Landlording & Rental Properties

The 5 Levels of Property Management Expertise

Expertise: Business Management, Landlording & Rental Properties, Real Estate News & Commentary, Real Estate Marketing, Personal Development, Real Estate Investing Basics
106 Articles Written

After several years of watching our competition, learning from them, and growing with them, we've come to the conclusion that there are definite stages that property managers evolve through as they perfect their skills. It's not a terribly useful insight, unless you're an investment property owner who is wondering if the property manager you've hired is as good as he claims to be. (Because frankly, we all claim to be great — the market pretty much demands it.)

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So here’s what we’ve learned about the stages of property manager development.

First Stage: Business-Focused

The brand new property manager is going to spend most of his time and energy thinking about and working on their property management business, simply because the business is the foundation of everything else that happens. At the beginning, none of us are familiar enough with the basic processes to be able to take shortcuts that more experienced PMs use automatically.

They're still working out how to negotiate with contractors, figuring out which vendors to pursue relationships with, and working on the cost-benefit analysis of hiring advertisers, inspectors, real estate agents, and so on. Some PMs skip this step by working for other, more experienced PMs for a few years before they go off on their own.


Second Stage: Property-Focused

After they’ve got the basics of their business down, a property manager begins naturally to focus on the properties their clients are presenting them with. The questions change — for example, from “how do I get this building renovated?” to “how do I get this building renovated so that it will be attractive and last a long time?”

Related: Why I Fired Property Management — And Began to Manage My Own Investments

Property managers at this stage will learn what attributes of a building are deal-breakers (i.e. if the property is worth 30 percent more than any other building in the neighborhood, you’re never going to be able to fill the vacancy). This may lead to them also narrowing the type(s) of properties they’ll manage and getting rid of properties that don’t fit their focus. PMs at this stage do well as long as they don’t get a problem tenant, but if they do, things can fall apart fast.

Third Stage: Tenant-Focused

Once they’re confident in dealing with all of the aspects of the property itself, focusing on tenants is the natural next development simply because tenants are the source of 80 percent or more of the problems property managers face. A property manager at this stage is learning why it’s critically important to screen tenants with a special eye toward indications of future problems and why communicating with a tenant is vital not just to resolve problems, but to resolve potential eviction cases that make it to court as well.

A lot of times a PM at this stage will finally figure out they can’t hand-hold problem tenants and it’s better to just get rid of them. This is the first stage at which we would call a PM “ready” to be hired, but there’s still a long way for them to go.


Fourth Stage: Profit-Focused

Once the property manager is comfortable dealing with most of the situations that crop up with tenants and whatnot, they’ve gotten a grip on basically all of the major problems that PMs need to solve on a regular basis. This frees them up to concentrate not on problem-solving, but on profit margins. (Obviously, every PM has to pay attention to profit margins, but PMs before this stage can often feel like such things aren’t really in their control.)

The PM at this stage will be “purging” his business, seeking new vendors with better profits, outsourcing to advertisers with better rates of return, getting rid of problem owners and generally improving their ROI — but more importantly, they’ll also be improving your ROI at the same time.

Fifth Stage: Client-Focused

In the final stage of property manager development, the PM learns that not all clients are the same — some have goals other than "maximum ROI per month" — and learns how to adapt their systems to accommodate those other goals. If you're a two-home family, for example, renting out your second home to save up for your child's college education until you can pass the home along to said child, keeping the home in sterling condition is more important than maximizing your ROI.

Related: Property Manager Checklist: 7 Vital Tasks to Keep Tenants Happy & Paying

If you're a local credit union with a foreclosure and you're renting it until the market stabilizes and you can find a buyer who can pay a legitimate sum, your renovations will look different (and be more expensive) than those of a holding company who intends to rent the property for decades until the next real estate bubble swells. There are enough different clients in the world that this stage will take up the rest of the PM's career — they will be adapting and evolving to their clients' needs until they retire.

Unfortunately, there’s no real way to tell where a given PM is in their development without working with them for a few months and seeing what kinds of problems cause them to fluster and flail. All you can do is look at where those problems lie within the stages, and if your PM is stuck in the first 1-2 stages, either patiently wait for their learning curve development or start interviewing for a new property manager right away.

