Background

The Problem

The property management side of the business was profitable but had become an operational nightmare. The disruption caused by the pandemic had made it increasingly difficult to get contractors and providers to respond as in years past. They currently don't have all the proper tax and insurance documents for their contractors and have inadvertently exposed their company and clients to unnecessary financial and liability risks.

While leasing, rent collection, and accounting were smooth and predictable parts of the business, the maintenance management and coordination had become a miserable, thankless part of the business that at times could easily overwhelm the staff. The occasional loud, angry tenant in the lobby or on the phone disrupted the entire office. Even more concerning was these confrontations often took place in front of new prospective tenants, buyers, and sellers.

Additionally, the real estate market has begun to slow down, and their agents and brokers weren’t closing deals like in previous months. This was putting more pressure on the business owners to cut overhead and look for ways to increase their property management business so they could weather the coming economic storm. 

The Analysis

Handyman On Demand analyzed their existing maintenance operation and the number of tenant and management-generated maintenance work orders. We determined they were operating a fractional management model. This means instead of having designated maintenance coordinators and management, the property managers, leasing agents, supervisors, accounting department, and executive management fractionally contributed to their maintenance management activity. This shared effort totaled 2.4 manheads per month. After understanding how much time each employee contributed to their maintenance effort, we were able to calculate an average fully burdened hourly wage rate plus G&A. A fully burdened rate includes federal, state, and local taxes, insurance, and company benefits. The G&A portion accounts for the infrastructure costs of supporting an employee such as computers, phone, office space, etc. The client agreed that $32.43 per hour was an accurate rate and that $12,452.12 per month was an accurate estimate of how much they spent on maintenance management and coordination. This analysis revealed that their internal cost per door was $35.78.

The Goal

After discussing our analysis with their management team, we carved out six essential goals they would like to achieve. They are…

The Solution

Based on 400 doors under management, we were able to put a 24/7/365 full maintenance coordination plan together for $3.63/door. This change resulted in an immediate reduction in their overhead of $32.15/door for a total projected overhead reduction of $154,320 per year.