PM Collective - The ART of property management

Part 1: Your first steps to enhancing team capacity in your business

• Ashleigh Goodchild

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This episode was inspired by some fan mail I received about the vital concept of capacity management in property management, emphasizing its impact on profitability and team culture. We unpack the myths about property manager ratios, the importance of tech stacks, and the balance between workload and job satisfaction.

• Understanding capacity as a key to better financials 
• Importance of financial structuring in property management 
• Assessing current team capacity through open communication 
• Streamlining tech stacks for enhanced efficiency 
• Role of policies and procedures in workload management 
• Regularly evaluating the fee schedule for profitability 
• Balancing culture with financial goals in the workplace 
• Preparing for the next steps in capacity management discussion

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Speaker 1:

So if you were watching my Instagram stories, you would have seen that I got some fan mail through my podcast and it was anonymous and I thought it was a really, really good question and I'm so excited to talk to you guys about it. But I do have to do it through a different, through multiple parts, because there is a lot to unpack. So here's the question. Hi, I've been listening to your podcast and I'd love a show on capacity for property managers. I've been told 100 to 120 from start to finish, including leasing, pcrs, finals, routines, maintenance and trust accounting. There's so many agencies saying that they have 150 to one or 100 to one ratio, but none of them mentioned the outsourcing, leasing agents or VAs they have. I'd love to hear thoughts on this. It's sending a very blurred message to business owners and setting ridiculous expectations. So this is part one of a series. I actually have no idea how many series we're going to do in it, so just stay with me. So the first thing I want to talk to you is about why we are wanting capacity in our teams. Now, generally, there is only really a couple of reasons why you would be discussing this in your business. Common reasons are going to be. You're looking for better finances, so you want to increase your profitability without increasing your overheads. So that's the first reason why a lot of people want to increase the capacity with their team. The other reason is just for the growth opportunity and making sure that your business is scalable. So really, they're the two reasons, and so we're going to nut out these two reasons today and I'm interested to hear hear thoughts. Feel free to send me through any messages or anything like that or some more fan mail. I loved getting it and we will go through the process. So, first up, we are going to talk about how to. Let's talk about how we have structured our business, and I do want to do a bit of a disclosure on this, because the thing is that every business has their own financial goal. So for me and my business, we generally look at a bit of a third, third, third. So we've got sort of third profit, third admin, third salary. So that's sort of our guide in making sure that the business is financially healthy and if there are any drops in the market, we are also in a safe zone. So that's why we find that those figures work for us, and I know many offices where that works for them as well. So that's sort of the first thing I would be actually doing as a business owner. I would be looking at those three sections of the business and seeing if you are top heavy in any of those parts. Because potentially, if you're top heavy in the profit but you aren't spending a lot in you know the admin and the costs and the salaries well then you've got an issue there that you've got to work with and you know that goes for all those categories. So I think that's probably a really good starting point.

Speaker 1:

The first thing you'll also find with businesses is you need to assess your current capacity. So, for example, most of my team I've met with and I know what their capacity is. They've also got personal goals. So some of them have got goals to work to increase their portfolio, some of them don't. They sort of all have their number that they want to work towards, but equally, they also know what number I want them to work towards and I know they can do it. So that's a limiting belief that I will work through and coach them through as well. But because I know that with all my team, it makes it very easy for me to assess my current capacity. So my current capacity using existing labor is probably around 80 properties. So our business can bring in 80 more properties using existing labor and my team know that. You know the property managers know who. You know whether it's their portfolio that's got room for 17 more properties or 34 more properties, et cetera. So they sort of all know that.

Speaker 1:

Because we're very clear with that capacity and it all started a couple of years ago where we went through and did a complete tech stack audit because we were using so much tech stack it was feeling really overwhelming and the processes in the business, the systems we were using, and so when we started cleaning all of this up, that was actually the first step of creating the capacity. So we cleaned up our whole tech stack. We're down to, I think, four let me get that right. We've got TAPI for maintenance Property, me, inspection Express and IRE and IRE, bdm and Airtable if you want to count that as a tech stack. So that's five and that has definitely made a massive difference in streamlining, because the problem is you can't create capacity if you don't have those systems and processes in place and really good systems and processes and some of the feedback that I actually got from some people online and I'll actually tell you what someone had mentioned to me.

