How To Foster The Best Service In Property Management
Property Management has a problem. Management fees are being pushed down in order for agencies to compete with one another, forcing agents to manage an increasingly unwieldy portfolio – and in return Landlords and Tenants are receiving worsening levels of service.
As both a landlord and tenant, I’ve been exposed to over 10 property management entities over recent years. There is a clear distinction between those that are good, competent operators, versus those who don’t really provide a decent level of service.
Numbers Behind Property Management
Property management fees tend to be charged at a commission rate proportional to the rental income. This is an apparent incentive system encouraging an agent to secure a higher rent, benefiting both the landlord and agent by driving up earnings.
But does this work?
The earning drivers for an agent are market/rent, occupancy, commission rate, and quantity of properties serviced. Notably absent is ongoing service level, which has no direct relationship to earnings.
| ITEM | RENT | PERIODS | TOTAL | RATE | COMMISSION | DIF OWNER | DIF AGENT |
|---|---|---|---|---|---|---|---|
| Baseline | 400 | 52 | 20,800 | 6% | 1,248 | 0 | 0 |
| Rent Increase | 410 | 52 | 21,320 | 6% | 1,279 | 520 | 31 |
| Lost Week | 400 | 51 | 20,400 | 6% | 1,224 | -400 | -24 |
| Commission Increase | 400 | 52 | 20,800 | 7% | 1,456 | -208 | 208 |
| Commission Decrease | 400 | 52 | 20,800 | 5% | $1,040 | 208 | -208 |
The above table compares the impact of a series of changing factors on the earnings of landlord and agent. Seeing this, is it still so clear that agents are incentivised to achieve maximum rental incomes for their landlord?
Weekly rent
Market/rent and occupancy across the board will impact an agent’s portfolio, but on an individual property level the benefits they bring to an agent are trivial.
In the example, a $10 rent increase would be worthwhile for an owner so long as its pursuit costs no more than 1 week in lost rent. But from an agent’s perspective, this trade off only nets them $7 for the year and it may be at the expense of hosting an additional inspection – that’s not worth it. The only incentive an agent has here is that by raising this property by $10, it might impact the market on a larger scale generating growth across the board which could over time meaningfully impact the agent earnings. But so long as the market still functions without the extra effort, you could expect a free rider scenario to be common where agents can rely on larger market forces or other agents to drive up prices while they reap the benefits when they come easily.
Lost week of rent
Look at the lost week scenario, a meaningful cost of $400 for an owner but a trivial $24 for an agent. The lost week comes into play between tenancies and will only occur if the agent has not found a suitable tenant or if the property is not ‘ready’ for tenanting. Put aside any time the property is being renovated, that’s on the owner.
To find a suitable tenant the agent needs to advertise as early as possible, and host inspections as early and frequently as practical. It’s understood that tenant availability in some markets is quite high, and a single inspection may be sufficient to receive numerous suitable applicants.
Property readiness
In terms of property readiness, it might be disconcerting to know that some agents suggest 1-2 weeks between tenancies to allow time for them to complete their final inspection and to address corrections with the previous tenant. At an owner cost of $400-800, barring the most extreme of circumstances, any owner would surely prefer to pay a cleaner and handyman if required (a tidy tax deduction) the day immediately after vacating, and have the new tenant move in the following day.
Remember here that time is money for an agent. The tenant changeover may be the most time costly process there is when managing a property. A week of lost rent is only $24 – so if the agent could turn it around a week sooner, but it comparatively takes an extra hour of their time, it’s not worth it (the landlord at $400 a week might disagree!). So it’s likely the agent will want to batch this work, visit properties of the same locality on the same day, complete reports in a sitting. They’ll delegate any follow up work back to the tenant to fix in their own time, it’s easier than explaining to a cleaner or handyman, it requires less coordination. Then afterwards, they’ll inspect the property again, and produce the report again.
What does drive an agent?
After further review we can look again at the earning drivers for the agent. We saw that market/rent and occupancy are generally trivial in impact at an individual property level. This leaves commission rate, and quantity of properties serviced.
Chart 1: Impact of rental outcomes on Landlord and Agent earnings.
Suddenly our innocent starting proposition that there is an “incentive system encouraging an agent to secure a higher rent, benefiting both the landlord and agent by driving up earnings” seems flawed.
The main earning drivers for the owner (market/rent and occupancy) are insignificant to the agent. The agent makes the most money by taking on new properties at the highest management rate possible, although even the management rate is low in magnitude compared to the earnings from additional properties.
