Is your rental management department a sleeping giant?

Is your rental management department a sleeping giant?

MAIN IMAGE: Schalk van der Merwe, Director of WeconnectU Intelligent Property Software


Did you know that very few rental management businesses in South Africa are launched for the sake of it? Most are created as extensions to existing sales or community management businesses.

According to Schalk van der Merwe, Director of WeconnectU Intelligent Property Software, the goal for these rental “add-ons” is usually simple: to add value and help with client retention by meeting a more complete selection of their property needs.

Being an initially low-margin operation, however, Van der Merwe says it’s not unusual for rental management departments to be somewhat neglected in favour of more immediately profitable business units.

“Let’s face it, business owners in the property management space are stretched in a thousand directions,” says Van der Merwe. “When time is limited, it’s human nature to focus on areas that bring in the most immediate income. Unfortunately, that means rental management – along with all its long-term potential – is often left to fly under the radar. As a result, balls are dropped, service quality suffers, clients are exposed to unnecessary risk, and significant business value is essentially left sleeping.”

The knock-on effect is that the same rental management departments that are supposed to help retain clients often end up losing them, despite endless hours of hard work trying to provide good service in an increasingly complex landscape.

But it doesn’t have to be that way.

“If you take a look at the numbers, a rental book of 50 properties with an average rental of R8k and a management fee of 10% brings in a gross income of R40k per month,” says Van der Merwe. “That may not sound like much, but a small change in perspective reveals a lot more value hiding beneath the surface.”

For starters, Van der Merwe points out that R40k per month adds up to almost half a million rand over the course of a year. That’s a figure that can make a real difference to a small business’ cashflow.

“We’ve also seen many instances where a well-run rental management business – one that leverages technology to be compliant, manageable, scalable and profitable – has sold for 12 times its monthly income or more,” says Van der Merwe. “That’s another half a million rand in asset value waiting to be realised when the business is eventually sold – not a bad little nest egg for a savvy business owner.”

That’s not the limit of a rental management business’ potential, either. According to Van der Merwe, it’s possible to increase rental management income by 20% or more – with a corresponding increase in business value – simply by implementing the right business model and leveraging form your tech ecosystem.

So, what does the ultimate business model and tech ecosystem look like?

“In terms of business models, the goal is to create an environment that optimises efficiency to enable teams to do more, in less time, and with less effort,” says Van der Merwe. “That, alone, can free up resources to unlock additional income streams. We’ve seen businesses increase sales by 5-10%, for example, by simply freeing up the time to engage with their rental investors over strategic – and mutually beneficial – expansion of their property investment portfolios.”

To get the best results, however, rental management teams – and business owners – need to be supported by the right technology.

“There’s a huge correlation between business growth and using the right property management software,” says Van der Merwe. “It’s all about working smarter, not harder, which is exactly what WeconnectU is designed to do.”

From automating key financials, operations, communications, and reporting, to delivering complete transparency between departments and clients, purpose-built property management software certainly supports a relatively effortless workflow for rental managers. This, Van der Merwe says, makes it possible to pursue additional income streams without overloading your existing workforce.

“The right tools should do more than just streamline your processes, though,” he says. “They should also help demonstrate and communicate your value to your clients. This is essential if you want to be paid fairly for your services and turn your rental department into an income-generating asset.”

Perhaps even more importantly, however, good property management software gives business owners the insight – and oversight – they need to manage all their business units, equally.

“No more picking and choosing where to spend your energy,” says Van der Merwe. “When you have all your KPIs at your fingertips, management becomes a whole lot more… well… manageable.”

And when business owners are able to perform the necessary checks, it’s much easier to transform rental management from a sleeping giant into an active and profitable addition to the broader property management business.

About WeconnectU

WeconnectU offers a truly end-to-end Property Management ecosystem that solves all the major challenges in Community Management, Rental Portfolio Management, and Inspections & Maintenance Management.

WeconnectU’s solutions have proven extremely effective at helping property managers break free of their operational limitations to create modern businesses that are compliant, manageable, scalable, and profitable.

  • Roger Lotz

    Great read

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