Property management cooperatives: banding together to cut costs

I spoke with a property manager the other week who was lamenting the tight profit margins he said he was forced to accept in order to get more business from property owners.

He was interested in property management software as one way to cut costs and boost margins, which is a great solution. But are there other ways for property managers to cut costs in addition to increased automation.

One of them is forming or joining a property management cooperative. The idea is simple: Bring together a group of property managers in your area with common needs — trash pickup, maintenance, etc. — and pool their negotiating power to get lower costs for products and services.

That idea is the brainstorm of CCA Global Partners, which has found a niche implementing cooperatives in many different industries. Now they’re turning their attention to property management, creating INNOVIA.

“The purpose of INNOVIA is to bring together property management firms from across the U.S. so the aggregation of goods and services can be achieved at a much greater discount than by doing it on your own,” Justin Gargiolo, senior vice president and director of corporate operations for Great North Property Management in Boston, told the New England Real Estate Journal.

The savings can be substantial. Gargiolo elaborates:

As one of the 12 founding members of INNOVIA (and growing) we’ve already achieved 12% saving on our trash hauling costs and have seen the opportunity for 10-12% savings in energy procurement (gas/electric). We expect to see additional savings opportunities in office products, insurance, mortgages, pest control, and flooring, among many others.

He adds that there are already plans to let rental owners benefit from cooperative purchasing as well.

Do you have experience with property management cooperatives? How could you benefit from joining one? What are the risks? Please share your experiences in the comments section below.