You will often see property management companies promoting their business using statistics. The most common are along the lines of "# of properties leased this week", "% of properties occupied" and "# of new management agreements signed".
At a glance these statistics sound great and seem to portray the success of the business. But let's take a minute to actually break this down and consider what each property management statistic means, and how relevant and valuable this really is to a landlord.
Number of properties leased this week
This is a statistic which is quite compelling. It certainly tells a story of the volume of property management work being undertaken. It could be seen as a sign of the success of the business in filling vacant properties.
What this figure doesn't reveal is the proportion of their rental stock which remains vacant. For example, if a business states they have leased 5 properties in the past week, you don't know whether this is 5 out of 5 properties, or 5 out of 15. The number of leases on its own does not tell the full story. There is often not a clear reference point to help understand just how great a success this number of leases indicates.
To get a clear understanding of what this figure means when you see it advertised, ask the agency how many vacant properties they have alongside the number they have recently leased.
There are many reasons a property may be vacant, and many of these reasons are not within the property manager's direct control. The agency's answer to this question will give you a feel for their level of transparency, professionalism, and immediate knowledge of their available rental stock.
Percentage of properties occupied
Enter the "% of properties occupied" figure. The aim here is to provide the missing reference point, so a landlord has an understanding of the number of properties occupied as a percentage of the number of properties the business is managing.
The first point to note here is that this is near impossible to validate, given that the number of rental properties on a business's books can change several times throughout the week, as can the occupancy status of any of those properties.
That point aside, the clever property management business will carefully choose when to promote this figure. Why? Well, as will be covered next, another popular statistic in property management promotion is "# of new management agreements signed". More often than not, a new management agreement brings to the agency a vacant property. So, as the number of "new management agreements signed" goes up, down goes the % occupied figure.
The increase in one statistic generally sees a decrease in the other. But the property management business wants both figures to appear as high as possible to help win your business.
Remember, the numbers you see promoted by property management businesses have been chosen. The promoted numbers will always tell the best story possible.
Number of new management agreements signed
This statistic provides little value beyond an ego boast for the agency. Think about it - as a landlord, what does this figure actually mean to you?
On the one hand, if the agency has signed a high number of new management agreements, this could be a sign that the business is strong and growing. But think further...
What implication does the seemingly endless supply of new properties to manage have on the agency's capacity? Are the available property management resources stretch thin?
There are several models of property management team structure. Generally the larger the agency, the more specific the tasks are that are completed by each individual. For example, business development, routine inspections, booking tradespeople, written reports to landlords, collection and payment of rents, and so on may all be completed by separate individuals in a property management team.
While this enables each team member to retain focus on a core set of skills, this can be frustrating for landlords who just want a single point of contact who knows all aspects of their investment property.
An often-referenced rule of thumb is that a property manager should be responsible for no more than 120-150 properties. Beyond this number, the level of knowledge of each property and the level of service to each landlord suffers.
If an agency promotes the number of new management agreements they've signed, ask how many properties they have now. Then ask how many property managers look after those properties. You don't want to be lost in the pack or endlessly waiting for a return phone call from the property manager you want to deal with, regardless of the matter.
When you see statistics promoted by a property management business, remember there's more than meets the eye. Statistics are often presented to support the business putting forth the information, rather than to inform others.
"Facts are stubborn things, but statistics are pliable" - Mark Twain
About Carnelian Property Management Newcastle
We are a family-owned and run Newcastle business. We’re landlords. We’re home owners. We’ve also been long-term tenants. We are refreshingly accessible with intimate knowledge of the greater Newcastle, Lake Macquarie and Fern Bay rental markets.
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