Speaker 1:

She had sent me a message and said this topic always interests me. I think it depends on policies and procedures and what is outsourced. One of the officers I worked for had strong policies and procedures with PCRs outsourced for the first one trust accountant, shared assistant admin. I was happy here and smoothly managing 130 with no stress and loved it Technically end to end and we did our own BDM work with internal leads which we shared. I've also worked for an office with no policies, no procedures, no checklist and did all of it, which I felt a struggle at 80 properties. So that's from a property manager's experience with working with two offices one that had good processes and procedures and one that didn't.

Speaker 1:

So the first part of this process topic is really understanding what capacity you have and do you have all the back-end systems set up correctly and your tech stack? Is that all healthy, before you ever move into trying to increase what you've got? So that's the first thing I would say. The other thing I would be looking at is if your staff don't feel that they've got the capacity to take on more properties, and I would absolutely just be asking the team how do you feel if they say that they're stressed? I would be more specific. I want to know what you were feeling busy doing. Are you feeling busy with maintenance? Are you feeling busy with admin? Are you feeling busy with phone calls? What? Feeling busy with admin? Are you feeling busy with phone calls? What is it? Because when we know specifically what you are busy doing, then we can make changes. So for us, we found that we were busier at the time with maintenance, so that's why we bought in TAPI.

Speaker 1:

But now here's the interesting thing when you bring in new tech is, if you only bring in new tech to solve a problem like a band-aid because the property managers have said I'm too busy with maintenance, so you just band-aid, fix it by bringing on a tech, but you don't make it clear that the idea is that this is going to reduce their hours that they're spending on maintenance. Therefore, if we're reducing their hours, we can increase their capacity. I made that very clear when we first brought that in. So, for example, if I said I can save you five hours, for example, in maintenance every week, so if I say this to a property manager, I can save you five hours in maintenance every single week, then I would say I would expect your portfolio to be able to handle another 15 properties. Because I personally work and I found that this number works for me is that a basic property manager should be able to handle three to five properties per hour. So three properties per hour and I'm saving you five hours per week by adding a new tech stack. Then technically that's 15 properties we can put on your portfolio. So we exchange those. When we bring in new tech, we're exchanging the time savings for that property manager and replacing it with capacity. So we're not just band-aid fixing by bringing in new products and new tech. So that's something that I do from the very, very start. It's worked very well for me and the team do get that, so that has been great.

Speaker 1:

The other thing I would also talk about is, with tech is if you can ultimately reduce their workload. Would they want to be reducing their hours or would they want to be increasing their earnings? So that's a really interesting thing to ask yourself is if the capacity increases, are you prepared to reward your team for it? So what sort of incentives make sense in this space? How can you balance their workload versus their financial benefits. So it's really important that the conversations that we have with our team is that when we are talking about increasing capacity, we're not talking about increasing the hours that you do. That's not what we're looking at. I actually am aiming to increase the capacity while reducing your hours. That's my goal. So if your team know that, then it's very, very important they understand that and that you're not increasing capacity and taking something from them where it's going to cost them a lot more time. So being very clear with that is super, super important.

Speaker 1:

The other topic I wanted to also have you consider is you know if you're needing to increase capacity because for financial reasons so maybe your profit margin isn't strong enough then look at your fees. Are you charging enough? Is there room to move there? Don't go based on your opinion, because your opinion might be limiting. Ask for some feedback from the team You've overruled. Come to a coffee conversations, find out overall what people are charging for fees and if your business is sitting at the low end or sitting at the high end for the market.

Speaker 1:

So me personally, I know exactly where my fee schedule sits. I sit right in the middle. I'm not the highest. I'm not the lowest, but I'm very much good value for money. So I know that we have got a bit of room to move up if we wanted to. But we sit right in the middle where we are comfortable for and our business is financial with that fee schedule. So that's good.

