A unique business model for property managers to help with work-life balance could be what the doctor ordered.
Perth-based Investors Edge Real Estate has developed a unique business model for Property Managers’ to receive far greater rewards while getting back their work-life balance and flexibility.
Many Property Managers are working over 50 hours a week and missing the important moments with their family, which really grinds away at them.
With Property Manager burn out at record levels and many great operators choosing to leave the industry we created our new business model to bring lifestyle and rewards back for property managers while improving the overall service delivery for clients.
The new model has been strongly welcomed by experienced Property Manager’s who feel they have hit a ceiling in their current role with no path for progression and greater demands to manage more properties for the same pay.
Over the last 5 years it has been extremely tough to be a Property Manager in Perth with record high vacancy rates of 6.5%+ making properties really difficult to rent.
With increased turnover of tenants moving away to get work elsewhere, there is also more work to fit into every month.
The challenging economic times also made rent defaults higher, leaving many tenants to break lease when their circumstances suddenly change for the worse.
This tough market caused us to look at how we could do property management better.
How does the traditional property management Business Model work?
The delivery of property management services has become very segmented with most larger offices separating the functions of business development, leasing and management while sometimes outsourcing routine and final inspections.
It is thought that this structure brings specialisation of functions and greater efficiency but it has been at the expense of the client relationship.
This has resulted in an overall relationship breakdown with clients no longer having a strong connection with an all knowing property manager.
It’s impossible for managers to get to know their properties when they don’t even see them and have in some cases 200+ properties to oversee.
The smaller property management offices will have more of these functions delivered together by one manager but they often lack the backend systems and administrative support.
This bogs them down in tedious and mundane tasks that don’t add to the client relationship but still need to get done.
Regardless of the office size, property managers usually receive a fixed salary and in some cases a bonus for performance. So there is usually very little incentive to take on more properties or go above and beyond for a client as it just means more work for little reward.
Depending on where they live, their portfolio and office location can all be great distances apartwhich only takes time away from their personal lives each day.
How does their new Business Model work?
The Property Manager Partner model starts with a small portfolio of around 50-60 properties which they get to know intimately while they handle the high level aspects of growing the portfolio, leasing the property, inspecting and managing the property.
Using the latest cloud based technology, time saving systems and having the support of an administration team they are able to focus on the things that matter- relationships, negotiation and problem solving.
The Partner receives a revenue split of the fees collected on their portfolio so as they lease a property, complete a routine inspection and grow the portfolio they are directly rewarded for the positive outcomes they get for clients. The structure really allows the client’s and the manager’s interest to be aligned.
Our Partners are enjoying the flexibility of being able to be there for their kids.
They are fully setup to work independently from home, while having the full training, support and camaraderie of a professional network of like minded property managers. It’s great to be around others that are all focused on being the best versions of themselves for their clients and family.
This gives the client one point of contact with a manager that has an ownership mentality who really gets to intimately know their property and the market conditions affecting it.
The starting salary for this new model is approximately $50,000 so it does require a small step back in income for most experienced property managers who are earning $60,000 to $70,000.
However the added work life balance and earning potential for up to $120,000+ per year is giving plenty of upside for those that want a change.
What is the Future of Property Management?
With plenty of disrupters coming into the industry who are lowering their fees, it's going to be a very interesting time ahead for property management. It's one thing to charge a lower fee, it's another thing to consistently deliver a service that can give clients peace of mind.
Unfortunately these pressures to reduce fees and find greater efficiencies in property management is leading to an erosion in service and relationship.
This only makes it easier for a client to leave and give the cheaper service a try.
Hopefully there will always be a place in the market for great service built on strong relationships and Investors Edge Real Estate is adjusting their whole business model to bet on it.