In our seventh Centralization Webinar Series session, we moved beyond the operational basics to tackle the dollars and cents of centralization—specifically covering how fee managers can transform centralized services into revenue-generating departments. We were joined by Hope Dunleavy, Enterprise Management Consultant at Real Foundations, who brought 25+ years of industry expertise to help operators understand how to properly monetize their centralized services.
Here's what stood out from our conversation.
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Takeaway One: Centralization Creates a New Revenue Stream for Fee Managers
While REITs and owner-operators typically view centralization through the lens of payroll savings, fee managers have discovered something more exciting: centralized services can become an entirely new revenue generator for management companies. When you replace dedicated onsite staff with shared centralized resources, the math creates room for everyone to win.
Consider this example:
- An assistant community manager costs roughly $28 per unit per month when dedicated to a single property.
- A centralized specialist supporting multiple properties can deliver the same services for $6-10 per unit per month.
That delta allows fee managers to generate revenue while still delivering substantial savings to ownership groups.
This revenue opportunity is particularly compelling because efficiency improvements over time expand margins. As specialists become more proficient and AI tools handle increasing volumes, a specialist initially managing 1,250 units might eventually support 1,500 or 2,000 units. If billing rates remain stable while productivity increases, those gains flow directly to the management company's bottom line.
Takeaway Two: Success Requires Understanding Your True Cost of Service
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Before setting billing rates, operators must calculate the complete cost structure of their centralized services. This goes well beyond just payroll. The full cost of service includes:
- Specialist salaries, benefits, and bonuses (typically the largest component)
- Technology stack and AI tools that enable scaling
- Hardware like headsets, computers, and home office equipment
- Department overhead including management and supervision
- Direct expenses like training and travel
- Shared service allocations from HR, accounting, and legal
In our example, a specialist earning $50,000 annually had a total cost of service around $93,000 once all factors were included. Missing even small items—Hope reminded us not to forget envelopes and stamps for security deposits—can erode margins over time, so properly scoping your cost of service is a crucial part of delivering ROI from centralization.
Takeaway Three: Per-Unit-Per-Month Billing Creates Transparency and Scalability
The most successful operators are adopting per-unit-per-month billing models for centralized services, mirroring how they already pay for technology. This approach offers several advantages over flat fees:
- Easy budgeting: Properties can predict costs based on unit count
- Clear value demonstration: Ownership groups can directly compare centralized costs against traditional staffing
- Scalability: As portfolios grow or shrink, billing automatically adjusts
- Fairness: Properties pay proportionally for the support they receive
Setting the initial rate requires balancing cost recovery with market acceptance. Our analysis showed break-even rates around $6.20 per unit per month, with successful operators billing $8-10 while still delivering meaningful savings versus dedicated staffing models.
Takeaway Four: Choose Between Dedicated and Shared Models Based on Your Portfolio
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Operators must decide whether centralized resources will be dedicated to single ownership groups or shared across multiple owners. Each model has distinct advantages:
Dedicated Model:
- Simpler billing and administration
- Easier to pilot with owned assets
- Clear accountability to one owner
- Limited scalability unless the owner has a large portfolio
Shared Model:
- Maximum scalability across ownership groups
- Better specialist utilization
- More complex billing and allocation
- Requires careful tracking of time and resources
Most operators start with dedicated models for their owned assets or largest clients, then transition to shared models as they gain experience and confidence in their allocation methods.
Takeaway Five: Value Extends Beyond Payroll Savings
While payroll reduction drives the primary ROI calculation, centralization delivers value through multiple channels that strengthen the business case:
- Technology consolidation: Fewer users often unlock better enterprise pricing
- Training efficiency: Specialists require less ongoing training than generalists
- Reduced turnover: Clear career paths and remote flexibility improve retention
- Performance improvements: Automated collections often outperform manual processes
- Risk mitigation: Specialized expertise reduces compliance errors, especially in affordable housing
Hope emphasized how "delocalization"—aligning tasks with the right talent in the right place—can uncover hidden value. One of her clients discovered they were leaving hundreds of thousands of dollars on the table in commercial lease administration within their mixed portfolio. Centralizing that function with specialists who understood commercial terms captured previously overlooked revenue while reducing risk.
Takeaway Six: Brand Consistency Becomes Your Competitive Advantage
The most underappreciated benefit of centralization may be brand standardization. When specialized teams handle processes uniformly across all properties, residents experience consistent service quality regardless of location. As Hope noted, using Nordstrom as her example, customers return to brands that deliver reliable experiences every time.
This consistency manifests in:
- Standardized communication across all resident touchpoints
- Uniform financial processes and documentation
- Reliable response times and service levels
- Professional handling of escalations and exceptions
Meanwhile, onsite teams freed from administrative burden can focus on relationship-building and high-touch service—becoming the true face of your brand rather than being buried in paperwork.
Putting Commercialized Centralization Into Practice
The shift from viewing centralization as a cost-cutting measure to seeing it as a revenue opportunity represents a fundamental change in how property management companies can structure their operations. For fee managers, this creates competitive advantage through new revenue streams. For owner-operators, it delivers measurable NOI improvement through both cost reduction and operational enhancement.
Success requires careful attention to cost structures, billing models, and administrative systems. But operators who get the formula right are discovering what other industries have long known: operational efficiency and revenue growth can go hand in hand. In an industry where management fees have been compressed for years, centralization offers a path to stronger margins while delivering better outcomes for residents and owners alike.
Ready to explore how centralized services can boost your NOI? Join us at our Centralization Summit in Dallas on September 25th, where we'll share the complete playbook for monetizing your centralized operations.