Speaker 1:

However, if you're a very low fee schedule and you're paying your team very low, then the problem with that is that you're not going. You need to focus on that first. You can't just go keep on increasing capacity with lower fees, because it's actually probably not going to solve the problem that you're looking at. So a simple exercise you can do is really working out what your cost to manage is. So cost to manage should hopefully be sitting around about $1,500 per property, and then what I would do is I would print off your whole rent roll, I would go and put it in order for the cheapest yearly annual management fee and I would go down to the very bottom and as a team, I would highlight all of the properties that are under the $1,500 per year management fee. Potentially, what you could actually do is to increase the business financials is if you could replace let's say there's 20 properties that are under value or under your cost to manage. If you removed 20 of those properties and replaced them with 10 proper fee schedules and 10 proper properties, you are having the same effect. You're not actually increasing the capacity, but you're improving your financials, which is sort of, at the end of the day, all you're looking at doing. So that's another thing to be considering.

Speaker 1:

So the other thing I guess the final thing just for this session, because I don't want to overwhelm you because we've talked about a lot the final thing with this is to also check in with how long your team are staying with you, because capacity should not only serve profitability but it should also serve culture. So it's not just having one or the other. So you know, there's no point having a wonderful culture and having a business that can't survive financially and there's no point having a fantastic business where you don't have any good culture. You need them to both be balanced beautifully in a business. So the capacity one of the next things that we'll talk about but I'll do this in another session is that there is a strong correlation with property managers that are long-term versus short-term in a business, with what they can manage.

Speaker 1:

So, to give you full transparency, I've got one property manager in my office who's been with me for a long, long time so 10 years. She manages clients. She knows very, very well. She manages over 170 properties end-to-end and when I say end-to-end, she refuses to outsource, she refuses to use a VA, she does all her own leasing, all her own inspections, and she'll also jump in and help the trust accounting when the trust accountant is on leave, so she'll take on extra responsibilities. So Could I put a brand new person into that position and expect them to do the same? No, so the tenue that you have with your team is very, very important. So the longer your team are with you, the longer the team get to know their clients, the easier it is for them to manage. So that's super, super important to also understand and that is why when my team come with me, they usually start on a smaller portfolio and then we grow it to the capacity that we believe they should be at. So that's how we do it in our business, and I will share in another episode sort of exactly what my team set up looks like and what capacity they've got as well.

Speaker 1:

So we'll cover that, but for today, I really just wanted you to understand number one, why you are looking at the capacity. Is it because of the finances of the business or do you think your property managers are standing around doing nothing? So that's the first reason. The second thing you need to look at is what does your business look like from a financial point of view? What do those categories look like the profit, the admin and costings and the salaries. What sort of percentage split? Is that really really good exercise to do?

Speaker 1:

Third thing I would be looking at is just that tech stack and making sure that your tech stack, your processes, your procedures are like 90% perfect, maybe 80% perfect Actually, that's probably mean to say 90 80 perfect and making sure that is all set up before you do anything. And then the last thing would be checking in with your team uh, with how they're feeling and what they're finding that they are busy with. And when you know specifically what they are busy with, then you can start working on those areas. And then keep in mind that you can't just increase capacity overnight. I've been working with my tech stack and with my processes for nearly two years now and we are only now just sort of getting to that point where now it's like, okay, let's bring in these new managements, let's get that capacity up.

Speaker 1:

So it is a process. You could probably do it over 12 months, but you need to make sure that your team are there for the ride and know exactly what your intentions is with your intention. Are there for the ride and know exactly what your intentions is, with your intention not just being financial. Your, your, um, your reason for increasing capacity needs to benefit the team as well, so you need to keep that in mind. So that's the first session. Let's leave it there because it's like a lot. You've got a little bit of homework that I want you to go and do because it's really really important.

Speaker 1:

And then the next podcast session we do will be on the next bit to look at with that capacity and I'll share with you what our team's doing and we'll just keep on going and then we'll have I've got a magic figure at the end of the day and actually maybe I should just let you know so you can sort of sit on this for a little bit.

Speaker 1:

But really what I'm aiming for in my business is 200 to 250 properties per property manager. That is, them doing their own leasing and home opens, their own inspections and all their management, but it will be with the help of a VA. So there will be a hopefully a full-time offshore professional for each person and then the trust accounting is also done in-house by a trust accountant and BDM. We have a BDM as well, but that's them doing what I consider end-to-end, which is the leasing through to the final inspection and everything in between. So that's what I'm aiming for $200 to $250 with one VA. So we'll dive into a little bit more of why I've got that in the next episode. I hope you enjoyed this one. I hope it's given you something to think about and any questions do reach out and I would love to help.