Know Before You Grow: A Property Manager’s Guide to Successful Scaling

Shahar Goldboim
9/11/2024

The journey from launching your first rental property to overseeing a sprawling portfolio is far from a leisurely vacation. Many property managers start with little to no business experience, relying solely on what their hospitality instincts tell them to create welcoming and comfortable spaces.

And while a knack for delivering an exceptional guest experience is certainly a valuable asset, that alone isn’t going to be enough to navigate the complexities of a fast-growing business.

But fear not. We’re going to prove that you don’t need an MBA to scale your short-term rental management effectively. Here are some fundamental tips to keep things running smoothly as you expand, ensuring that your business grows without growing pains.

Keep Your Balance Sheets in Equilibrium

One of the first areas that can spiral out of control when a company grows fast is accounting. While it can be easy to keep track of money when you’re only taking a few bookings each month, in a large portfolio, when you have dozens or hundreds of properties on your roster, managing accounting without specialist tools or people can lead to mistakes that can cost you a lot of money.

As property management isn’t a high-margin business, it can be easy to make mistakes. As the merchant of record, you receive 100% of the money from bookings but only about 20% of that is your profit, before expenses. This means that you’re handling a lot of money—often for a long period between the booking and check-in—which appears as liabilities. Without a clear system, it’s difficult to keep track of what funds go where, which can lead to potential financial mismanagement.

Maintaining an up-to-date profits and losses (P&L) sheet is crucial. Think of your balance sheet as your oxygen tank, and your P&L as the gauge showing how much air you have left. While specialist software can automate much of this process, ensuring real-time updates and reducing the risk of errors, you too must pay attention—and not forget to breathe. If you keep a close eye on your business’ financial health, you can make informed decisions about expenses and revenue that widen your profit margins and prevent issues before they arise.

Accurate accounting is also vital for owner and investor relations. Clarity and transparency encourage trust in your services, while investors are more likely to trust a business that demonstrates meticulous financial management and a clear understanding of its trajectory.

Scaling Your Team

As your portfolio grows, so should your team. A common theme in rapidly scaling businesses is small teams made up of employees on the verge of burnout, each juggling the work of two or three people. Finding the right moment to expand and ensuring that new hires are financially viable and sustainable can be a real challenge. However, a strong business plan and data-driven projections provide the solution.

Plan for how you want the company to look in five years’ time, breaking this vision down into yearly and quarterly goals, or even 10 years, setting clear targets in terms of financial goals, portfolio size, and team growth. This foresight requires identifying which roles will become critical as you expand, as well as establishing a clear payroll structure and career progression path. An objective-led plan will help retain your best staff and allow them to grow with the company.

Automation is your ally in growing your team at the right speed. By automating repetitive tasks, you can free up your team to focus on higher-value work that requires a human touch. This balance between well-managed human talent and technological efficiency will be a cornerstone of your sustainable growth.

Make Business Intelligence a Priority

It’s easy enough to maintain a good level of oversight when you’re only managing a handful of properties. But as you scale, it becomes increasingly difficult for one person to keep track of every important detail. This is where problems start to arise, and mistakes can happen.

Implementing a robust business intelligence (BI) tool early in your growth journey will pay dividends in the long run. BI tools and well-chosen key performance indicators (KPIs) can provide deep insights into every aspect of your operations, from occupancy rates to maintenance schedules, allowing you to make data-driven decisions with confidence. Structured reporting will also help you to spot problems before they occur, saving you time and money.

Optimize Operational Efficiency

The key to managing a growing portfolio without becoming overwhelmed is implementing effective processes. Regularly review your team’s operations, clarify responsibilities, and identify areas for improvement.

Again, you can also lean into technology to automate and streamline tasks. Operations platforms simplify overseeing schedules and coordinating with staff, while also making it easier to track your team’s performance.

Taking a proactive approach to property maintenance can prevent costly repairs and downtime. Today, AI can predict potential issues before they escalate, enabling timely interventions that keep your properties in top condition and prevent future problems.

Scaling your property management business means much more than just acquiring more properties. It requires a balanced approach that combines financial acuity, strategic hiring, operational efficiency, and the effective use of technology. By adhering to these principles and maintaining a commitment to continuous improvement, you can ensure your business not only grows, but thrives.

Keep learning, adapting, and striving for excellence, and your property management business will stand out in an increasingly competitive management.

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