A question for those of you who hire PM's to manage your IP's. I've always tried to select PM's who have smaller portfolios; with the theory being that they have the equal amount of time to spend on less properties=more individual attention=more benefits for us as landlords. However, after chatting to a few fellow investors lately, and comparing notes, there are some PM's out there giving great service but also managing what I would consider "too many", in the vicinity of some 160-250 properties. One agency I talked to in Lane Cove manage a massive 600 properties with only 3 staff. My initial reaction is to stay away from such PM's, as, from my experience, the larger the no. the poorer the service. Not many PM's who will offer to fix washers or ring up faithfully after 3mthly inspections, from my travels. However, I know this isn't always necessarily so. Effective time managers and better communicators are hard to find. So, onto my question, for those of you who currently have PM's who manage large portfolios (150+ per PM): How have you found the service to be, when a situation has developed that requires the true skills of the managing agent to emerge? (think arrears, runner tenants, malicious damage, claims, other issues etc)
Hi Jacque, I think it comes down to the organisational skills of the head PM and those systems in place within the agency. My first PM job (about 15 years ago now) was with an agency that had 600+ properties and it was total chaos all the time with only 3 staff...but I've worked in other agencies that had similar property:staff ratios that ran like dreams... I also worked in another agency that had 80 properties, one PM, and it was completely unorganised and the trust account was a disaster. it all comes down to systems and effective time management. My personal experience means that I would never engage a PM with less than about 7 years experience and I would look for a smaller properties:staff ratio. I believe that it is imperative that a PM know the properties that they manage "intimately"; they should be able to recall those little details of a property, and I don't feel that a PM can do that if they're managing more than around 120 to 150 on their own. But of course, economies of scale come in to the equation for the agency owner and in some locations it may not be feasible to have a lower properties:staff ratio. I would also look for a PM that has a financial interest in the running of the rent roll, although this is very hard to find.
Yes! you'd think it would be logical that a PM with a smaller number of properties to look after would have a better chance of doing the job properly and to a higher standard. There are always exceptions, - consider an on-site manager in a block of approx 35 units, of which at least 6 are owner occupied and their level of service is still sadly lacking. In this case they will be able to concentrate on one less property shortly. I know of one other on-site manager that has a level of professionalism and efficiency you can't fault with about the same number of units to look after.
Joanna, you make a really valid point about using a PM with experience- 7 yrs would do it for me! However, what can happen in an office is the property gets passed on to the junior and the experienced PM's leave or switch sides to sales Reliable and well organised PM's are still hard to find- perhaps they should be paid on commission or some type of bonus situation? Having a financial interest in the agency is definitely a worthwhile incentive to look after clients as well. I wonder why more agencies aren't operating this way, as rental rolls are often the income that holds them together in the first place.
