The Impact of Property Management Office Structures

Ever wondered how the structure of a property management office could impact your investment? 

In this episode of Talking Property Management, Samantha Eason, will unravel the complexities of task-based and portfolio-based management approaches. 

You'll discover the strengths and weaknesses of each model, enriched with her personal experiences and insights from the field. 

Hear about how portfolio-based management can improve customer service through consistent relationships but also face challenges like property manager burnout and service inconsistency. 

This episode offers valuable advice on the importance of an experienced property manager and effective office management to ensure high-quality service for property owners.

If you have any questions or scenarios you would like us to discuss on an upcoming episode, please email samantha.eason@exclusivelymanaged.com.au or visit https://www.exclusivelymanaged.com.au/

Transcript

Speaker 1: 0:34

Hi, it's Samantha Eason here with Talking Property Management and today I wanted to discuss with our listeners the structure of a property management office and the agency's structure of their team. So ideally, when you're looking for a property manager, you want someone who is able to conveniently look after your property, ideally know the ins and outs of your property and, I guess, just be all over everything. Now, obviously, because property management has suffered a lot over the last few years with stress and workload, possibly toxic environments within offices, a lot of property managers have left the industry and what you may find being with a larger agency and office is that you've had a new property manager every year and every two years or so. That is probably the worst thing that could happen for your property and portfolio and I'll discuss why later in the episode. So the main structures of a property management office is task-based and portfolio-based. There is also a hybrid approach which combines both of these in some way, but to break it down for you, there are pros and cons, unfortunately, for both structures. So let's define what portfolio based in property management means. 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 their group and portfolio. Usually it's based on location, but sometimes it can be based on experience or difficulties of the clients. If I'm going to be honest, however, that could come down to finding new tenants, conducting routine inspections and managing maintenance. Previously, where I've worked in offices, there have been occasions where I would not be responsible for finding the new tenant, but you would be responsible for communicating absolutely everything to the tenants and the owners conducting your routine inspections, organizing the maintenance, completing the entry and exit condition reports. When you're looking after 100 to 150 properties, that's pretty good. It's manageable. You don't necessarily have 150 people vacating in one week. It's usually set out between three and five in a week, but it can still be very time consuming if that property manager does not have the experience and time management skills to do that effectively. There, unfortunately, have also been times where I could look after double those amounts of properties, or even triple, with very limited administration support, and whilst that is not good for burnout, experience wise, I'm going to be honest I learned a lot, so I can't hate that situation as much as I probably should.

Speaker 1: 4:06

Customer service can be enhanced in this portfolio based structure, and the reason is is because, generally, you should be dealing with one person and you get to build that relationship with that one person. That one person is your go-to. The way that that affects your portfolio negatively is if the office has no phones while you're out on the road, so you can't answer clients' phone calls. You have to wait until you're back in the office, and there can literally be times where you are out on the road from 8 till 2 pm. So if you're answering or missing those client calls, you've got to answer them when you get back in, as well as any emails that have come across the desk. So it can, unfortunately, be a big negative, depending on what that day looks like. In saying that as well, you may not get along well with that property manager. It's pretty common to not like everyone that you meet, so there may be someone that just rubs you the wrong way, or you just don't like them. That's completely normal. We're human, that's part of it, but unfortunately you're stuck with that property manager.

Speaker 1: 5:22

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, and I'll speak from experience from working with other property managers in larger offices. Some we believed that they just walked in with their eyes closed when they did inspections entry, exit routines. You would really hope that management are looking out for their clients and following in those property managers after those inspections to ensure that things are getting completed. But unfortunately then you are at the risk of management doing their job properly. So there is a massive risk with the property manager doing it their way, because there isn't generally a structured way that the office wants tasks completed. I've worked with some agencies that want you to take 30 photos all up for a routine. I've worked with some that want five to six photos per room where possible, and I've worked with some. You tell me as a listener what would you prefer More photos or less out of routine inspection? But again, that's down to the office or the property manager's particular way of structuring their tasks.

Speaker 1: 6:54

It all comes down to an experienced property manager. Someone who is in the industry for three years is going to do things a lot different to someone who's in the industry for eight or more, and unfortunately that's just how it works when you are with a large agency. You don't get to pick your property manager. They pick it for you and unless things have changed and I'm not aware, they don't exactly ask you beforehand. Is there someone that would be really suited for your investment in this office? We have 10 property managers for you to choose from. Who do you want to go with? It doesn't, unfortunately, work like that. You're stuck with who they fit you with, and it's either down to geography, as in where your property is located, it could also be what your property is worth. So you would hope, actually, that someone who has the most experience is looking after the most expensive assets, but it is also really unfair for those struggling properties to not have someone who is as experienced. So, again, you're at the mercy of the agency and that structure.