The two aspects most driving the property manager’s earnings are both secured when the agent initially engages a new customer (the owner/landlord). We call them property managers, but it seems their income really isn’t impacted by the management service they provide, particularly if owners aren’t punishing them by abandoning bad service providers. And as the commission rates are forced lower, the agent will have even less incentive to manage each property to a high standard.
Property Management Level of Service
In the existing commission structure there is no direct relationship between the earnings of an agent and the amount or quality of effort they contribute to any property – i.e. service level.
Pair that fact with the incentive to manage as many properties as possible and the agent is increasingly likely to spend less and less time on each property providing an ever deteriorating level of service to both the landlord and the tenant.
“In the existing commission structure there is no direct relationship between the earnings of an agent and the amount or quality of effort they contribute to any property – i.e. service level.”
Unfortunately this incentive system has turned into a destructive cycle. In order to remain competitively priced, agencies are now required to take on too many properties, reducing their service level, and thus reducing their value even further.
This isn’t to say it’s always the case in property management, there are still good agents doing good work. The smaller boutique agencies more frequently provide good service, whereas more ubiquitous franchises are more likely to slip.
What is good or bad property management service?
We can’t so easily quantify a subjective measure like service level – but generally someone will know if they are receiving adequate service or not. Drawing on personal experience, there are some examples below in Table 2.
| SERVICE | ADEQUATE | INADEQUATE |
|---|---|---|
| Calling | Your agent answers their mobile | A receptionist answers and you don’t know who to ask for |
| Callback | Calls back promptly | You have to call them back |
| Responds same day | Doesn’t respond within a day, or at all | |
| Property knowledge | Knows your property | Doesn’t know your property |
| Queries | They answer your question | You find the answer on Google before they do |
| Rent | Agent tells you if a tenant is behind on a payment and why | You notice your rent hasn’t arrived, and ask your agent why |
| Maintenance | Agent arranges same day, and sends SMS when done | You wonder if the job is scheduled or done yet |
| Ads | Your ad is well written with suitable photos | Your ad has typos or doesn’t make sense, photos are blurry or double up |
| Condition report | Meaningful photos and comments | Blurry photos, and meaningless comments |
| EoY statement | Correct and on time | Incorrect and/or delayed |
| Change of staff | You are notified | You find out when someone different answers their phone |
The items listed might not be a direct cost financially, but in terms of time, effort and frustration – they certainly cost.
When an agent or agency falls into the inadequate category an attentive owner will find it frustrating and be required to micromanage their manager, turning them into merely a rent and communication conduit.
Image 1: Is this comment meaningful to an owner reviewing a condition report? Does an owner care that their tenant folds washing on the couch?
Service to the tenant
An agent has some incentive to serve an owner to the minimum level required to retain them as a customer. But what incentive do they have to serve a tenant? Very little.
If an owner is receiving an inadequate level of service, you can bet the tenant will be receiving even worse service.
The poor experience of the tenant likely begins before even moving in: they may show up to an open only to find it cancelled without notice. They’ll likely have less than 5 minutes to view the place they are committing to living in for the next 12 months. When they do get accepted the bond needs to be paid by bank cheque as if we’re still in the 2000’s – so prepare to take a trip to the bank and real estate offices during business hours.
Once the tenant is moved in, if they have an agent providing an inadequate standard of service, it’s likely they often won’t receive callbacks or email responses, or they may be unreasonably relayed. Agents may come across rude, and maintenance items will start to seem not worth the effort. Upon moving out the tenant should hope that the bond is processed timely and correctly and that they don’t get called back to correct trivial things with their bond held ransom.
The tenant doesn’t have a lot of power. There are Acts and Regulations, and lobby groups are pushing for certain causes. These range from useful to insignificant. But it’s the poor service provided where the disrespect really occurs. Where tenants really are mistreated on a greater scale. It’s not reasonable for a tenant to lodge a complaint every time someone takes too long to return a call. But it’s not right that it happens frequently either.
A happy tenant is profitable for all
From the above, it appears the tenant is vulnerable to receive poor service – and this is likely true – but despite the apparent food chain, it’s worth questioning the common conception that a tenant is the least powerful party in the tenant/agent/landlord relationship. This is because it would seem the tenant singularly has the greatest ability to waste agent time or cost landlord money, which both parties most want to avoid.
