Just as there’s not one single property market, there’s not one solution for property management businesses. It all depends on the particular investor you’re dealing with and the local property market in your area.
I’m a contrarian and tend to do the opposite to what most regular people do, and that goes for business and for investment. If you’re good at what you do, you can be successful without technology or even any office, staff or brochures. Of course, you probably still need a computer, phone and website!
Day to day I wear a few different hats, which have given me a multi-layered insight into property management. As an investor with 14 properties worth around $15 million, I deal with property managers as a direct client. Then, as a shareholder of a property management company and a buyer’s agent who purchases 50 to 100 units a year on behalf of my clients, I also know what time-poor professionals looking for passive investments require from a property manager.
I’m all for finding simpler ways of doing things and technology can assist with this to a degree. As an investor, if I’m going through a remortgage to extract equity and buy further investments, the banks always want copies of my latest statements. If they’re all online and easy for me to access, not only can I get my application in quicker but I don’t need to contact my property manager when his time is best spent looking after my properties.
I built a business with virtually no administration as I knew my employees and customers hated it, and I encourage more people to think like this to minimise it where possible.
Whilst some clients are very particular and want to know every single detail of what happens to their property on a daily basis, I try and get my clients pre-framed to concentrate on the bigger picture from day one.
Although every extra dollar you make in rent and every dollar saved on repairs and property management fees makes a difference, it’s best not to focus on the day-to-day dollars and cents too closely. If a $500,000 property rises at $25,000 to $50,000 over the long term (five to 10 per cent), wouldn’t it be better to concentrate on buying an extra property rather than trying to squeeze a few cents out of your current one?
Some clients want to hear from their property managers every month or quarter, but I would prefer to pay my agents more not to hear from them. At the start of a new lease, I tell my agents that if any property repairs required are valued at under $1,000, just go ahead and fix them. If repairs will cost over $1,000, I have the agent notify me by email before proceeding.
We’ve recently introduced an automatic system in our property management company where the landlord, the tenant and the tradesman all get notified that an issue has arisen and it’s going to be fixed. I’m sure lots of landlords love this, but for me, it’s just another email that I don’t really need.
Many businesses outsource their bookkeeping (which is then often re-outsourced overseas) and then have an interim CFO come in, and I think we will see similar processes in property management. There needs to be a friendly face or voice to sign up the landlords and to meet the tenants, but most other back office elements can be transacted in volume elsewhere for a fraction of the current costs.
If you’re in property management and want to be the best in the business, it’s always good to be abreast of new technology. However, remember that you’re not going to meet the needs of every person with one single system; there is still a need to be able to sell to your landlord and form a relationship with them. There will always be another competitor with new technology, so you cannot let technology be the only feather in your cap.