EPMEPM: BD & Growth

5 ways to grow your PM department

There is an enormous sense of complacency in most agencies about their rent rolls. Regardless of the rent roll size, most licensees seem to feel as though nothing will ever change – the size will stay the same and the income generated by management fees will keep on rolling in as the years go by. But the reality of property management as the 21st century progresses promises to be wildly different.

Cut price competitors
Many agencies have felt the pain of a competitor undercutting them on price in both sales and property management. However, nothing beats the gobsmacking effect of losing out to any agency that charges less than 5%.

Are you surprised? Most of these agencies are offering a really basic service – really basic – that covers the sort of jobs that everyone has to do anyway. Let’s face it, this is all they can afford to do if they hope to make any profits at all. The problem lies in the fact that these basics are what many property owners believe is all that any agency does anyway.

That has to hurt because we all know how much really professional agencies can do for their landlords, don’t we? The truth is though that many agencies aren’t delivering on the full promise of their performance.

Poor Performance
Plenty of agencies are sitting comfortably on the same rent roll they’ve had for years. Well, not exactly the same. There’s been some churn over time – new managements have come on board, others have sold or moved on. It’s a bit like grandpa’s shovel – it’s had three handles and five blades but he’s had the same shovel for fifty years.

Now this state of affairs is all fine so long as everyone else is happy staying the same too but the moment a nearby competitor starts shouting about either their super low fees or their super great service, managements are going to start moving.

The reason behind this is that most Property Managers are either working too hard or not working hard enough. Even the best PMs find it hard to cover all of the tasks that they not only must do but also those they know they should do. Some of the others don’t even try.

Keeping up to date on rent reviews, discussing long term strategies with owners, liaising with the sales department to help grow the business and the like are time consuming and often left behind as the more mundane aspects of property management get in the way.

Even then the job of handling inspections, maintenance and rent arrears are all areas that require different skill sets. These are seldom found in the one individual and can lead to gaps appearing in the service they’re supposed to be providing. That, in turn, can lead to lower job satisfaction scores and result in increased staff turnover.

The Revolving Door
Most agents knows how hard it is to recruit and retain high performing staff in both sales and property management. It’s the high performance part that seems to be the challenge as there are many mediocre employees out there with, as one agent put it, “years of experience but with just the first year repeated year after year”.

One agency we’ve dealt with went through thirteen property managers in just one year and unsurprisingly, they suffered a drop in their rent roll of over 14% at the same time. That’s an extreme example but any turnover in your PM staff is going to result in a level of discomfort for some of your landlords.

If we then accept that the major challenge, aside from the initial recruitment, is keeping staff engaged, motivated and performing then we have to understand that their day to day responsibilities are going to constitute a major percentage of their job satisfaction. We have to concede that there are PMs who just don’t enjoy parts of their job. Whether it’s acquiring new managements, dealing with tenants’ maintenance requests, getting out of the office for inspections or picking up the phone to chase overdue rents, the skill sets and the mindset required to do them well, vary greatly.

In big agencies with large rent rolls, there is the opportunity to distribute the workloads across verticals so that some staff deal with business development, some look after just inspections; others handle calls for maintenance and so on.

In smaller agencies, however, the lack of size really does count against any ability to spread the property management load. Even if there are sufficient properties under management to be able to support specialisation, problems will arise if for any reason a staff member departs and leaves their speciality unserved.

For this reason, agencies with rent rolls of less than 1,000 managements must retain the “generalist” model for property management and bank on their Property Manager’s ability to cover all aspects of the agency’s services for their owners and tenants.

Traitors and “turn coats”
So you’ve set up your property management department well and your PM team is doing a great job of looking after your owners and tenants. It might be going so well that the income generated from your rent roll is subsidising the sales team and administration costs of the business giving you the flexibility you need to ride out lean times in terms of sales listings.

It’s then you get the knock on your door from your Senior Property Manager and he or she is asking for a massive pay rise that, if you gave it to them, would eat up most of that buffer you were relying on.

There are many team members who would listen to your reasons for not giving them what they want and understand that, for the good of the business, they’ll suck it up and keep on giving their all. Then there’s everybody else who, rightly or wrongly, believes that they thoroughly deserve their pay rise and that your refusal is a betrayal and, therefore, gives them the right to look elsewhere for their career.

If you’ve got 10 or more staff in property management, losing one person can be managed. But if you’ve got five or less, that loss can leave an almighty hole. The trouble compounds if they head to your nearest competitor.

The source of the problem is that the relationship has been built directly between the Property Manager and the owners. The agency seldom fits into the picture because there’s rarely any contact other than with the Property Manager or the receptionist.

Building Agency Relationships
Industry leaders have been telling us all for some time now that the landlord relationship should be built with the business, not with individuals. Many agencies, however, are finding that extremely difficult when property management staff are over-stretched and agency principals are focused on sales.
However, given the competitive challenges that many agencies now face, making changes to the way Property Management operates is going to become an essential part of a successful agency’s long term planning.

Top Five Survival Tips

  1. Recruit staff for their vertical strengths and provide support for their weaknesses
  2. Free your Property Management staff from as much drudgery as possible.
  3. Promote yourselves as a Full Service Agency that does more than your competitors
  4. Improve your landlord relationships by making sure that quality, strategic calls take place between you and your owners.
  5. Make growth happen! If it’s not a priority for you, it won’t be for your Property Managers

Show More

One Comment

  1. Great article, David, thanks. Our clients are certainly giving us feedback that aligns with your observations here – that whether it’s because some property managers dislike routine inspections, don’t have time to do them, or simply because their talents are best utilised in other areas such as business development, freeing up property managers’ time by using our service makes good business sense.

    Cheers

    Michael Uspensky, National Rental Inspections (sales@nri.net.au)