5 property management business structures and when to use them
When it comes to getting the most out of your property management agency, choosing the right business structure is vital to its success. Here are five property management business structures and when to use them to avoid any pitfalls.
Task-based management is when each team member is assigned a task they could be an expert at, be it property inspections, maintenance management, or tenancy renewals. It’s high time this property management business structure should be considered viable when the property management business itself has grown its rent roll, and when the team is large enough to have all property management deliverables delegated.
However, the task-based property management structure would require high levels of cooperation and accountability for it to operate seamlessly and successfully. The reason being is that one of the pitfalls of this property management structure is the team members do not oversee the entire property management process. Take for example, when one of the team members manages property inspections, the portfolio manager has less knowledge to effectively communicate with the rental property owner. However, if you prefer to implement task-based management to your agency, you should still appoint single team members for specialist roles such as the leasing consultant. If this snag is managed, task-based can lead to increased productivity and profitability for your property management business.
Portfolio-based management is when each property manager is appointed a number of nearby located managements, and they accomplish all property management tasks associated with those rental properties. The perks of using the Portfolio-based property management structure is that it can be implemented at any agency, at any stage. However, in order for this structure to operate efficiently and effectively, each property manager should have an administrative assistant. The administrative assistant is referred to as a property management coordinator (PMC). To achieve the top results, the PMC should focus on the portfolio’s non-dollar productive tasks, whilst the property manager manages dollar-productive activities.
PMCs may be in a form of an in-house assistant or a virtual assistant. Employing PMCs as Property Management Virtual Assistants has revolutionised the Property Management industry since it helps in accomplishing all non-dollar productive, administrative tasks at a fraction of the cost. This then helps in scaling your real estate business in the long run as it gives boosts in increasing your bottom line.
Portfolio-based management has proven its effectiveness in managing performance, productivity, and profitability. It allows your property management agency to grow whilst maintaining consistent service standards and operational processes. The main downside associated with this structure is that clients may form strong relationships with the portfolio manager rather than the brand. That being said, to ensure optimal brand protection at all times, this structure is designed to easily manage this pitfall by making it flexible enough for properties to be moved from one portfolio to another without any compromisation in their management.
Profit Optimisation Distribution Zones, or PODZ™, although undeniably an effective property management business structure, is not suitable for Property Management Agencies who are just growing their first 50 doors. It should only be implemented for large property management businesses. In this structure, the management employs a portfolio manager as an associate portfolio manager who is expected to meet goals and targets. The role of an associate portfolio manager is to manage a large portfolio of properties and achieve maximum retention, growth, and profitability. As compensation, they receive a percentage of the profit gained from their portfolio.
This property management business structure would require a team that consists of an associate portfolio manager, one or two para-property managers, and a PMC. The associate portfolio manager is responsible for all property management tasks, and that includes training the para-property managers. Trained para-property managers will eventually be assigned their own portfolios. PMCs, on the other hand, help in minimising overhead costs. That being the case, this portrays the perfect structure for a growing business since portfolios can swell by 50% or more, depending on the number of para-property managers. Be that as it may, the main pitfall of this structure still accounts for tasks getting overlooked if the business is not managed with suitable accountability indicators, leading to loss and liability. Therefore, the associate portfolio manager should not only be business-minded but should also have strong leadership qualities in order for this structure to be successful.
Hyper Uberised Business Zones, or HUBZ™, is another structure that ensures business stability and asset protection. HUBZ can only be considered as a viable property management business structure for super agencies managing 2000 or more properties. Each pod must have at least an appointed team leader, six portfolio managers, three PMCs, one leasing consultant, one receptionist, and one ‘floating’ property manager. A portfolio of properties will then be assigned to each portfolio manager like they would under the portfolio-based structure.
HUBZ provides support for your property management business in achieving sustainable growth and profitability. The management of large property management teams and the training and induction of new recruits has been made easy because of this structure. The only downside of this HUBZ is that it’s only effective for super agencies.
Hybrid, in its essence, is a combination of two or more business structures. Unlike the portfolio-based management structure that can be implemented by any agency at any stage, the only best time to implement this structure is when your property management business is growing from one size to another–we refer to this as a ‘transitional phase’. The effectiveness of the hybrid structure depends on what size of the agency you are moving towards. Any structural combination may apply during the transitional phase of the property management business since it is a crucial time to manage team stability, brand protection, and business retention. The Hybrid is known to be the most effective property management business structure to manage your agency that is undergoing a transitional phase to achieve growth and for your brand’s protection.
When it comes to choosing the best property management business structure for your agency, the key is to plan ahead and remain flexible as you grow. This allows you to know, well in advance, the right structure for your business to ensure your agency has the best chance at succeeding.