Property management has traditionally been treated as the poor second cousin to sales in most real estate businesses. It’s been perceived by many principals as being confusing, bringing conflict and full of process; all the things which are generally far from compelling to a sales-type personality.
No matter how much property management may not be appealing, it can’t be ignored - at least, if you have any intention of creating real wealth and not just income in your business. The importance and value of property management is described fully in a previous article HERE , but essentially, a rent roll is usually the main saleable asset of any note in a real estate business.
So, in accepting that property management is a necessary facet of your business, it’s obviously ideal to have it operating as efficiently as possible, with as little or as much attention as you’re willing to put into it.
Regardless of the size of the rent roll, it’s absolutely critical to have a business based system behind the business, not a people based system. There are businesses all over the country who have great property management departments, but which are totally dependent on the people who work in them. This makes those businesses vulnerable if the people are no longer there, whether it’s by choice or circumstance. Even worse, it can create an environment where the people working in the business hold the balance of power over the principal in relation to conditions, decisions and in some cases, even salaries.
The bottom line is, whatever system you choose, anyone should be able to walk into your property management business and follow the procedures, which should be clearly documented in a policies and procedures manual. There’s no need to re-create the wheel - most franchise groups offer their franchisees policy and procedures manuals and even if you’re an independent operator, there are various property management specialists you are able to licence manuals and software through. The manual is just the beginning though - it’s what you do with it that’s really going to count.
The software that you use should be tied into the procedures, creating total transparency. It should be possible to see the exact history of what has happened with each property as well as what needs to happen in the future. There are several good versions of property management software available which are designed to run daily tasks, although unfortunately as of the time of writing, none of them are completely self contained. They still rely on people putting the correct data in, such as scheduling inspections, but if used correctly, they will help improve business efficiency.
Next, you need the right people to drive the systems - people who want to see the business grow and prosper and will use the systems to drive the business forward with you.
Michelle Delaney, Property Management Executive of Ray White, says she has seen many cases where experienced team members with the wrong attitude can hold the balance of power inside an agency and the principal becomes unable to do anything but accede to their demands. These businesses are generally centred on one person who holds all the knowledge. She says principals who allow people based systems to continue place their biggest asset at risk.
Michelle has witnessed principals in the Ray White network seeing real change in their businesses over the past few years since the group began increasing their focus on property management. On top of the standard policies and procedures manual known as the “blueprint” the group now has a range of additional value-added services for their franchisees. One of the most popular offerings is the on-line training program, which attracts approx 2500 users every week.
“The professional system allows our businesses to recruit inexperienced people and train them through the Ray White Professional Development Program. We provide three live sessions a day, five days a week. The sessions cover technical skills and specialised skills and we also hold leadership and problem solving forums.”
“On top of that, we have a 24hr/7day helpdesk via our Intranet and dedicated business development executive support for our offices. The system is designed to help our principals create wealth through their rent roll” Michelle says.
Michelle adds that inexperienced people with the right attitude also won’t cost as much as experienced operators.
“Inexperienced people will still need to be trained and managed and the principal may need an experienced manager to do that if they don’t want to be heavily involved themselves. The leadership component is critical - you still need a driver” Michelle says.
“But a good set of systems which can be operated by less experienced people will ultimately result in a better business with improved margins, as well as the critical advantage of that business staying within the principal’s control.”
“When a principal has a solid foundation for their property management operation combined with professional external support, it’s much easier for them to achieve success. The real proof is in the attitude shift - our principals are open and willing to talk about property management now.”
