5 key metrics to measure your property management company

Property owners and individuals new to the real estate industry get themselves into financial difficulty from making poor choices when selecting a property management company. This has to be one of the biggest mistakes property owners make once they have acquired a rental property.

1. Business acumen is key: The majority of property managers are average at best if not border line lazy. Like most things in life, people usually settle for average results and average property management. Don’t settle for less! Don’t settle for average!

Make sure you hire a proactive property manager that strives for above average results. The best way to find one of these individuals is by taking your time and doing your due diligence on the company. If they seem lackluster or they don’t have a compelling marketing effort then take your property to a company that offers stronger results.

2. The lost skill of marketing: Most property management companies use a broad marketing approach to gain tenants. This style worked in the past but the new forms of media have changed the marketing environment. Instead of focusing on a general idea the property management team should formulate a marketing plan that is focused on a target market. This approach allows transparency and the performance can be measured.

Time and attention should be applied in discovering what the target market is and how the geographic area affects the market. Once the market is defined then marketing channels should be setup to attract each segment. The segmenting allows you to breakout the ROI for each defined market as well.

3. Lack of Property Knowledge: Most management companies fail to put in the research to discover the SWOT (Strength, Weaknesses, Opportunities, and Threats) for the property in the current marketplace. These 4 key terms help formulate a strategic plan of action that lays the ground work for the management team.

By defining what the property has to offer and what the local competition has to offer allows the management company to make informed business decisions. These decisions lead to higher ROI and lower turnover.

4. Know the market: Matching needs with benefits is paramount when managing property. The majority of property management companies are ineffective in determining the needs of the customer and the benefits that the property offers.

The more information you have about the customer and the local demographics the more effective the managed property will be in the market place.

To know the market you must address the following:

• Product positioning in the local area
• Maximum pricing that remains competitive
• Type of customer and the needs associated with them
• Value creation

5. Business Intelligence: I have never understood why, but most people and property managers dislike numbers. Instead of collecting the data and analyzing it for clues most managers just go with whatever feels good. One key thing to remember is that data doesn’t lie but it can be misinterpreted. Without the data, you truly are flying blind.

Clean data allows property managers to analyze the results for each business unit inside the property under management. From there you can forecast future growth and expense containment. When a property manager chooses not to use the data or collects the data but doesn’t know how to read it then it leads to a failed business.

To make your property a top producing investment requires strong analytical skills, creative and consistent marketing, and “get it done” leadership. Investments require property manger’s to get their hands dirty with the day to day operations. If they choose or their actions show a “hands off” approach then it is time to work elsewhere.

Now is the time to audit the quality of service your property management company is delivering. You can take these 5 bullet points and build a scorecard around it. If certain areas are lacking then address them immediately. If the management is extremely poor then now is the time to take the initiative and turn your investment into a cash flow machine.

Jerred Morris

www.vinebuyshomes.com