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.
Task-based management is when each team member is assigned a task, such as property inspections, maintenance management or tenancy renewals. The best time to use task-based is when your property management business has grown its rent roll and team to a large enough size that this structure would be considered viable.
To operate successfully, this structure requires high levels of cooperation and accountability. That’s because, one of its pitfalls is that team members do not oversee the entire property management process. For example, since one team member manages property inspections, the portfolio manager has less knowledge to effectively communicate with the property owner. However, if you implement task-based management, you should still appoint single team members for specialist roles such as the leasing consultant. If this pitfall is managed, task-based can lead to increased productivity and profitability for your business.
Portfolio-based management is when each property manager is appointed a number of closely located managements, and they complete all tasks associated with those properties. Any agency, at any stage, can use portfolio-based management. However, in order for this structure to work effectively, each property manager should have an administrative assistant, referred to as a property management coordinator (PMC). To achieve the best results, the PMC should manage the portfolio’s non-dollar productive tasks, whilst the property manager manages dollar-productive activities.
Portfolio-based management is a simple way to manage performance, productivity and profitability. It allows your agency to grow whilst maintaining consistent service standards and operational processes. The main pitfall associated with this structure is that clients may form strong relationships with the portfolio manager, rather than the brand. However, since properties can be moved from one portfolio to another without any break in their management, portfolio-based allows this pitfall to be easily managed to ensure optimal brand protection at all times.
Profit Optimisation Distribution Zones, or PODZ™, should only be used for large property management businesses. In this structure, a portfolio manager is employed as an associate portfolio manager who is responsible for meeting targets. Their role is to manage a large portfolio of properties and achieve maximum retention, growth and profitability. In return, they receive a percentage of the profit gained from their portfolio.
A pod consists of an associate portfolio manager, one or two para-property managers, and a PMC. The associate portfolio manager is responsible for all tasks, including training the para-property managers so they can eventually be assigned their own portfolios, whilst the PMC minimises overhead costs. As a result, this is the perfect structure for a growing business since portfolios can swell by 50% or more, depending on the number of para-property managers. However, PODZ’s main pitfall is that if the business is not managed with suitable accountability indicators, tasks can be overlooked, leading to loss and liability. The associate portfolio manager should therefore be business-minded and have strong leadership qualities in order for this structure to be successful.
Hyper Uberised Business Zones, or HUBZ™, ensure business stability and asset protection. HUBZ is only suitable for super agencies managing 2000 or more properties. Each cell has an appointed team leader, six portfolio managers, three PMCs, one leasing consultant, one receptionist, and one ‘floating’ property manager. Each portfolio manager is assigned a portfolio of properties like they would under the portfolio-based structure.
HUBZ supports your business in achieving sustainable growth and profitability. This structure also allows large property management teams and the training and induction of new recruits to be easily managed. Its main pitfall is that this structure is only effective for super agencies.
Hybrid is a combination of two or more business structures. The best time to use this structure is when your property management business is growing from one size to another- what we refer to as a ‘transitional phase’. Since a transitional phase is a critical time to manage brand protection, team stability and business retention, any structural combination can be effective, depending on what size agency you are moving towards. As a result, hybrid is the most effective business structure to manage your agency through a transitional phase if you want to achieve growth and protect your brand. 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.