Revenue per door $131, payroll per door $79. Where does the rest come from?

Question

Pulled the numbers apart properly for the first time. 340 doors, average rent $1,455, we charge 9 percent on collected rent, so base management revenue per door per month is about $131. Add leasing fees amortized across the year and it's maybe $148.

Payroll per door per month is $79 and climbing, and that's with me still doing owner calls myself. Software, insurance, comp, rent on the office and the rest take it to about $121 all in. So I'm running roughly 18 percent on a good month and less when a portfolio owner leaves.

Everything I read says ancillary income is where the margin actually lives now. But when I price a resident benefit package I get to maybe $30 a month per resident and I have no idea how much of that is real margin after the vendor takes their cut, or how many residents actually stay enrolled. Is 18 percent normal at this size, and what does an RBP realistically add per door once the vendor is paid?

Rena Expert · Accepted Answer

18 percent net at 340 doors is on the low side of normal for that door count, and the reason is visible in your own numbers. $131 of base fee against $79 of payroll means you're at roughly 1.66 on the revenue-to-payroll ratio, and firms that run comfortably at your size are closer to 2.2. That's usually a doors-per-employee problem rather than a pricing problem. Well-run single family shops land between 180 and 250 doors per full time person depending on scattered-site density; if you're under 150 you'll never fee your way out of it.

On the RBP: a $30 package typically breaks down into things you buy and things you already do. Filter delivery, credit reporting for on-time rent, identity protection and a resident portal are bought from vendors and cost maybe $10 to $16 of that $30. The 24/7 maintenance line and the one-time late fee waiver cost you nothing new. Realistic net is $12 to $18 per enrolled resident per month, and enrollment on new leases where it's written into the lease runs high while retrofitting existing leases at renewal converts far more slowly. On 340 doors, assume 60 percent enrolled in year one and you're looking at roughly $3,000 a month, call it 6 to 8 points of margin. That is genuinely meaningful at your scale.

Two cautions. If the package includes a renters insurance product or anything that looks like insurance placement, you may need an insurance license or a licensed partner, and that rule differs state by state, so ask a local attorney before you sell it. And mandatory fees bundled into rent have drawn regulatory attention in several jurisdictions. Price it so the package survives an owner or a court asking what the resident actually received for the money.

mikeoconnell7 · Answer

What's actually inside one of these packages? I've seen the term maybe fifty times and every list is different, so I can't tell if it's a real product or a line item with a nice name on it.

Rena Guide · Answer

A resident benefit package, usually shortened to RBP, is a bundle of services the management company sells to the tenant as a monthly add-on, separate from rent. Typical contents are air filters mailed to the unit on a schedule, a resident portal with online payments, credit bureau reporting so on-time rent helps the tenant's credit score, a 24 hour maintenance phone line, identity theft monitoring, and sometimes one waived late fee a year or a small move-out concession. Price is commonly $25 to $50 a month.

Whether it's a real product depends entirely on what's in it. The filter delivery is genuinely useful, and there's a maintenance reason for it too, since a clogged filter is one of the more common causes of an HVAC service call. Credit reporting has real value to a tenant building a file. A line item that just says "resident portal" when the portal is how they pay rent anyway is thin.

The piece people miss when they set one up is that the tenant isn't the party who signed the management agreement. The owner is. If you're charging the tenant for services and keeping the revenue, your management agreement needs to say so plainly, because an owner who discovers it later reads it as money taken out of their property. Managers who disclose it up front, in the fee schedule they hand the owner at signing, don't have that fight. It's also the sort of arrangement where state consumer protection rules can apply, so have a local attorney look at the lease addendum.

angela_burke · Answer

Your $79 payroll per door is the number I'd chase before the RBP. We're smaller and the thing that moved our ratio was killing inbound phone volume, not hiring. Maintenance triage through a form with photos required, plus a rule that nothing gets scheduled without the photo, cut our call minutes by something like a third. Every call your team doesn't take is doors they can carry.

chriswalton8 · Answer

From the outside looking at these as businesses, the 18 percent matters less than how much of the $131 recurs when an owner sells. If a chunk of your 340 doors belong to two or three owners you're not really at 18 percent, you're at 18 percent with concentration risk sitting on top. Buyers price that in hard.

Revenue per door $131, payroll per door $79. Where does the rest come from?

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