EPMEPM: BD & Growth

Which Structure Is Right for You?

TASK, PORTFOLIO, PODZTM, HUBZTM AND HYBRID; these are all structures used in property management businesses right across Australia. Which one is right for you? Jo-Anne Oliveri explains how to select the best structure for your agency while avoiding any pitfalls.

No matter what size your property management agency, an effective business structure is essential. Here are five structures often used in property management; for each one there are advantages and disadvantages; so the key is to analyse your agency’s needs and be flexible as you plan ahead.

Task-based management is where each team member is assigned a task, such as property inspections, maintenance management or tenancy renewals. The best time to use task-based is when your business has grown its rent roll and team to a large enough size for this structure to be considered viable.

To operate successfully, this structure requires high levels of cooperation and accountability. That’s because one of its pitfalls is that team members do not oversee the entire property management process. For example, since one team member manages property inspections, the portfolio manager has less information to be able to communicate effectively with the property owner. However, if you implement task-based management, I believe you should still appoint single team members for specialist roles such as the leasing consultant. If this element is managed, task-based can lead to increased productivity and profitability for your business.

Portfolio-based management is when each property manager is appointed a number of closely-located managements, and they complete all tasks associated with those properties. Any agency, at any stage, can use portfolio-based management. However, in order for this structure to work effectively, each property manager should have an administrative assistant, referred to as a property management coordinator (PMC). To achieve the best results, the PMC should manage the portfolio’s non-dollar productive tasks, whilst the property manager manages dollar-productive activities.

Portfolio-based management is a simple way to manage performance, productivity and profitability. It allows your agency to grow whilst maintaining consistent service standards and operational processes. The main pitfall associated with this structure is that clients may form strong relationships with the portfolio manager rather than the brand. However, since properties can be moved from one portfolio to another without any break in their management, portfolio-based allows this challenge to be easily managed to ensure optimal brand protection at all times.

Profit Optimisation Distribution Zones, or PODZ, should only be used for large property management businesses. In this structure, a portfolio manager is employed as an associate portfolio manager who is responsible for meeting targets. Their role is to manage a large portfolio of properties and achieve maximum retention, growth and profitability. In return, they receive a percentage of the profit gained from their portfolio.

A pod consists of an associate portfolio manager, one or two para-property managers and a PMC. The associate portfolio manager is responsible for all tasks, including training the paraproperty managers so they can eventually be assigned their own portfolios, whilst the PMC minimises overhead costs. As a result, this is the perfect structure for a growing business since portfolios can swell by 50 per cent or more, depending on the number of para-property managers. However, PODZ’s main pitfall is that if the business is not managed with suitable accountability indicators, tasks can be overlooked, leading to loss and liability. The associate portfolio manager should therefore be business-minded and have strong leadership qualities in order for this structure to be successful.

Hyper-Uberised Business Zones, or HUBZ, ensure business stability and asset protection. HUBZ is only suitable for super-agencies managing 2000 or more properties. Each cell has an appointed team leader, six portfolio managers, three PMCs, one leasing consultant, one receptionist, and one ‘floating’ property manager. Each portfolio manager is assigned a portfolio of properties as they would under the portfoliobased structure.

HUBZ supports your business in achieving sustainable growth and profitability. This structure also allows large property management teams and the training and induction of new recruits to be easily managed. Its main pitfall is that this structure is only effective for super-agencies.

Hybrid is a combination of two or more business structures. The best time to use this structure is when your property management business is growing from one size to another; what we refer to as in a ‘transitional phase’. Since a transitional phase is a critical time to manage brand protection, team stability and business retention, any structural combination can be effective, depending on what size agency you are moving towards. As a result, hybrid is the most effective business structure to manage your agency through a transitional phase if you want to achieve growth and protect your brand.

When it comes to choosing the best property management business structure for your agency, the important thing is to plan ahead and remain flexible as you grow. This allows you to know, well in advance, the right structure for your business to ensure your agency has the best chance of succeeding.

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Jo-Anne Oliveri

Jo-Anne Oliveri, CIPS, TRC, Founder and Managing Director of property management business solutions company ireviloution intelligence. She is an international real estate identity who has trained over 500 agencies and thousands of agency owners and property managers worldwide. Visit ireviloution.com to find out more.