April 2009 Newsletter
Choosing the Right Property Management Company
by Tina West (CPM), COO, Sunrise Management
Thirty years in property management has taught the team here at Sunrise that there are certain key factors that owners and investors should watch for when seeking on-site rental, maintenance, and the host of other services typically needed from a management partner.
However, rather than providing what might be seen as slanted information, I contacted numerous residential property owners throughout San Diego County to ask how they select a management company. Some of those contacted were our clients, some were not. All were among the most knowledgeable and particular people I know in the business.
There were patterns among their responses, and numerous factors came into play in choosing the right representative. They reported there are several key issues to watch for, including:
- Presence and Experience in a Marketplace – Overwhelmingly, having a local presence with experience in a submarket was a primary issue for owners. Knowledge of local housing trends and market data was ranked highly, as well as the ongoing insights into highly fluid competitive situations by neighborhood and the leadership only available from local management. As one gentleman said; “If you’re representing my property, I expect you to have a physical presence nearby to support all the promises you’re making.”
- “Best in Class” Site Management Team – Running a close second as a decision-making factor was the quality of people on the front line for the management team. Regardless of the quality of the asset, the front line team should and does rank highly as a factor when choosing a partner. A strong Community Manager with a proven track record and skill set is a must for any owner to have a solid comfort level.
This Manager’s skill set then translates to an ability to recruit, hire and retain onsite professionals with the comprehensive people and administrative skills needed to achieve success for any building. And since the on-site Management Team becomes a critical part of the day-to-day operations once they’ve settled in, they should probably play a bigger role in the interview process than the actual Management company does. - Strong Regional Leadership – Third as a factor when choosing a Management firm was the strength of the Regional Team. Owners need to know the Regional Team on their asset has the capacity, knowledge, leadership skills and focus required to pay proper attention to their investment.
With that said, though, one shouldn’t merely assume “They can’t handle more than X properties in their portfolio.” – it doesn’t work that way. In an effort to be fair to themselves and the Property Management company in question, owners should weigh the type of assets and geographic location of those assets being overseen to determine if their property is a good mix for the Regional. Likewise, the Property Management company needs to look beyond potential income when considering whether to take on a particular property. They should consider client relationships, windshield time, asset type and Regional strength when determining potential additions to their portfolio.
To maximize communications, look for a Management Firm that includes the Regional in decisions that impact on your property. They should be speaking openly about their capacity and skill set, as well as their capabilities regarding lease-ups and/or renovations. All parties should know your objectives and expectations and as many other points of detail as possible to improve your position as part of their portfolio. - Reporting – One item that was unanimously expected was on-time reporting, providing accurate financials, analytical data, and tailored reports to an Owner. “That report tells me how my building is performing” was a comment heard several times. Given both internal and external reporting requirements an owner may have, this response is logical. We’ve found weekly activity reporting, accurate budget preparation and in-depth data analysis by the Management Company generates a critical mass of comfort for owners.
- Communication – “Communicate often, but not too much” we were told. Owners expect their management company to be the eyes and ears that’ll stay abreast of the market, the community’s performance, and of any particular needs that must be met to improve the property’s results. Owners should know they’ll always get fast answers, whether from the Site Team, Regional Team or a firm’s Principals. “Follow-up and follow-through” is a sign that hangs on my wall and says it all. But remember - anyone can talk a good game during the interview process. Look at the company’s results to see if there’s a track record of over-promising and under-delivering. If so, head for the exits. Quickly!
- Infrastructure – Be sure the Management Company you’re considering has good support systems and procedures to ensure they perform successfully. Insist on the right software and substantive accountability from every team potentially associated with your asset, including Corporate Accounting, Marketing, IT Support, Administrative Support, HR and the Regional Team. Every owner should have a right to examine the infrastructure of a Property Management company, since this is a necessary component of the decision-making process. If a management company can’t or won’t answer all your questions, you should begin to wonder what’s wrong.
Was it me, I’d be asking if the company can provide the right tools to generate the results necessary for success. Is the Site Team and Regional Team provided the right type of training? Is the company philosophy built around a strong belief in education and support? If I wasn’t happy with the answers to any of those questions, I’d keep on looking. - Chemistry – Finally, don’t underestimate the importance of good chemistry between the Owner and the Management Company. You’re entrusting a huge asset with someone, and you need to feel comfortable that you can call on them any time and get quick, professional and honest answers. A smile is nice, too.
Years in the residential Property Management industry have taught me that owners appreciate a company’s culture, reputation, and most importantly, results. There’s no room for fluff – just straight talk and honest answers.
And make no mistake - choosing a Management Company to oversee the long-term health of what is a multi-million dollar business isn’t easy. Especially with so many firms from which to choose.
But doing a little extra legwork now, and committing to interview just one more management firm, could make a huge difference in your bottom line…and in your stress level.
Tina West is a partner in Sunrise Management (www.sunrisemgmt.com), and leads a talent base of over 250 associates in the San Diego and Phoenix markets. She currently sits on the Board of Directors of the SDCAA, serves on the IREM Executive Council as their Director of Marketing and Advertising. You can reach her at twest@sunrisemgmt.com.
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