There is such a thing as a bad tenant who will cost a landlord money and waste an agent’s time. With a reasonable tenant though, and most tenants are reasonable people, simple respect and adequate service will drive positive outcomes.
Consider yourself in the shoes of a tenant, receiving the kind of poor service described above. Even a positive person can build resentment when they feel disrespected, and this creates a strained relationship between the tenant and landlord, without them ever even interacting.
For the good of the property
If the tenant resents the landlord by proxy how likely are they to care about the property? Will they care about scratching your new floorboards or leaving marks on the walls? How likely are they to report a shower leaking through a wall that’s likely to cost a fortune if not fixed? Will they pay a few dollars to fix little things themselves, or will they pester the agent just to be a nuisance?
Property managers will know how valuable a no-nuisance tenant is to them, so they do have some incentive to pick good (or perhaps submissive) tenants, which pleasingly aligns with the landlords preference.
But building a good relationship with the tenant makes a difference. If there is a respectful and positive personal connection then the chances the tenant will take care of the property would increase significantly. This is the same reason you want a consistent manager rather than a distributed management structure – relationships matter. Having a bad relationship with a tenant can cost more for an owner in maintenance or repairs, and create more wasteful or negative interactions for an agent.
Unfortunately these disincentives for poor service – being increased maintenance and negative interactions – are too indirectly linked to the service level, so the feedback loop is likely not strong enough to drive correction.
Who Manages the Manager?
When people spend money they tend to make some form of assessment, and if they’re not satisfied with the product or service, they likely won’t make that purchase again or at least they’ll take some corrective action.
Yet strangely, in real estate management, this correction doesn’t seem to manifest as frequently.
There is a reason why the widespread franchises in the business get away with providing an unacceptable level of service without going out of business: too few owners take an active role in managing their manager.
It’s understandable that an owner may view a property manager as a set-and-forget, someone who will streamline and act as a sufficient proxy for their own efforts – but having viewed the misaligned incentives, this is not a safe assumption. An agent is incentivised to spend as little time as possible managing a property, and we’ve seen how this can cost an owner – in lost rent or potential rent, tenant related maintenance costs, and frustration.
It is the landlord’s responsibility to manage their property manager. Just like with any other service provider, landlords should be assessing their agent, providing feedback where required, and changing provider if necessary.
Refer back to Chart 1 comparing the impact on rental outcomes for owners/agents – paying an extra 1-2% in commission is well worth it to have a competent agent getting you maximum rent and occupancy.
Landlords should not be afraid to change if they’re unsure. They should not have to micromanage their manager, or coach them to be worthwhile. There is no reason to be loyal, and changing is an easy process, the new manager will deal with the transition.
Owners Corporations
Owners Corporation (OC) management is a service that owners of units and apartments will likely encounter. They oversee property, maintenance, and utility items related to common areas or shared services for a group of properties such as an apartment complex.
They come with the same performance variations as property managers.
A lot of owners seem to view this service and cost to be a fact of life, simply part of owning a property within a shared area. Subsequently they neglect to give it sufficient attention.
It’s only once a year that an owner needs to tend to this, that is when the Annual General Meeting (AGM) comes around, and it’s worth actually paying it some attention. Owners Corporation management is a service that you pay for and if you do not attend the AGM then who is holding the manager accountable?
All an owner needs to do is check that their services are being provided to an acceptable standard, then review costs. Their main services include:
Oversight of common contractors (e.g. gardeners)
Repair or maintenance to common areas
Continuation of insurances
Dispute management
Hosting of the AGM
Savings on Owners Corporations
Owners Corporation fees are one of the easiest cost cuts around. In many cases savings of 25-45% may be obtainable simply by getting quotes and either switching or negotiating down prices accordingly. Many OC managers will apply a percentage fee increase annually for most services (including their own). If left unchecked these increases will become costly.
Consider what services are being provided and what you’re paying for them, look for disconnects – they’ll probably be obvious. Once you have a few quotes, you’ll be able to see what a reasonable management fee is. An excessive disbursement fee (printing, mailing etc) should be a red flag. Gardener scopes that don’t align with the property requirements, or where there seems to be excessive hours, should be questioned.
Owners Corporation management requires managing, just as property managers do. And if you can negotiate some good savings, the other owners will love you for it.
The Future of Property Management
The property management industry has an alignment issue and appears to be in a state of deterioration. Unbalanced incentives are driving earnings and service levels downwards.
