The property management industry is undergoing a fundamental shift in service delivery models, with leading companies increasingly bringing traditionally outsourced services in-house, according to one industry expert.
“I think you’re seeing a lot more management companies really kind of vertically integrating a lot of their services, because the third party companies are really like the wrench in their system,” says Tiffany Mittal, CEO of Utility Ranger, a Utility Billing Software, pointing to utility billing as a prime example of this trend.
According to Mittal, the shift toward vertical integration is driven by both financial and operational considerations. “Property managers already have a very slim margin in property management companies,” she explains. “So if you can add this as another service that you can bring in house, you can actually generate additional revenue for it.”
This additional revenue stream is particularly valuable given the traditionally thin margins in property management, Mittal argues. Moreover, she suggests that bringing services in-house often results in better service delivery and more control over the tenant experience.
“You can’t control what the third party companies are doing, but if you really bring all that control in house, you can actually perform a lot better for your owners and provide a lot better service to your owners overall,” Mittal observes.
This control extends beyond just service quality. According to Mittal, property managers often find they “spend more time managing the third party company, rather than just taking this in-house and doing it themselves.” The result, she says, is that they “actually save time overall and then streamline the experience for their owners.”
The market appears to be responding to this integrated approach. Mittal notes that property management companies, particularly those managing under 1,000 units, are increasingly looking to add utility billing as an in-house service offering.
“Fewer people for the owners to have to deal with. They just want to deal with the property manager,” Mittal explains, describing the appeal from an owner’s perspective.
The shift toward vertical integration is being enabled by new technology platforms that make it feasible for property managers to bring these services in-house. Mittal’s company recently released a new approval workflow feature specifically designed for property management companies looking to offer utility billing services.
“We have quite a few smaller property management companies. Maybe they have 500 units, 800 units, 1000 units under their belt, and they are actually looking at bringing this on as an additional service offering to their owners,” she notes.
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