December 3, 2010

How many properties can one property manager manage?

I had an inspiring and interesting conversation with a client recently about the old age question of how many properties can one property manager manage?

The client I was working with was seeking advice regarding structure of his property management business as he is on a positive growth path and has achieved 60 net managements in six months. He is at a crucial period in his business as he has hit the 200 property mark and is considering which structure is best.

There are many structures set up in modern property management businesses which range from the traditional portfolio method, the POD method or task based management. I have always been a great fan of Portfolio due to the accountability and also the lessor peace of mind of 'who is managing their investment' but have in recent times seen a handful of business who have mastered the task based management. Those I have worked with who succeed in task based have very clear job descriptions, visions and goals.

I have saved one client over $50000 on wages due to a restructure using the task based management system, however the licensee is hands on and works 100% in the property management department which allows for lessor's complete peace of mind and the main point of contact. This model in my opinion doesn't work well unless there is a clear head of department; the face is what you might call it. It generally is beneficial if this is a licensee.

Regarding my client yesterday who was seeking advice on his property management business model; he has already decided that he will staff one property manager to 50 properties. I almost fell over but had to sit back and admire his thinking. He believes that in today's property management world, with all the compliance and risk of litigation, you cannot afford to have property managers managing more than that. That is, as he said, you want the job done properly.

Now this got me thinking... I have in recent months had to dramatically review my own beliefs as to how I would structure my own department. In many days gone by, I managed a successful business with property managers on 200 properties with administration support, I running new business and the trust. This model worked great with a routine maintenance/inspection officer on top of that.

Due to massive legislative change, and greater risk of litigation due to increased client expectations and making agents accountable, I believe that today's licensee has to seriously review the tasks required to be carried out in property management. The days of one property manager managing 200 properties successfully are over.

Today in Queensland, property managers need to have their finger on the pulse in relation to a vast range of compliance issues, including

* tenancy law
* smoke alarms
* safety switches
* pool safety

to name just a few issues...

How many properties can one property manage... it is still a million dollar question and one that will be debated well beyond my lifetime. I do however think that the answer for each business is four main factors. It depends on

1.  the systems
2.  the support
3.  the people; and
4.  the commitment of the licensee to drive the business.

I will eagerly watch my client who is going to work on the ratio of one to 50 properties... an innovative and interesting thought...


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