Speaker 1: 8:10

The number of managements a property manager under a generic portfolio-based structure will, or should be, I should say, capped, and the general rule of thumb is 100 to 150 properties. Now I'm going to give you this as an example. You could have a really really good property manager. They could be incredibly thorough, but they may work differently to someone who is just as good but maybe faster. So, necessarily speaking, they may struggle when they're overwhelmed, but they're really good in other situations they may not be able to handle 150 properties and they'd be better suited to 120.

Speaker 1: 9:01

But the agency doesn't look at the particular property manager and what they can do. They just look at it as a general rule of thumb. Let's give everyone 150 properties to manage. So in that situation, what do you think is fair? Do you think it should be better suited for the staff member or for the agency? And the size? Don't forget, the going rate for a property manager is 60 to 80 grand a year. In Brisbane. There are agencies that obviously charge more based on experience. But for the going rate of 60 to 80, wouldn't you prefer that your agency hire another property manager? You'd think that would be the ideal solution, but unfortunately that isn't always the case. It's too much money. They'll just dump more properties on either the best performing person or the worst.

Speaker 1: 10:03

And that brings us to task-based property management. So task-based is when there are several people within an agency who each have a separate task. So that could be someone for routines, someone who focuses only on maintenance, someone who focuses only on tenant communication and someone who focuses on owner communication. Then you may have someone who does entries for the whole office and then you may have someone who does exits for the whole office. It depends. The structures can be different, obviously, per office, but it is unfortunately separated in that way. Most offices will have a leasing consultant or someone who just completes the trust accounting. That's perfectly normal. I wouldn't say the leasing consultant is a great thing for your portfolio, but we do have a different episode on that.

Speaker 1: 11:04

So the issue with that is retention of the property management team will be easier, as you will have a less stressed team and likely a happier work environment, but it also means that those particular team members aren't able to move up in the industry, and I can tell you this it's incredibly boring just doing routine inspections as your day job. So when you have to do eight of those every Monday through to Friday, that's incredibly boring. So retention may not be as good unless you're one of those people who are looking after the high stressed roles. But if you have a team member or a property manager that is, you know, maybe more focused on doing more with their work and learning more, they're going to get bored. They're going to move on.

Speaker 1: 11:55

The good thing is, though, you will have likely one point of contact within this role, or you could have several, so you would have someone who would talk to you only about maintenance. You would then have someone talk to you about the tenant's concerns, and then someone else regarding accounting, and then someone else regarding leasing. That can be really frustrating, because you just want one person. If you speak to one person about something, you would hope that they would pass that information on to the next, but unfortunately that doesn't happen. Then there's obviously the issue of finger pointing. That's not my responsibility, or I pass that over to leasing, and it can get really convoluted, really messy and just incredibly frustrating. Some issues can also take longer to be resolved if they're passed around tasks. So when you are structured in that way, it's not one person that you've dealt with. You then have to wait for that person to pass it on to the relevant. The relevant person then needs to investigate and then they go from there. Um, and what generally happens in a task-based environment is there's more properties for that team to manage, so essentially, they're trying to save a few bucks.

Speaker 1: 13:19

There have also been some situations where you only deal with the senior property manager and then the assistant property managers or property managers have to deal with everything else, and that, unfortunately is not an ideal situation because, again, those other team members don't get to move up in those roles. So it's hard. You want training, you want someone to be able to check KPIs and check everything is clean within those portfolios. But I'm going to be completely honest here. When you have a large office and you've got an abundance of property managers to choose from within that team, you'll find they'll meet every week, they'll discuss the arrears, but no one's actually walking through your property unless it's your property manager. And if that property manager moves on to a different role, who can you go to for assistance? It's actually the most times that we get frustrated owners who call us at Exclusively Managed because there's a massive lack of communication. You were dealing with one person, they left and now you've got to reiterate everything to this new person. So it's really frustrating.

Speaker 1: 14:40

But if you are a landlord, you need to decide exactly what it is you are looking for in a property manager If you want one person to deal with, if you want to focus to be on communication and customer service, or if low fees and efficiency of what you are most after. Have your core needs and expectations clear before looking to engage in a property manager and you will avoid disappointment down the track. The amount of clients and this is incredibly unfortunate to say, but we hear them every single week the amount of clients that choose a cheaper agency over a good agency is outstanding. And unfortunately, the most properties that we pick up managements from are the franchises, and the reason is because their properties are only being managed by someone with limited experience or they're just overwhelmed and busy. They're dropping the ball on the management, and it unfortunately happens all the time.

Speaker 1: 15:55

So when you are choosing a property manager, you need to find out what structure their office is in and you need to see if that works with you, because if you're happy dealing with five people instead of one, find someone with a task-based office and structure. If you're happy dealing with just one person, you need to find out what that staff and agency retention period is like, because if they have a revolving door of property managers, it's not going to be the best fit for you. Let me know your thoughts Again. I'm Samantha Eason. This is Talking Property Management, and we over at Exclusively Managed provide a personalized and bespoke experience for every single one of our clients. No two managements are the same and we would be happy to assist you with growing your investment.