Which is the best option for your business or your property if you’re a landlord?
When you are thinking about setting up or purchasing a rent roll this is one of the biggest considerations you will have to undertake. There are many pros and cons to both options, but the decision must come down to your rent roll size, your goals, and your core values. This is also an important consideration if you are a landlord interviewing for your fist property management company or thinking of changing to a new one.
If you only have a small portfolio and are content to just have a natural organic growth rate, then there is little point in even considering task-based, as you will be wasting valuable income on wages, however, if on the other hand you are wanting to grow rapidly and your company is business development orientated then it is worth considering the task-based route. Another consideration is whether or not you are simply profit-based and it all comes down to the bottom line, or whether you are service-based and customer satisfaction and care is a core value. Finally, how will your team cope with the different options, you will need to consider their well-being and ability to work effectively and efficiently under your different structures.
At iThink Property we have tried both options so here are a few of the pros and cons you will need to consider when deciding whether your property management business will be portfolio based or task-based.
PORTFOLIO BASED PROPERTY MANAGEMENT – PROS AND CONS
Firstly, let’s define what portfolio-based property management is. Basically, it means your dedicated property manager will be responsible for a set amount of managements and are responsible for taking care of all the tasks associated with the properties in that group. For example, finding new tenants, conducting routine inspections and managing maintenance.
· Customer service can be enhanced. In the portfolio based system, the property manager is across all aspects of the property and has a relationship with both the owner and tenant making is a more personal experience.
· At the other extreme though if a property manager has a large portfolio to contend with customer service can suffer if things get missed or aren’t done correctly.
· Property managers risk burn out and don’t cope well in a high stress work environment, this ultimately leads to high staff turn-over.
· Finding a property manager with competency in all the necessary skills for portfolio-based management can be difficult.
· You are at the mercy of a good portfolio manager if they go on extended leave or leave suddenly there is often big shoes to fill.
· The number of managements to a property manager will be caped under this model (100-150 is the general rule of thumb)
TASK BASED PROPERTY MANAGEMENT – Pros and Cons
· Miscommunication can occur if tasks are clearly defined and roles assigned.
· Easier to recruit for certain roles, tasks and skillsets, ie Leasing Consultant or Business Development Manager.
· Retention of your existing team will be easier as you will have a less stressed team and a happier work environment.
· Better customer service – more time to focus on positive communication initiatives with landlords.
· Passing the buck or finger pointing amongst your team. “That is not my responsibility” or “I passed that over to leasing” etc.
· Issues can take longer to resolve if passed around between tasks.
· A lot more managements per property manager is achievable if say you leasing, routines, and business development is made task-based.
ITHINK PROPERTY TIPS FOR MAKING TASK BASED PROPERTY MANAGEMENT WORK
· The senior property manager is the only person that speaks to or communicates with the Landlord. One client manager per owner.
· Training should be thorough and tasks ticked off as competency for different tasks is achieved.
· KPI’s set for every task and person responsible
· Communication between the team to clearly defined ie weekly catch up, notes left on files, etc.
· Utilising outsourcing services when possible this is certainly a means to adjust expenses without affecting customer service.
· Job descriptions for all personnel
POD BASED PROPERTY MANAGEMENT
A new system of property management has recently evolved called the POD. This includes several property managers taking care of a large-sized portfolio, often though the tasks are broken up amongst the different team members, so it is essentially still a task-based model. The pros for this model include a larger portfolio of properties can be managed, if someone leaves suddenly or has holidays the portfolio will still be managed effectively, stress shared amongst the team. The cons include potentially higher wages for more property managers, finger pointing and buck passing, too many people for the landlord to deal with.
If you are a landlord you need to decide exactly what it is you are looking for in a property manager, whether you want one person only to deal with, whether communication and customer service is high on your priority list, or if low fees and efficiency are what you are after. Have your core needs and expectations clear before looking to engage a property manager, you will avoid disappointment down the track.
Portfolio with a few tasks is probably the ideal structure in the modern era of property management. That said keep as a business owner keep an open mind and be prepared to change along the way as your business grows and evolves. Don’t be afraid to address things if they are no longer working and sometimes the best success comes from making a few tough decisions and taking a risk to change things along the way.
iThink Property has a team of real estate agents in Ipswich and Toowoomba offering property sales and property management services. With a passion for people and property, iThink Property was conceived with the notion of building a team of good people to work in a real estate brand that did things differently. iThink Property focuses on transparency, communication, innovation and teamwork and has become a leading independent brand with unique points of difference. So whether you are thinking of buying, selling or renting, think iThink Property.