The main earning drivers for the owner (market/rent and occupancy) are insignificant to the agent. The agent is driven to oversee more properties as the only meaningful way of increasing earnings – regardless of the impact this has on their ability to actually service the properties.
This disconnect will not last, it will have it’s reckoning when technology sweeps through the industry. When this happens, and it has already started, most services that agents are providing will be automated. This is why agents need to take a deep look at their profile now and ask themselves where they see their business headed.
There are only a few daunting tasks in managing a property. These are things like collecting rent, handling bonds, producing financial reports and finding tenants. But these are child’s play for technology.
New technology
Airbnb and other Uber like services are enormous disruption risks to this industry, and software services are already eliminating a lot of the administration work. The below table paints elements of a potential future for the industry – and many of these are already here.
| CURRENT | FUTURE |
|---|---|
| Agent advertises property | Owner advertises property on Rental Uber |
| Agent reviews tenants | Owner reviews applicants on Tenant Tinder |
| Agent gives bond instructions | Rental Uber processes bond |
| Agent collects rent | Rent goes through app |
| Agent receives maintenance request | Maintenance request goes to owner in app, tick to approve and allocate trade |
| Agent does inspections | Owner does their own inspection, taking photos in the app, or use inspectors from Inspector Tinder |
| Agent produces financial report | App does it instantly, available any time during the year, with additional reporting functionality, feeds it directly into ATO |
| Agent evicts tenant | Eviction via app |
| Agent returns bond | Owners ticks box on app to return bond |
Property managers working with technology
Where does an agent fit into the picture if they’re not required for the above services?
Currently direct to business software services are augmenting an agent’s work; they remove some of the tedious tasks. But more nefariously, they’re forcing agents to take on more properties, which is likely creating more stress and playing a role in driving down service levels as the manager spends less time learning any individual property. But this style can’t continue; the technology will continue replacing these roles, and agents must find a way to work alongside the technology.
“The property manager of the future must become a friendly, trusted, reliable, and knowledgeable resource providing a high level of tailored service and value adds. Merely collecting rent simply will not cut it anymore.”
The property manager of the future must become a friendly, trusted, reliable, and knowledgeable resource providing a high level of tailored service and value adds. Merely collecting rent simply will not cut it anymore.
I would be very nervous if I was a property manager offering poor levels of service at present.
Making Things Better
Property managers need to realise that their industry is at risk and start adapting. Businesses and agents are being forced to drive costs lower to compete with one another and as a result are required to take on more properties to maintain revenue – causing them to be unable to dedicate the time to provide adequate levels of service. This destructive cycle must be broken, and it must be broken by the industry before it finds itself replaced wholesale.
The objective is to produce a sustainable, profitable structure that provides a good level of service to owners and tenants.
Property management fee structure
The current commission price war is good for landlords’ pockets, so despite the downsides, the owners are not going to fix this problem. It needs to start with the agencies.
The existing commission fee structure does not adequately align owner and agent incentives, and it clearly isn’t working for the industry. It is so poorly aligned, there is really no reason for it to be a percentage commission rate. To achieve an adequate service level agencies need to be paid for the efforts actually required for the properties they are managing.
“To achieve an adequate service level agencies need to be paid for the efforts actually required for the properties they are managing.”
Some online services are offering pay-per-use structures where an owner requests services as required and pays accordingly. This is one option for change, and there is room for it in the market, especially for owner-managers who just need a bit of guidance with certain aspects of the leasing process.
A more appropriate pivot for existing agencies would be to a fixed pricing structure based on the individual attributes of each property, using general rules around the labour that could reasonably be required for its management. As an example, old properties will likely require additional maintenance, and therefore additional agent-hours to manage it. Age of property should be a price driver, as should size, rooms, yard, condition etc.
Ending a property management price war through differentiation
Aligning pricing with the agent-hours required to provide a reasonable level of service for each property will likely mean a fee increase being charged to owners. This becomes a penalty for first movers as owners could flock to other cheaper providers. But that doesn’t have to make it a complete non-starter.
The way to approach this change is through differentiation and branding. A company cannot increase pricing but continue to function the same way. An agency should be considering how they can differentiate themselves from their competitors in a manner that provides more value to the consumer – allowing them to charge a premium rate.
Improved service levels is a given, and having increased the agent-hours available per property this should occur naturally, though in some instances may require some systemic changes.
Owners and tenants must have a dedicated agent, whom they know by name with an email address and mobile number. Needless to say, they should be notified if their dedicated contact changes.
