While property management has traditionally been viewed as a back-end function, agencies that leverage technology and provide a more advisory-based service would be better positioned for long-term growth.
Property management has long been considered the quieter department in the real estate family, but that sentiment has begun to change, according to an experienced industry figure.
Over the past few years, Belle Property Mornington Peninsula head of property management, Alistair Shearer, said that agencies had begun to develop their property management departments as they realised the opportunity to add value.
“It has always been the case that property management is the backbone to support the operation of an agency,” Shearer told REB.
“I think people miss the boat when they don’t realise that. Maybe they have a sales-only business or keep it small and don’t scale up, then they miss out on a lot of opportunities there.”
Shearer said that the strength of an agency’s property management department was typically an indicator of the business’s long-term goals.
He said the agencies that were serious about growing their business had recognised that a rent roll could do more than just provide a steady income; it also played a vital role in dictating growth.
According to Shearer, an agency’s growth ambitions could often be gauged by its investment in its property management department.
Additionally, he said the agencies that were serious about their growth took the time to develop and strengthen their property management teams, having recognised the value of rent roll as more than just a steady income.
“It really separates the agencies that are in growth mode from the ones that are starting to plateau.”
“The agency needs to have property management set up correctly as a growth engine that views the role as an individual that is nurturing relationships and acting as an advisor, rather than being bogged down with admin and data entry.”
Working together rather than as individuals
While the role of a property manager used to be solely focused on rent collection and maintenance, Shearer said the best agencies understood the need to break down the walls between sales and property management.
With the property management industry undergoing a significant change in recent years, Shearer said the best agencies had recognised the value of breaking down the barriers between property managers and sales.
According to Shearer, the two should work in tandem, with each division bringing leads to the other.
“Have the view that (properties under management) is a future sales pipeline and that these are clients of the business, not separate. Sales has a role, property management has a role, and we all integrate together,” Shearer said.
“It’s about looking at the two departments and how they can work in sync together, because if you get that, you become a very high-performing office.”
For the two departments to work collaboratively, Shearer said there needed to be trust that sales could handle former property manager clients, and vice versa.
“There needs to be a high standard from both sides of the business that the lead is going to be followed up on and nurtured,” he said.
He said that the responsibility for setting high standards and ensuring confidence between the two departments fell to its leaders.
Technology’s role in growing property management
Shearer said the role of a property manager had been shifting into a more advisory-focused position, moving away from traditional duties such as maintenance coordination and rent collection.
To support the transitions, he said that agencies should invest in technologies to streamline workflows, freeing up property managers to deliver a higher level of service to clients.
“Having the time to be on the phone and building those relationships with owners, providing recommendations to enhance the property and get a better return, or even talking to them about other properties, that’s the conversations property managers should be having.”
“While the industry navigates all of the changes to legislation, compliance and standards, property managers are becoming more valuable in that space.”
Managed CEO Phil Tarrant warned that technology was simply a tool, not a panacea that would transform a poor property management operation into a growth engine.
"If you’re looking for shortcuts through technology, you’re ultimately going to be disappointed. The best tech in the world will have zero impact if it is not used effectively," he said.
Tarrant said he believed the fastest-growing rent rolls were driven more by a better customer proposition than by the tech they adopt in isolation, with smart operators using the right tech to help drive better outcomes across the business.
"Next-gen agencies use tech to reduce manual tasks and, through that, to increase the time available to the team for more meaningful relationships with owners.
“But this must be driven from the top down. If the principal doesn’t see the value in building better customer relationships, how can they expect the team to take the initiative?"
“Whatever tech you subscribe to, make sure that you have the systems, strategy, and mindset to complement it, or you’ll end up going nowhere."
Developing a property management division
If an agency had little to no property management business, Shearer said they could either purchase an existing rent roll or build one organically.
“The easiest way would be to look at a small acquisition where they can take on a small department and integrate it into their own business,” he said.
He said that an agency would then be able to immediately benefit from the existing connections and cash flow.
Alternatively, Shearer said that a business could develop their own property manager department from the ground up, which would enable it to implement its preferred systems from the start.
“The other way is to start off with a couple of staff members, get a structure in place and then start to go out and talk to investors and build it up organically,” Shearer said.
Shearer said that ideally, businesses should strike a balance between the two.
“It is a slower burn, but I am a big believer that you have to have both strategies in place,” Shearer concluded.
Want to see more stories from trusted news sources?Make Real Estate Business a preferred news source on Google.
