services is communication. Generally, if someone is leaving you a bad review or thinks they received bad service, it’s probably for a reason you can understand. A tenant is usually happy until for some reason they don’t feel you did what you’re supposed to do when something in the home breaks. It’s typical for property managers to get bad reviews.
It’s an odd metric, but make sure you’re tracking your level of service. Be aware of the quality of communication your employees provide. For example, maintenance coordinators need to make sure the tenant knows maintenance techs are coming and/or that their comments and complaints have been heard. Tenants want to be kept in the loop, and they will appreciate the company that keeps open communication with them. Find a good way to track and improve that sort of communication because when your service quality goes up, everything else becomes easier.
With local businesses, customer experience is crucial in this day and age. People don’t choose a service until they see good reviews. Fourandhalf has a service where tenants and owners are surveyed any time there’s contact; whether it’s right after a move in or a move out, or once tenant placement is completed. It’s an excellent way to get reviews and to be aware of your customers’ experience with your business. The good reviews are made public and bad reviews will be sent to you so you can correct bad service.
Efficiency When Dispatching Techs
Your efficiency depends upon your scheduling. So, no matter how many technicians you have, you have to be able to dispatch them based on job priority. Decide what’s a priority, what’s past due, or what’s within 10 minutes of a tech who is currently in an area. For instance, in Minnesota, markets cover a large area, and some properties can be over 60 miles apart. That’s doable as long as you’re not sending someone 60 miles every time. Scheduling is less of a metric and more of an efficiency.
If you can’t create a good schedule, you’ll lose money, and the bigger you get the more challenging that becomes. We recently ran across an article about why UPS drivers never turn left. It was about how, to save money, UPS’s dispatch software routes drivers so that they (almost) never turn left in traffic intersections. That’s extreme, but you want to route your service technicians so they aren’t driving around all day or sitting in a parts store all day. Know how much of their time is billable, and if you can only bill for three hours in an eight hour day, you need to fix that.
Providing Maintenance to Other Property Management Companies
If other companies can’t make money off maintenance, you should take it off of their hands. That business opportunity is a “low hanging fruit” if other property management companies trust that you won’t try to steal their clients away. Getting local customers is no more difficult than attending NARPM meetings, making friends locally, and having a couple of people trust you first. Everyone needs a qualified maintenance vendor, so you have a competitive advantage.
If you spend the time to get good techs on your side, you’ll sell your maintenance services more easily. The demand is already there. Hiring good techs is often the hardest part. Someone at a NARPM event said they simply never close their job posting for techs. That’s good advice. There’s more of a demand for good techs than there is a supply. So qualifying the first tech is the hardest part and it’s like any skill; you’ll learn who to look for.
When to Start Your Maintenance Division
It depends on more than the size of your company. The type of properties you manage will impact that. If you’re in the downtown of a major metro area, you’ll have properties needing work all the time. People who are successful at this can start when they are at about 200 properties, but those who have 400 properties do even better. This part of your business takes up very little office space and you don’t need a whole different infrastructure when you incorporate a maintenance side.
It’s a great opportunity, and when we talk about doubling your recurring revenue with maintenance, the opportunity could be worth the work. If so, PMToolbelt.com is a service you should check out. Reach out to Curt if you have any questions.