Driving profit for owners
Maximising profit for owners needs to become a true objective for agents. The earning drivers identified in Chart 1 can direct these efforts.
$10 rent increase is worth $520 to an owner
Avoiding a week of vacancy during re-leasing is worth $400 to an owner
Key here is that these two items provide a financial benefit to an owner. An owner will be more willing to pay the extra few percent commission if they’re seeing a return from it. Both parties need the incentive.
Providing the incentive
Money generally isn’t the strongest motivator when it comes to the workplace, but it is still a powerful lever at our disposal – and one that is much easier to manipulate than other things like workplace culture.
If every time an agent delivers a $10 rent increase or changes over a tenant in less than 7 days, the owner compensates them with a $100 bonus, that will likely produce some motivation. If an agent were to manage 100 properties and deliver a rent increase on half of them they’ll earn themselves a $5,000 bonus – and they deserve it.
Given what an owner stands to gain from these wins, they very well may embrace this bonus structure. The more ownership the agent demonstrates for driving owner earnings, the more generous an owner will be to compensate the agent.
“The more ownership the agent demonstrates for driving owner earnings, the more generous an owner will be to compensate the agent.”
For an agent to go even further in truly owning the results and driving earning for the owner, they should understand the financial side of the business. Not only should they be fully aware of the rental income and expenses, the agent should be able to suggest renovations or property improvements to an owner at appropriate times understanding payback periods and tax implications. They may even produce a property investment plan for an owner, presenting a report considering their investment holdings with recommendations to increase earnings.
Improving processes to achieve the results
Increasing rent is something that will come from understanding and leading the market, but efficient re-leasing is an effort and service based win.
Through region-specific experience agents should be conscious of how long the tenanting process takes in their area of operation, and likely already keep a contact list of good or promising tenants who may be looking for a home.
The real streamlining that needs to take place is the transition itself. This means the vacating tenant needs to leave on the set date and the new tenant needs to be shifting in with as few vacant days as possible in between. Obviously the agent needs to push the dates to line up tightly, but they also need to take steps to facilitate by ensuring that the property is ready for the new tenants.
One way to do this would be to conduct an inspection a day or two before the move out date. Check that the tenant is on track, and look for any obvious issues including necessary repairs or things that may need specific attention when the tenant does their final clean. By respectfully pointing these out beforehand, the tenant should be less likely to miss or overlook things, and it’s less likely there will be any shocks in the final inspection.
The final inspection
The final inspection and handover of keys would be best completed with the tenant present, and it should be built into a collaboration where the agent and tenant look to spent a short time reviewing and correcting any minor issues to ensure the property is ready. The agent should take some basic cleaning equipment with them (duster, glass cleaner, squeegee, paper towel) only for minor touch ups if required.
This isn’t about letting the tenant off the hook (the agent can ask the tenant to do it while they watch, if they want), it’s about recognising that it is in everyone’s interest to finish up as quickly as possibly in a single visit without back and forth. If the tenant really has not done a good enough job though the onus should be put back onto them – clean it today, or we will hire someone to do it from your bond.
Even if the bond isn’t claimed, from an owner perspective if it means moving in a new tenant sooner, it makes sense financially to pay someone to clean than risk waiting a week for a tenant (who has already demonstrated apathy or low standards) to finish the job. Agents should have cleaners and general trades available who will be able to attend jobs same or next day.
With these processes in place, there is really no need for a property to be vacant more than one day – so long as the agent can line up the dates. Property managers may have some concerns over the amount of extra effort involved here but remember that this earns the $100 bonus, and that this is a key improvement contributing towards increasing the value of the real estate property management service.
Property Management Value adds
Value adds can be used to increase the profitability of each property for a real estate agency. These are additional property management services on offer that can be provided at an extra cost to the owner.
Subscription maintenance
Real estate provides a consistent income for investors but repairs and maintenance can be unpredictable and causes fluctuations. An opportunity for real estate agencies may be to provide a repairs and maintenance subscription service. This service would entail an owner paying a set regular cost on top of their agent fees for which the agency would fulfil selected repairs and maintenance at no additional cost to the owner.
The list of covered items would need to be carefully curated to leave no uncertainty of inclusions or exclusions. The pricing could be modelled as per the agent fees based on individual property attributes, or as per insurance models where better condition properties may carry the cost of less maintained properties within the agent portfolio.
