Property management agencies have been warned that chasing more properties under management without understanding their true cost could be eroding profitability, driving staff burnout and undermining long-term growth.
Property management agencies risk turning rent roll growth into a financial liability by taking on unprofitable landlords, overlooking client retention and failing to account for the true cost of servicing their portfolios.
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Property management coach Lauren Robinson said agencies had become too focused on the number of properties under management (PUM), rather than whether those properties were delivering sustainable returns.
Instead, unprofitable clients are increasing the workload expectations on already stretched property managers, worsening client outcomes for other landlords and tenants.
"Not all business is good business, and you really need to know the numbers and then work out how much that business is actually costing you," Robinson said on the PMX Podcast.
She warned that the pursuit of new management could also distract agencies from retaining existing landlords, creating an expensive cycle of client acquisition and attrition.
"If you’re putting enormous effort into winning new landlords whilst existing clients are quietly leaving, then growth becomes really expensive and exhausting."
Robinson said principals needed to look beyond headline management fees and consider the staffing, administrative and operational costs associated with each additional property.
"I think a really useful question is: what does this portfolio earn? And then what does it actually cost us to deliver the service we promised?"
She said the consequences of poorly managed growth extended beyond profitability, with inefficient systems and unclear responsibilities placing unnecessary pressure on property managers.
“So where agencies can get it wrong is assuming that the answer is for property managers to be more efficient or work harder. Sometimes the problem is actually in the structure around them,” she said.
“It might be unclear responsibilities, inconsistent processes, or maybe taking on clients whose expectations were never properly managed.”
She said agencies should look for ways to streamline simple processes such as work orders and maintenance requests.
According to Robinson, these tasks often involved more sets of hands than required and created friction in the experience for landlords and tenants.
Robinson said thriving property management businesses streamlined these processes and clearly defined staff responsibilities.
“The responsibilities are clear: who owns the task, what happens next and when the client is going to hear from us,” she said.
Supporting staff to safeguard against burnout
As businesses pursued more properties under management, Robinson said it was important not to forget the impact the extra workload was having on staff.
She said that agencies placed too much emphasis on the number of PUMs a property manager looked after rather than what managing those assets actually involved.
“Something that I see often is I can see the property manager really wants to be able to deliver and do a good job, but there are no systems or processes in place, and that’s the fundamentals that you need to get right to have a good business,” she said.
To address the issue and prevent burnout, Robinson said business leaders should focus on supporting their staff.
Robinson said more successful operators supported their staff by prioritising escalation pathways, training programs, and reliable coverage so they can take time off.
“I think that looking at the everyday workload, it needs to be manageable and people need to be able to take leave without feeling like they’re spending the following week recovering from that.”
Separating themselves from the pack
To avoid lowering fees in a highly competitive environment to win new clients, Robinson said agencies should be specific about what they can offer each client rather than speak broadly about their offerings.
She said that with most agencies offering a similar suite of services, the real opportunity to create a point of difference was in understanding the landlords’ priorities.
“Once you understand that, you can explain your service and diagnose their concerns and how you’re able to deliver value.”
Robinson said the business’s marketing, including its website, reviews, and proposals, needed to support these conversations and clearly show what it brought to the table.
“Because when the difference between agencies is really vague, and all the websites say the same things, then the fees become the only thing the owner can differentiate.”
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