the housing and utilities sector and allows you to build a service focused on customer needs.
At the initial stage, the company may face limitations in the payroll fund. In this case, some specialists, such as accountants, economists, lawyers, and HR managers, can be engaged on an outsourcing basis. This approach allows the company to save resources while ensuring the necessary level of professional support. As the company grows, it will be advisable to move key functions in-house to develop competencies within the organization.
The company’s startup will require significant investments, especially in infrastructure and the salaries of management personnel. Considering that the initial volume of serviced residential property may be insufficient to cover all expenses, it is important to anticipate cash flow gap compensation mechanisms in advance. This could include additional financing from shareholders with clearly defined investment repayment terms. This solution allows the company to grow without compromising the quality of services provided.
If the company is being created as a partnership, it is crucial to formalize the basic principles of interaction at the initial stage. This may include the distribution of roles and responsibilities, financial obligations of the parties, dispute resolution mechanisms, and success evaluation criteria. Transparency and alignment of these principles will form the foundation for stable cooperation. Over time, such agreements will only strengthen, contributing to the long-term stability of the business.
Creating a property management or service company is a serious project that requires not only financial investment but also a systematic approach to each stage. The quality of preparation and thoughtful planning will determine not only the successful launch but also the long-term sustainability of the business. By investing in office space, technology, personnel, and building trust with residents, you lay the foundation for a company that will generate profit and meet customer needs.
2. What is the profitability of the business?
Creating a successful property management company for multi-apartment buildings involves more than just legal registration and organizational aspects. It is crucial to carefully work out the financial side of the business, including cost calculations, income sources, and profitability. Without a deep understanding of the economic fundamentals and a sound approach to budget formation, there is a high risk of encountering losses and, consequently, business closure.
The profitability of companies operating in the field of property management for multi-apartment buildings is initially quite low. The business requires substantial initial investments, and its return on investment can take several years. Initial expenses include rent or purchase of premises, purchase of furniture and equipment, acquisition of software, hiring staff, and possibly additional costs for marketing and client acquisition. These costs form the base from which the company’s future financial stability depends.
The main income for the company is generated through tariffs for management and maintenance services of multi-apartment buildings. However, tariff rates are often low due to market characteristics. Most of the housing stock consists of buildings that are over 10—15 years old, where people with limited financial means live. They are often unwilling to pay high rates for building maintenance and services, which creates limitations for companies in increasing their income.
However, tariffs are regulated at the general meeting of property owners, and the management company has the opportunity to initiate a review of the rates. This may be due to the objective increase in costs, such as inflation, rising material costs, and services. An important factor in this process is providing a transparent justification for raising tariffs to the residents to avoid dissatisfaction and loss of trust.
Property management companies can increase their profitability not only by changing tariffs but also by introducing additional areas of activity. For example, one way to boost income is by offering extra services to residents. This could include installing utility meters, repairing plumbing or electrical equipment, providing private security services, organizing small repairs, or modernizing engineering systems. These services are charged separately and can significantly increase the company’s revenue.
Another effective method is renting out non-residential spaces within the managed building, part of the adjacent land, or advertising spaces. For this, it is necessary to obtain consent from the property owners at a general meeting, emphasizing the importance of building trustful relationships with the residents.
Additionally, the management company can enter into agreements with external contractors who provide specialized services, such as cleaning, water delivery, apartment repairs, or technical maintenance. This not only expands the range of services offered to residents but also helps optimize costs by outsourcing some tasks. This approach reduces the financial burden on the company and improves service quality.
A key indicator of business success is profitability, which is calculated as the ratio of net profit to the company’s revenue over a specific period. Simply put, it’s the share of profit generated by each tenge invested in the business. A high level of profitability indicates well-organized business processes, optimal cost management, and effective customer relations.
To increase profitability, it’s essential to balance income and expenses. This includes not only proper tariff formation but also the implementation of quality control systems, cost reduction, and customer loyalty programs. For example, implementing automated accounting and management systems will help optimize operational processes and reduce manual labor costs. Transparent and clear communication with residents, including regular financial reports, also strengthens trust and, as a result, improves the company’s financial performance.
Although property management for multi-apartment buildings is a business with low initial profitability, it has significant growth potential. As the managed housing stock increases, automation levels rise, and the range of services expands, the company can substantially boost its income. It’s important to understand that this process requires time, a systematic approach, and continuous efforts to improve service quality.
Thus, success in the property management industry depends directly on the company’s ability to combine sound financial planning, effective communication with residents, and the implementation of innovative solutions. Only in this way can one expect long-term business stability and profitability.
Profitability is one of the key indicators necessary for the objective assessment of a company’s financial and operational efficiency. It allows management to analyze how effectively the company’s resources are being used, evaluate the dynamics of business development, and determine whether there has been an increase in efficiency or if negative trends are emerging. This indicator is especially important for comparing the company’s performance over different periods and for analyzing the competitive environment. In the property management business, profitability serves as a marker of the company’s stability and viability.
In practice, in the housing and utilities sector, the profitability of management and service companies typically ranges from 5—10%. Higher profitability (around 10%) is more commonly found in companies that manage newer buildings, particularly those built less than 10 years ago, or new residential complexes. This is because new buildings require fewer maintenance expenses, and the owners in such properties often have higher incomes, making them more willing to pay higher fees.
For a company operating in conditions of low profitability, it is crucial to manage its resources carefully to ensure stability and avoid financial difficulties. For example, with a profitability rate of 5%, the collection rate for services provided must be at least 90—95%. If this rate drops below that, the company will inevitably face accumulating debt, which could lead to bankruptcy. This underscores