A model like this provides consistency in income for an agency. It also provides an avenue to increase profitability without taking on additional work, by maintaining or improving properties to reduce maintenance costs . This incentive aligns with the owners’ interest in sustaining the condition of their property.
An extra opportunity for agencies is to train their agents in basic maintenance and repairs. If agents can change a washer and save the call-out costs of a plumber then the price of maintaining this service drops significantly, increasing profit. This would also increase the agent familiarity with the property, further improving service level.
It’s worth noting in this section that this value add may have insurance implications for the property management service provider.
Smoke detector service
Owners are encouraged by agencies to subscribe to a smoke detector inspection service at the cost of $90 + GST per year. The service is to ensure smoke detector compliance with regulation, as well as replacing batteries and detectors when required.
This is a clever service that targets investors with a convincing “buy this service or else you may be liable for costs or vulnerable to legal action in the event of a fire”.
This service could be taken on by real estate agents rather than outsourced. Batteries only need to be replaced once a year and detectors themselves every ten years. The cost of an agency providing this service and completing the tasks at inspections would be negligible, and it provides about an 8% increase in revenue per property for them at the example price.
Again, this service may have insurance implications for the property management service provider.
Financial services
Moving into a different realm of services, property managers could consider providing financing for house purchases. If car yards can do it for cars, why can’t real estate agencies do it for houses?
Feedback
Surveying of tenants and owners is an underutilised tool for assessing service levels, but it would be a great way to determine satisfaction and to identify areas for improvement or new value add opportunities.
This data could increase customer retention by identifying disgruntled owners before they terminate their contract, allowing agents early warning to rebuild relationships. Sometimes this may simply be flagging a personality clash, allowing a manager to switch the assigned agent for a ‘fresh start’.
Sending tenants an SMS survey of their moving in experience simply asking for smiley or angry face would be quite telling. But this is the sort information that can be used to assess areas where agencies can keep growing to provide a better service level.
Tenants may not respond truthfully to surveys by their property manager out of fear for repercussions, but it is a valuable data set. It might make sense for some data collection to occur through an outside authority to ensure it is secure and anonymised to a suitable degree or to certain audiences.
With good data available an agency will be able to identify which services are working well, and which processes are causing frustration to drastically improve their offering. But it should also provide clues to which additional services could be offered. If surveys reveal that many owners are confused by insurances for their property, an agency may investigate providing management or recommendations for that service. If surveying suggests many tenants in an area would rather have utilities included in their rent, there may be an opportunity for owners and agents to offer that.
Date can help property management agencies work toward providing more value to consumers, increasing their worth, and improving their industry for everyone.
Handling new technologies
New technology is arriving at consumer and business level. The key thing for property agencies here is that they must embrace and adapt. If workers or unions resist and make the claim that technology is putting people out of the job, they’ll naively put whole companies out of business as they get left behind.
Most of this article has focused on human service because that is what will keep real estate agencies alive. To remain competitive they’ll need to take on technology to replace most or all administrative work, but shift focus onto providing a great personable service to their customers.
User experience should be a top focus as they take on technology, it should be to the benefit of agent, owner and tenant. This might not be an all in one transition. Think about which tasks would be most beneficial to replace because they are time consuming, frustrating or tedious. But know that a messy conglomerate of software and apps won’t suffice, an agency should be seeking a universal system that will grow to handle all functions. The user interfaces should be simple and functional, don’t settle for buggy bargain bin apps.
Most importantly, just get started, and have fun with it. Let your young people try things out and see what they like. This isn’t like buying a house, it’s not expensive to trial things and change your mind a few times to find what works best for you and your team.
Conclusion
This isn’t an attack on agents, or owners, or tenants. We all play our part in this system, but the system is not functioning in the best interest of it’s stakeholders. Property management is stuck in a cycle where to be competitive agencies continue to give up lower and lower management fees, increasing the workload of their agents to the detriment of their customers. It’s this cycle that needs to be broken – it will take a realignment of incentives, innovation in service, and a fresh look at values in the industry all while facing the impending technological transformations staring us down.
We can only hope that the best make it through, because those who don’t adapt, will be replaced.
The focus of this piece has been on the management of properties on the low-medium end of the rental range, with rental incomes of $10,000 – 35,000 per year in Melbourne and Regional Victoria. There is more subject matter to be explored regarding the higher earnings to be made off higher value properties, and the possibility of securing higher grade tenants. Regardless, this analysis of incentives is still relevant.
