The Pros and Cons of Big Owner-Clients for Property Management Success
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As a property manager, generally speaking, more properties mean more profit. So, when you are building your property management business, do you want to sign a couple of big owner-clients, or do you want to manage properties for numerous clients who own only one or two properties?
It's an excellent question to consider as you think through your business plan and the best types of clients to fit your goals for property management success. A property management consultant can help you evaluate which types of clients best suit your business. Let's investigate the advantages and disadvantages of signing on a client with an extensive property portfolio vs. smaller clients with fewer properties.
Pitching your services to a big corporate client can seem daunting. Is it worth the stress and effort? Will a large owner-client translate into massive success or more effective property management? Here's what to consider.
1. Big Pockets
The first and most apparent advantage of landing a big client is the cash injection to your business.
Corporate real estate investors have a bigger budget to spend on small businesses. However, if you do your due diligence and stand your ground, there are opportunities for valuable contract negotiations. A bigger paycheck means peace of mind for property management business owners and the resources to grow a successful property management business.
2. Opportunity for Future Work
Larger organizations have more opportunities for future work.
Even if units that you are currently managing for them sell, there is a high likelihood that the company will replace these with different properties. Therefore, you don't need to spend as much of your time prospecting for new clients.
You will have more time to devote to other aspects of your business—for example, fine-tuning your systems and procedures for effective property management. This could translate into improved efficiency and better profitability down the line.
3. Industry Credibility and Prestige
Signing on a big client is a fantastic boost for your company's visibility in the property management landscape.
Association with a well-recognized company can improve your credibility amongst other real estate investors, both big and small. Make sure to build secure and trusting relationships with your clients so that you can count on them to keep sending work your way. You will also want to be able to ask them for a testimonial or referral to use when marketing your company to new potential clients.
4. Rigid Standard Operating Procedures
Depending on your standard operating procedures (SOPs), this point may be an advantage or a disadvantage.
If you are starting in the property management business and snag a big owner client, you can benefit from the systems and structures the client would like you to follow. However, if you have been operating with specific systems for some time, it might be challenging to take on board a client that wants you to do things their way. You don't want to diminish the efficiency and consistency that you have been building on for the past few years.
The Disadvantages of Big-Owner Clients
Large clients may mean a massive cash injection, but it could come at a price. They may place a lot of pressure on your property management business and be far more demanding than smaller clients. Think about these disadvantages before signing on with a big client.
1. Big Clients Want More Bang for Their Buck
Do more doors mean more profit?
Bigger clients tend to be more price-driven. They may want to negotiate costs at every turn. Overseeing fifty units owned by a single owner rather than fifty individually-owned units should take up less time.
So, you could consider bringing down your fees slightly. Just be sure to have done all your calculations before entering negotiations with them, and don't cheapen your services to please a big client that could be costly to your bottom line.
2. Big Clients Have Big Expectations
Many corporate businesses know they are doing you a favor by assigning you to oversee their property portfolio. As a result, they might have greater expectations about what you should do for them as part of the property management package.
Be open to negotiations, but don't bend over backward for the sake of a big client and, in so doing, lose sight of everything that makes your business successful and unique. For example, if your new potential client wants you to inspect their properties five times a year instead of the usual twice a year, that is your SOP (standard operating procedure), then make sure to bill them for it.
3. Big Financial Impact
Losing a client who owns one or two properties is not a significant loss compared to losing your biggest client with a significant number of doors.
Parting ways with a big client will be a massive financial blow. As a business owner, a client with multiple doors can make up most of your income.
Work hard to serve them well to decrease the likelihood of them moving to a different rental property management company. However, stay true to the essence of what you are and how your business operates. If taking on a large client (then losing a large client) is devastating your income and workforce, it might not be worth it.
4. Big Clients Can Have a Big Hold on Your Business
Property management businesses may become beholden to their "Big Clients." Once you have onboarded a corporate real estate investment company, you might become terrified of losing that client and the corresponding income. This could drive you to make concessions in the way that you would normally do things and lose sight of your core business values.
Which Client is Best for Your Business?
The client best suited to your business is the one that you can serve the most efficiently and profitably!
A property management coach can help you review your processes, team, and goals to help identify the types of clients or a property owner you should pursue. Big owner-clients and smaller portfolio clients bring different things to the table. For example, clients with large portfolios can be a useful cash injection, while a handful of smaller portfolio clients can lend stability to a long-term plan.
The right property management coach can guide you on how to find the ideal balance for your successful property management business.
Choose Clients Wisely for More Property Management Success
Do you want to aim for those big-ticket clients or stick to serving individual property owners? No matter how you scale your business, ensure you have the processes, technology, and people in place to maximize your profit per door.
To attract the right kind of clients, you need to have the correct business infrastructure in place. Real-Time Consulting Services has the experience and insights you need to help you build a client base that leads to more property management success! Reach out soon to connect.