So often, we meet with investors who have had a poor experience with another property manager. The tales are usually very similar, along the lines of "Our property manager used to be great, but then moved to another role and we're left with someone who doesn't seem to know what they're doing".
Our reaction to experiences like this used to be one of surprise. But negative experiences with property managers and real estate agents have become so common, bad experiences are considered normal by many working within and with the industry.
Now, the commonly-heard anecdotal negative experiences have been quantified by research, and there are 5 main areas which can be identified as reasons for poor property manager engagement and retention in the industry.
Rockend and Elite Agent recently conducted a nationwide survey of 1,034 property management professionals, including property managers, agency principals, team leaders, business development managers and trust account managers. The purpose of the survey was to identify the major issues and attitudes of those working within the industry.
In December 2018, the 2018 Voice of Australian Property Management Report was published. We have reviewed the results and having given much consideration, summarise our thoughts on the research findings below.
1. Most Property Managers Are Inexperienced
The report concluded that a typical property management employee is "likely to be a young woman working in a full-time position who has held her role for less than two years".
Specifically, the results showed that:
Two years is a very brief timeframe within which to experience the complexity of regulation governing the industry. More so, it is a very brief period to begin dealing with the many areas of the industry which lack specific regulation, requiring strong skills in negotiation to reach a suitable outcome for two conflicting viewpoints.
Additionally, property management as a role can be highly stressful. A young property manager will typically have little or no investment experience, and relatively little experience negotiating through difficult financial and emotional situations such as sudden unemployment, illness, death, relationship breakdown and so on.
Years of experience can be vital to handling a situation appropriately and expertly on both a personal and commercial level.
Unfortunately, lack of experience is a hallmark of the property management industry.
2. Most Property Managers Are Not Happy In Their Role
Property management is an industry with high levels of job dissatisfaction. While this is sometimes evident by the lack of enthusiasm or proactiveness investors receive from their property manager, the results of the survey show the problem is widespread and more than anecdotal.
Specifically, the report found that:
Only 1 in 4 property managers feels positively about their career. That is an astoundingly low rate of job satisfaction.
Job dissatisfaction results in the significant flow-on effects that many investors experience, such as poor service levels, disengaged property managers, and high levels of staff turnover, as we will address further below.
3. Most Property Managers Want To Leave Their Job
One of the most alarming conclusions we have drawn from the report actually comes from a combination of two separately presented results:
Let's take a moment to think about that. 75% of property managers are indifferent or indeed negative about their career, but only 12% of them expect to leave real estate.
This means that 63% of property managers feel passive or negative about the industry but will stay on in their job regardless.
Under these circumstances, it is no wonder so many investors have poor experiences with their property manager. 63% of property managers do not enjoy their career, yet they choose not to leave.
As the report concludes, "When employees are disillusioned and unhappy it impacts training costs, onboarding and loss of business knowledge resulting in a poorer service to owners and tenants as teams constantly struggle to be on top of their workloads".
4. Property Management Is Often Considered A Stepping Stone To Another Career
Further to the findings of high job dissatisfaction and intentions to leave property management roles, the survey found that property management is often seen merely as a pathway to another career.
The report found:
In conclusion, the research shows that staff stability is a significant challenge to the property management industry with property management often treated as a training ground to move to other roles in real estate.
5. Staff Retention Is Ranked The Lowest Priority By Agency Principals
The survey included a section requiring respondents to rank six given priorities in order from 1 to 6 (with one being the highest priority). Priorities varied by the respondent's role within the industry, as one would expect, however when agency principals' responses were isolated, their order of priorities was found to be as follows:
Priorities of Principals
The research found that retaining staff was the lowest-ranked priority by agency principals.
As the report concludes, given the typically small real estate office size, losing staff has a significant effect. It is therefore difficult to understand how agencies expect to increase productivity and grow their rent roll when upskilling and retaining staff are deemed to be the lowest of priorities.
"Seen in this light, we get an understanding of the hamster wheel that many property management businesses appear to be on", the report states.
What Can Be Done To Improve The Property Management Industry In Australia?
The role of those working within the real estate industry
The report clearly documents the negative state of the property management industry. There are significant challenges to be addressed by real estate professionals across the board, from agency principals and team managers to property managers themselves. Through greater staff support, focused efforts on increased training and staff retention and clarity around career progression and opportunities, the industry future could be much brighter.
The role of investors working with a property manager
Investors may feel unable to contribute and make a difference to the industry, feeling instead that moving from property manager to property manager "until you find a good one that stays" is all that can be done.
Given the challenges of a lack of experience, high job dissatisfaction, and low staff retention, there is a lot to be said for providing positive feedback to your property manager. If your property manager has provided you excellent service, clearly demonstrated their expertise, or worked through very difficult circumstances to provide a great result for you as an investor, let them (or their department manager or principal) know! It could put a spring in their step and turn a difficult day into a great one, or ultimately turn a "stepping stone" job into a successful career role.
Our own perspective
As a family-owned property management company in the Newcastle and Lake Macquarie area we are somewhat different to the "typical" agency captured by the survey. Our owners are both licensed real estate agents who have selected to create and build our business following successful careers outside of real estate (most significantly within the media, automotive, and event management industries).
We know what it is like to negotiate between strong and differing opinions, meet conflicting deadlines, and manage several streams of stress at once. We also know first-hand the difference clearly-documented processes and ongoing training can make to an employee's level of comfort in their role and sense of being supported, while appropriate recognition and reward can make such an important difference to the motivation of an individual and the outcomes they are capable of achieving.
If you are seeking a refreshing, transparent and personal approach currently missing from your property manager, please contact us for a conversation.
As we often reflect, "If you're not happy where you are, move. You are not a tree". We encourage seeking change for the better - whether you are an investor receiving poor service, a tenant seeking greater support, or an employee who is not a perfect fit for the role.
Carnelian Property Management Newcastle NSW
We are a family-owned and run Newcastle real estate agent offering expert property management across Newcastle and Lake Macquarie.