It's a question as old as property management itself. How many properties should a property manager be managing? How many is too many?
It is not a question we are asked frequently, but from time to time it crops up in meetings we have with investors.
The response to this question was interestingly responded to in the article "How Far Can A Property Manager Walk?". In summary, the idea is that if you were to be asked how far a property manager (or anyone for that matter!) could walk, your mind would be over-run with variables which make it difficult to come to a clear answer. How fit is the person? What supplies do they have with them? What incentive do they have to keep going? What support do they have along the way? How appropriate is their footwear? What are the conditions like that day? And so on.
The point is - if asked how far a person can walk, generally people understand the mass of variables involved and know that there is not going to be a good answer applicable to everybody in every situation.
The same cannot be said of property management. Most people ask the question "How many properties are you managing?" (or "how many should you be managing?") with an assumption already in mind based on something they have heard or read about what the "ideal number" should be. But they do not generally know or think about the variables which greatly impact this number.
Research Shows Most Real Estate Agents Are Terrible At Property Management
Firstly, when considering how many properties a property manager should be managing, it is important to consider that the structure and management of most real estate agents results in a terrible property management service. The consistent high turnover of staff, lack of motivation and lack of experience of property managers in Australia is not just anecdotal, it is backed by research.
Just some of the findings from Rockend and Elite Agent's 2018 Voice of Australian Property Management Report, a nationwide survey of 1,034 property management professionals, revealed:
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".
This leads us directly to considering the variables which impact the efficiency and effectiveness of a property manager in managing their portfolio, including:
1. The Property Manager's Motivation
How motivated is the property manager? Importantly - this is not a matter of being financially incentivised. There are many highly paid yet poorly motivated employees in most industries.
It's more a question of how genuinely interested the person is in achieving a great outcome for the investor and themselves. Employees do not have the same motivations as business owners to achieve great things. And this is more than financial.
2. The Level Of Stress in Managing the Property Portfolio
Is the property manager stressed? A property manager that seems stressed may be reaching or exceeding their capacity to manage their portfolio. Someone with a consistently pleasant and approachable manner is a good sign of someone working within rather than beyond their capacity.
3. Property Management Business Structure
How is the agency structured to support the property portfolio? There are many ways a property management business can be structured. Each has its pros and cons. Some will slice up the management of a property so that separate individuals look after separate aspects of the property (inspections, tenant selection, maintenance, rent arrears monitoring and management, lease renewals, regular rent reviews etc). Others will have the majority of this work for a property designated to a single person only. Others are more fluid and offer a blend.
Another layer of consideration is whether the property manager liaises regularly with both landlords and tenants, or one group only. The variable of structure alone has an enormous impact on capacity.
4. Use of Technology by the Property Manager and Agency
What technology supports the efficiency of the property manager and the team? Property management software and access to all files via the cloud rather than office servers ensures fast access to information and responses to landlords and tenants, regardless of location.
Chosen technologies also impact how readily another person could assist with an enquiry in the absence of your main contact (through sickness, leave, etc). Of course, the way technology is used also greatly impacts the speed with which common tasks can be completed e.g. completing inspection reports via an iPad rather than using pen and paper.
5. The Property Manager's Job Satisfaction
As in any industry, individuals tend to perform better the happier they are in their role. Whether through reward and recognition programs, flexible working arrangements, or path to progress in the industry, many factors can help improve a property manager's level of job satisfaction.
However, through it all, property management is a challenging industry. An experienced property manager who is able to keep a smile on their face most of the day is a sign that they are not only coping with the challenges of the role, but they are a good fit for the the industry - not a "square peg in a round hole".
How To Choose An Appropriately Resourced Property Manager in Newcastle
The above variables are far from exhaustive, and are not the same for every agency, let alone every property manager within an agency.
We encourage landlords to ask us (and any other agencies they are considering) as many questions as they like when assessing our abilities to successfully manage their investment property. However, a heavy focus solely on the number of properties managed is a poor assessment of the ability, capacity, and appetite for growth of an individual and business.
Our business expands largely through positive referrals and word of mouth recommendations, rather than through mass marketing or running competitions to drive further rent roll growth (e.g. "we'll give you a gift voucher if you bring your property to us"...). As a result, we have the ability to grow and scale at a steady pace, responding to increasing workload proactively and through careful planning, rather than reactively and dramatically.
If you're an investor considering changing your property manager in Newcastle, take a look at the reviews of your shortlisted property management companies on Facebook and Google. These are the first places most disappointed landlords will voice their concern over a company's service, while even delighted customers rarely leave positive comments for a business. A number of positive reviews and low negative comments provides a good indication of the level of service you could expect from the agency should you choose them.
Are you seeking a professional and appropriately-resourced property management company in Newcastle to manage your investment? We'd love to talk further!
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.