Investors: Have you noticed that the property management you’ve worked with is in one of these stages?

Let me know your experiences with a comment!

While in the mortgage business, Drew rose to a VP position at the first broker he worked for and then started his own company. In the pursuit of excellence, he obtained several mortgage designation...
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    Peter Mckernan Residential Real Estate Agent from Newport Beach, California
    Replied over 4 years ago
    Hello Drew, Great spot on step-by-step description on how the property management growth goes and where it goes. It is really great to read the first two and see those be completely spot on! I am currently working with some property owners and helping manage, it is a learning curve for sure! It is tough to see what is working and what is not. Keep up the great content!
    Drew Sygit Property Manager from Birmingham, MI
    Replied over 4 years ago
    @PETER: hopefully our post helps you get to the next level:)
    Peter Mckernan Residential Real Estate Agent from Newport Beach, California
    Replied over 4 years ago
    It helps out a lot to move me there! Thank you!
    Drew Sygit Property Manager from Birmingham, MI
    Replied about 4 years ago
    @PETER MCKERNAN: be sure to use a good software package and systematize EVERYTHING! The sooner you do that the easier growth will be.
    Milly Claudia
    Replied over 4 years ago
    Great post and thanks for sharing…
    Drew Sygit Property Manager from Birmingham, MI
    Replied over 4 years ago
    @MILLY: thanks for reading and taking the time to comment.
    Jonna Weber Real Estate Agent from Boise, ID
    Replied over 4 years ago
    Hi Drew, This is really insightful. Choosing a PM that already has their systems in place is so critical. Nice article!
    Drew Sygit Property Manager from Birmingham, MI
    Replied over 4 years ago
    @JONNA: we think it’s more important for an owner to understand what stage a PM is at, so their expectations are realistic. We went through these same stages and through always pushing to provide improved service, have continued to grow — allowing us to add even more new ideas and better services! We have lost some clients as we grew and transitioned because we couldn’t scale up some of the “hand-holding” they had become accustomed to:(
    Dror Shmaya Property Manager from Bronx, New York
    Replied about 4 years ago
    Very nice . Thank you. Today pm must make sure they receive all field information on their dashboard asap. The challenge is to create this kind of communication . What would you suggest as best growth strTgey fo PM. Thank you
    Drew Sygit Property Manager from Birmingham, MI
    Replied about 4 years ago
    @DORY ANGEL: best growth strategy is providing excellent service and letting word of mouth spread and get you more business. network with real estate agents, CPA’s and attorneys as they are all the first ones to hear about a new investor or an investor that is not happy with their current PM.
    Replied over 3 years ago
    This is a very interesting article that explains the stages in which a property manager or a property management company develops and grows. This is a lot of great knowledge that can be very useful. Thank you for sharing this great article!
    Drew Sygit Property Manager from Birmingham, MI
    Replied over 3 years ago
    @PORTIQO: thanks for reading it and taking the time to comment:)
    Emily Decker
    Replied over 3 years ago
    Great post! you describe all five points greatly. Currently i am working with a buyer. We buy houses in San Antonio and these tips are amazing and helped me a lot to understand more about properties.
    Drew Sygit Property Manager from Birmingham, MI
    Replied over 3 years ago
    @EMILY DECKER: be sure to Follow Us here and at our other blog on our website:)
    Jason Hull Property Management Growth Strategist from Highland, CA
    Replied 6 months ago
    Enjoyed this. I think there is one or two more stages... after these there is a 6th stage of "Industry-focused"... the industry-focused manager is beyond the pettiness of competition and helps other PM firms in their market. These are true collaborators and are contribution focused. They contribute to their trade organization and see that there is plenty of business to go around. They are no longer in a scarcity mindset and focused on serving only the interests of their business. And if there were a 7th stage... it would be Entrepreneurism Focused or World Focused. At this stage they have moved into supporting progress in general beyond industry and into humanity at large. Hope this contributes to the discussion! to our mutual growth, Jason Hull (Property Management Growth Consultant) DoorGrow