How Many Properties Can A Property Manager Manage?

Principals always want to know if they’re getting return on investment when it comes to rent roll size and the people it takes to successfully run it. Based on a case study with PMTA members, Kasey McDonald takes a look at the optimum ratio of people to properties.

It is a question I get asked all the time, and not just by property managers either. In fact, if I had a dollar for every time someone asked me this million-dollar question, I’d no doubt be sipping mojitos on a tropical island in early retirement!

I even found myself discussing this topic on stage last month when I presented at the PM Grow Summit event in the US. It seems everyone wants to know the answer. But there’s no real magic number and it’s not a one-size-fits-all.

To find out if an office or property management division is on track in terms of property managers and the size of

the rent roll, I apply my handy 10-point capability audit to derive a ratio for that business.

MY 10-POINT CAPABILITY AUDIT WORKS ACROSS THESE MAIN CONSIDERATIONS

1. What software or systems are used in the business? Are they adding real value? How well are they using it?

2. What does the internal structure look like? Is it end-to-end property management or pod style?

3. What kind of support system does reception provide to the team?

4. What does an audit of each property manager’s tasks look like? Can you break it down to a bottom line report? What does it look like in terms of how much time certain tasks take?

5. Time management around tasks like entry and exit condition reporting and routine inspections: What is best practice? Is it all conducted on site or some in the office, too?

6. How many routine inspections do you do per year?

7. What does the portfolio look like? Are there multiple owners? What’s the geographical disbursement? How are inspections best scheduled?

8. How many houses versus units are in the portfolio?

9. What is the breakdown of the portfolio in terms of property age and property type?

Once the above has been finalised and analysed, I start to look at the tasks, the time and repetitive nature of the tasks, and the labour rate. I then arrive at an annual cost, divided by the amount of properties.

Before I apply it, I ask some questions to get an overall grasp of the structure within the department. Here are a handful of insights that should be considered for principals who want to drive economies of scale, and for property managers who want to push back in terms of what their principals expect their management capabilities should be.

FOUNDATIONS

As the word implies, the foundations of a division set it up for either optimum output or dismal results. The first question I ask is around the systems and procedures. Does everyone follow the same systems and is there consistency in the tasks and service provided at each touchpoint?

WHO’S WHO IN THE ZOO?

What staff members do you have in which roles and what are their true capabilities? To drive efficiencies, it’s super-important to first ensure everyone is working to their key strengths. I often perform an office audit and find out that some of the most capable and driven staff are given the most automated roles when they could be outperforming their counterparts.

ONGOING TRAINING

How committed is the team and principal towards ongoing training and support? In a dynamic industry like real estate, I’m often perplexed at how little training and support is given to property management departments. The introduction of sophisticated new technologies alone is revolutionising the way property managers do business. This can not only affect the number of properties a property manager can handle; it can positively impact the bottom line.

SHOW ME THE PROPERTIES

A rent roll is more than just a number; efficiencies often depend on the calibre of the portfolio. For example, does your geographic footprint grace you with a large proportion of new executive homes in a master-planned community? Or are most of your properties just a series of old, dilapidated houses spread out within a 40km radius?

Why does this matter? Well, let’s consider routine inspections as an example. Say you’re in the state of Queensland; you conduct quarterly inspections and your rent roll includes a master-planned community in which you manage 150 new units and homes. Imagine the time you’d save in clustering those inspections together.

Now say you had the same amount of properties spread out geographically and of a poorer, older condition. You’re not only going to spend a lot of time driving between inspections, you’re going to spend a lot more time on repairs and maintenance requests too. This is a hugely important factor to consider when working out the property manager to property capacity.

For example, doing only the big, basic, standard jobs involved with day-to-day property management, such as conducting routines, entry and exit reports, maintenance management and lease renewals, I find a property manager can manage between 150 and 200 properties in the portfolio.

However, if you add to that things like administration, receipting rent, accounts processing, phone calls, emailing, travel time and leasing, it starts to cost $627.96 and 24+ hours to manage one property per annum (based on a salary of $50,000 and end-to-end management).

This is not a magic figure and it really does fluctuate with each office. Just ask yourself: how dedicated are you towards ensuring best practice? There’s no point cutting corners to manage more only to find yourself highly stressed and doing only half the job. It not only puts yourself and your business at higher risk, it also leads to retention issues. But that’s a whole other story.