IS THERE A CEILING on the portfolio size for an individual property manager? Could you improve your capacity by 20 per cent while still doing a great job? Brock Fisher, COO of Rental Express, takes a look at both the myths and the possibilities.
‘HOW MANY properties can a property manager manage?’ This is one question I hear a lot in the property management industry, second only to ‘How many properties do I have to manage?’ in an interview for a property management role.
If I asked you ‘How far can a property manager walk?’ what would your answer be? Think about that for a moment. How far do you think a property manager could walk?
Your mind starts ticking over, thinking about all the variables and different factors involved in coming up with a logical answer. Maybe you think the question is stupid, and that’s fair enough too. It is intended to challenge perceptions around this issue because, in the evolving industry we work in, portfolio size looked at strictly as a number is no longer relevant. It is a property management industry cliché.
One of the things I have noticed about the portfolio size discussion is the general tendency for people to shout down anyone doing anything that would be considered outside of ‘the norm’. They look at all the reasons why they believe it can’t be done, assuming that bad service, poor results and extreme levels of stress are the only things that can happen with a larger portfolio than the size they are used to.
I have seen discussions in social media forums and at conferences about portfolio sizes that many people seem to find ‘confrontingly large’. But what I find frustrating and disappointing is that people are losing a golden opportunity to learn from excellent operators. They completely close themselves off to what could be possible, rather than being challenged by it, being curious about it and asking questions to see what lessons can be learnt to improve their skills and allow an incremental improvement in their own individual working situation.
It is my opinion that assumptions people make about portfolio size stem from a limited imagination. They consider their own circumstances right now, do some maths in their head about what would happen if their portfolio was 15 per cent bigger, or 50 per cent bigger, and arrive at the conclusion that their world would be carnage.
But what if your business was structured differently? What if your systems and software were different? What if you worked in another way than you do now? What if you had assistance – what might be possible then?
The lessons learnt from industry leaders like Bill Basha at McGrath Cronulla are not that every property manager should be managing 396 properties or they aren’t trying hard enough. Bill’s story, to me, is a lot like the property management equivalent of the four-minute mile, when society thought that it would be never be possible for any athlete to run a mile in less than four minutes. Once that barrier was broken and people knew it could be done, many athletes then quickly found a way to go faster than four minutes.
Property managers who successfully look after large portfolios have grasped an amazing opportunity to challenge themselves, to learn innovative and different ways to handle their week and its various activities, and consider different perspectives to improve how they operate as a property manager.
Imagine if you could improve your own capacity by 20 per cent while still doing a great job and working a regular week. You’ve then added significant value to the business and had a great impact on profit. How much more receptive do you think your principal or department manager is going to be when it’s time to review your salary package? And how much more confidence will it give you to negotiate a rise?
When you think about portfolio size, don’t just focus on the number itself. Here are 10 factors to consider which have a huge impact on what is and isn’t realistic:
- What software is used to manage property management tasks?
- What software is used to handle leasing enquiry and prospective tenant bookings?
- Are there any leasing officers or routine inspection officers, or do you do all that yourself?
- Are there any property management assistants or do reception staff help? And if so, how many tasks do they help you with, and how much of those tasks do they take care of?
- Are entry inspections, vacate inspections and routine inspections completed on site, on an app, or are they handwritten and typed up in the office?
- How many routine inspections need to be done per year?
- How far are the properties from the office? How far are they from each other? And what roads do you need to use to get to them?
- How many are houses, and how many are units?
- How many multiple owners are there in the portfolio?
- How old are the properties generally? There are more, so while you are thinking about it why not find another five factors that might influence how many properties you can manage effectively?
Speaking from personal experience, in the past I’ve managed a portfolio of 130 modern units located quite close together that took half the time to manage than a portfolio of 100 older houses and units that were far more geographically spread out.
At Rental Express we focus on the staff-to-property ratio, which takes into account the number of staff involved in providing frontline property management services (or providing assistance and support to those who do), divided by the number of properties we manage. This ratio is currently one to 70.
There are hundreds of different ways to structure a property management business but, regardless of how many properties are managed and under what structure, there are four key factors that really matter:
- Does it work and get the job done? If it doesn’t deliver results, there’s no point doing it that way.
- Does it result in clients being satisfied? If clients aren’t happy with the service provided, they don’t stay.
- Does it result in property managers being happy, satisfied and well paid for their efforts? If property managers are not happy with the structure, support and remuneration, they leave for better opportunities.
- Is it sustainable? If it’s not sustainable, allowing the business to make a profit, then the job opportunity ceases to exist because the doors of the business need to close.
So, next time you are discussing the issue of portfolio size, how will you put that into context and what will your follow-up questions be?
And if you come across a property manager responsible for a large number of properties, rather than being sceptical try saying ‘Wow, that’s great. How do you do that?’ Be curious!