Outsourcing Property Management
This is not a concept that will fit all business models and circumstances but there is value in the thought that it is possible to outsource some of the tasks within the Property Management Department of a real estate office. Every minute either you or your employees spend on an activity that doesn’t directly add value to your customer’s satisfaction is a cost that can be saved in your business. There are many reasons that you may look at strategically outsourcing your non-core property management activities to save time, save money, and most importantly – provide your customers with a better service.
When one person is in command of just one activity i.e. inspections, then they will excel in that area providing the correct training and attitude is in place. Another key area is Repairs & Maintenance. It has less chance of being ignored due to the constant workload on a Property Manager. This is a great concept for a start-up office when the Property Manager is busy in a dual BDM role to grow the rent role. It will also minimise exposure to risk as the outsourced contractor will be responsible for their own insurances and place a guarantee on the workmanship.
With the inspections being outsourced, they will have to be accountable for fully reporting every property through the appropriate documentation and ensuring speedy return to the office. It is vital that inspections have a short turn-around time. The Property Manager should also do spot checks on inspections and contractor’s performance much like a mystery shopper.
This is not a concept about totally losing control of your Property Management Department but working a little smarter and surrounding your business with a specialist team to give the Property Manager more focus on growing the business.
The accounting side can also be outsourced however, again, the Property Manager would also be advised to oversee the Trust Account and distribution of funds to landlords. There needs to be a very experienced person in the role with absolute knowledge and trust otherwise it may be better kept in-house.
Outsourcing administrative work in a property management department can allow you to focus more on customer care.
Companies that decide to outsource key functions can find that their infrastructure costs are much lower. Consider the cost of IT hardware, telephones, software applications, and even office space that are required for every employee in your business. By outsourcing some functions to key partners, it is possible to significantly lower your investments in these areas. Outsourcing some functions can also save on “hidden” operational costs like payroll, administrative costs (eg bank charges, printing and stationery), recruitment fees, energy, and utilities. In fact, outsourcing some business processes can give you some budgetary certainty around ongoing business expenses.
When you’re evaluating proposals from service providers, don’t be afraid to ask questions. Just like hiring a full-time employee, selecting a partner is a very subjective experience. Check references and ask for feedback from other clients who have used their services. Don’t be tempted to go with the cheapest contractor, the most successful projects are the ones where they felt the partner offered a balance of good value and quality results.
Communication is the key to success – You should communicate and explain all the objectives/goals that you wish to achieve within a certain period of time to both your proposed partner and to your staff right from the beginning of the contract and ensure that these channels of communication remain open and healthy for the period of the contract.
Establish a formal communication system both for regular updates and other ad-hoc communications; organise a specific time for a weekly/monthly meeting with the contractors. Set up a trial basis say for 3 months to enable both of your to settle in, and with change there will always be some pain or discomfort to be tolerated or endured but with some clear guidelines and communication, you just may be making the best decision for your business to grow.
If you wish to retain the full control of your Property Management and fear letting go, then perhaps outsourcing aspects of your business is not for you. A topic worthy of some strong debate. Could you do it?