What is real estate outsourcing?
Outsourcing can be used by any company in any industry. It is an effective way of distributing workloads and improving profit margins by assigning tasks to a person who sits outside of the company. Real estate outsourcing simply means assigning tasks to someone outside of your real estate company, usually on a contract basis.
When it comes to property management, there are a wide variety of tasks that must be completed every day. Every task can be separated into smaller sub-tasks, which are either considered ‘dollar productive’ or ‘non-dollar productive’. Outsourcing non-dollar productive tasks can help free up your internal team’s workload and save you money in the process.
Find out how real estate outsourcing works.
Which real estate tasks can be outsourced?
Virtually all non-dollar productive or administrative tasks can be outsourced. In fact, out of all the activities associated with property management, between 40 to 60 per cent of each task has administrative elements that are ideal for outsourcing. Administrative tasks include the following:
New managements – Preparing the management contract, sending letters of confirmation to relevant parties, setting up the property and rental property owner in the property management software, uploading and syndicating marketing collateral onto relevant web portals
New tenancies – Processing prospective tenant applications, preparing tenancy contracts and associated documents, setting up the tenant in the property management software
Property in-residence inspections – Preparing and issuing entry notices to tenants
Rental payments – Sending emails and text messages to delinquent tenants, sending breach notices to tenants in arrears, preparing termination notices for tenants facing eviction
Tenancy renewals – Preparing CMAs, preparing and sending letters to rental property owners and tenants, preparing tenancy renewal contracts, updating property management software with relevant information
Early terminations – Preparing and sending relevant documents, forms and letters, uploading and syndicating marketing material, updating property management software with relevant software
Water invoices – Preparing and issuing water invoices to tenants, following up late payments
Vacating tenants – Preparing and sending letters and notices to rental property owners and tenants, uploading and syndicating property marketing material
Management terminations – Preparing relevant documents for the transfer of managements being terminated
Insurance claims – Preparing relevant documents for insurance claims against rental properties
Court preparation – Preparing relevant documents for court hearing requests and claims
Contractors and service partners – Preparing and sending relevant forms, documents and letters, setting up contractors and service partners in property management software, issuing reminder notices, updating details for licences and insurance renewals
Each of these tasks requires the assigned team member to have the knowledge, skills and experience associated with carrying out the task. However, they do not require a real estate licence or industry registration certificate since the tasks do not require direct communication with real estate clients. If a property management task does require direct contact with a client, or advice is required, then it is not appropriate, or legal, to have such tasks outsourced to an unlicensed worker. Rather, such tasks should be shared between the internal team and the outsourced worker by implementing team-to-task workflow programs.
Real estate outsourcing advantages and disadvantages
Real estate outsourcing has many advantages. Real estate companies that outsource experience lower costs, increased efficiencies, and a range of other benefits. By outsourcing, companies can free up human, physical and financial resources, including cash flow, personnel and facilities that can be redirected to other tasks, resulting in growth. Outsourcing tasks helps companies operate more efficiently by lowering costs, improving productivity and increasing profits.
On the other hand, real estate outsourcing can create some challenges for real estate companies if the process is not managed with a task flow system. Often, when the internal team is allowed to pass on ad-hoc tasks to the outsourcing company or employee, generally the tasks passed over are ones which the in-office employee has no desire to do or should not be performed by the outsourced company or employee. Tasks and sub-tasks need to be pre-determined and pre-assigned between the internal team and the outsourced worker for outsourcing to successfully achieve lower business costs and greater productivity.
Real estate companies engaged in outsourcing must also effectively manage their contracts and ongoing relationships with the outsourcing provider to ensure that goals are achieved. Some real estate companies might find that the resources and time devoted to managing the outsourcing company relationship rival the resources required for the outsourced tasks, thereby possibly negating many of the benefits. Although, this is a rare occurrence if the outsourcing relationship is effectively managed by both parties.
Real estate business owners or broker owners may also find that they lose control over some aspects of the outsourced tasks. For instance, a company could lose control over the quality of customer service provided when it outsources its call centre function. Even though the company’s contract with the outsourcer articulates specific quality measures and standards, the company might find that it is more difficult to correct an outsourced provider than it would be to correct an in-house team. Another concern is the language barrier, where written communication can be misinterpreted, mispronounced or misspelt. Quality control and auditing, just as you would with your internal team, is a requirement to protect your company’s standards, brand and reputation at all times when outsourcing.
Real estate outsourcing trends
Real estate outsourcing is an effective way for real estate companies to lower costs, gain efficiencies and achieve business growth. Forward-thinking real estate companies understand that outsourcing tasks can help them gain a competitive advantage because they can access expertise and technologies that they do not have in-house. This allows the company to deliver better or additional products or services on-demand and all within the requirements of legislation, business standards and client promises. As well, it enables real estate companies to realign their resources to critical areas and allow their internal team to focus on dollar producing tasks to ensure retention and growth.
Real estate outsourcing versus offshoring
Outsourcing is a business practice in which a company usually hires or contracts another external company, or at times an external individual, to perform tasks. The external company, commonly referred to as the service provider or a third-party provider, arranges for its workers to perform the tasks. These tasks can either be completed on-site within the hiring company’s business premises or at external locations, such as the third-party’s business premises.
These days, companies can outsource an ever-increasing number of tasks, especially in real estate. Examples of areas that can be outsourced include information technology, technical support, graphic design, marketing, customer service and even business planning. Companies can outsource other types of work such as manufacturing processes, human resources and financial functions. In some companies, they also outsource entire divisions, such as their IT departments, marketing or sectors of a particular department. Outsourcing business functions is sometimes called ‘contracting out’ or ‘business process outsourcing’.
In comparison, offshoring is a business practice that involves relocating certain functions or activities of a company to workers from foreign (or offshore) countries. The purpose of offshoring is to reduce business costs, such as salary, manufacturing or production. Offshoring is usually seen as an effective business cost-cutting approach.
Moving from real estate outsourcing to offshoring
A real estate company typically outsources a specific task for a defined time period. They choose an outsourcing company and hire an offshore team member who is temporarily responsible for carrying out a task. The contracting company is responsible for training the staff member on this specific task, managing it and ensuring it is moved forward on a day-to-day basis.
Typically, real estate companies search for outsourcing when they begin to consider their offshore need. However, in reality, their needs may be more complex. Outsourcing is fine in the short-term but, at some point, you may need to take on someone full-time.
If you’re looking for a full-time offshore staff member to join your team, you should be searching for offshoring. For many businesses, this is the next step after outsourcing. As mentioned, this is when you hire an offshore employee to join your team. This person is dedicated to your real estate company, just like any other member of your staff.
Ready to move from real estate outsourcing to offshoring?
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A property management virtual assistant can help streamline your operations, maximise overall performance, reduce costs, boost your bottom line, and scale and develop a robust real estate business. Supporting your in-house property management team, they help your business perform as its peak, every day. That’s why, around the world, more and more real estate businesses are scaling through offshoring and hiring dedicated property management virtual assistants.
- Virtual assistants equipped with elite property management training
- Streamline your operations and maximise overall performance
- Reduce costs and boost your bottom line
- Scale and develop a robust real estate business
If you’d like to get started or find out more, contact us today for a no-obligation chat about how we can help your real estate business.