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Multifamily, We Have a Scaling Problem

Introduction First off, we need to explain what ‘scaling operations’ means. Operations are ‘scalable’ if they can use a small increase in costs to generate a large increase in growth. Let’s break it down further. Currently, when a property management company (PMC) gets more properties, it has to invest in more staff. This added cost of hiring new employees cuts into profits. But, with scaled operations, that’s not the case. An employee will can create a system for how to do things and then scale it.   Imagine you have a property management company with 5 marketers managing 50 properties. Now, what will happen if they get 50 more properties? With the standard operating system, the company has to double the amount of marketers. But, in a scaled operating system, the company may only need to add one more marketer.     So, we learned that scaling operations reduces the amount of capital needed for growth. Without scaling operations you are missing out on a few buck on the bottom line. No big deal, right? Wrong.    Let's take a look at the problems that arise when you are not scaling operations.       Symptoms of an Unscaled PMC Property management companies know they have inefficiencies in their lead-to-lease process. We know agents don’t have the tools or resources to spend their time efficiently. Their lead follow-up is weak, systems are not consistent, and scalability is difficult to achieve. Jake Meador, director of content strategy at Rentping, echoes our thoughts stating, “…leasing efficiency improves by improving the overall marketing and leasing system.”    Clerical Work Fills the Day Everyone in bus......
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Developing a Multifamily Growth Strategy

Developing a Multifamily Growth Strategy
What is your property’s growth strategy? As a property manager or owner, your initial instinct may be simple: We want to reach and stay at full occupancy. What more do we need to know? But every successful business needs a growth strategy to reach their goals. Your property is no different. There are a few different types of strategies businesses can choose from, based on the product or service they provide and their end-goals. These include: Market penetration—Where the company tries to create more sales to existing customers without making changes to the product, through tactics like lowering prices, increasing advertising, etc. This approach risks profit in the short-term to reach further and gain more market share. Market development—Where the company identifies new markets where they can develop their product or service. Product development—Where the company offers a modified or new product to its current market. Diversification—Where the company goes in a completely different direction than its current business model—providing a diversified offering to its current market. Considering the multifamily industry, there’s a limit on how many ways a growth strategy can be developed. After all, your market really is limited to the area and community around the property, and the goal ultimately isn’t to add to or completely diversify your current offering. You also aren’t likely to change a property so much it appears new to the market, such as going from a C-class to B-class property. So, that leaves us with market penetration. According to Entrepreneurship.org, developing a market penetration gr......
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