Modern property management started out in the back office of real estate sales organizations. Back then, the only technology was a typewriter, telephone, and ledger cards. Next, the computer was introduced that kept track of accounting. Years went by and computer programs were enhanced to handle maintenance work orders, credit checking, and eventually rental listings.
Lately, companies have begun outsourcing. Your tenants may be calling a centralized call center for maintenance and rental information. The newest big thing is property management as a technology operation. These new companies are selling themselves as completely technology driven, attempting to take the brick and mortar old school company out of business. But is a completely technology based company the best thing for you and your tenant?
The talk of the industry is whether technology based companies can take over the property management business. I have my doubts for several reasons.
First, property ownership is a locally based business and technology companies can only thrive when they have scale, meaning a large number of rentals in many areas. They will tend to hire low paid staff to handle local issues. Property management requires boots on the ground to deal with problems at the property site including inspections, late payers, and neighbor issues. It will be difficult for a technology based company to handle a spread out metro area with only a few local employees.
Second, the California Department of Real Estate requires that a licensed agent show vacancies, sign leases, and handle disbursements. Large technology based business we have seen have very few licensed agents on their team. These companies try to compete at very low fees and they simply cannot afford professionals on their staff. In the long run this lack of professionals will likely lead to violations of license law, discrimination, and mishandling of funds to name a few of the possible problems. Most owners want to meet their management company at the property to initiate the contract. This requires local licensed agents, which technology companies are short on. Only a licensed real estate salesperson or broker can sign a property management agreement.
Third, not having professionals on their staff, these technology companies will leave a trail of blood and move on. They are not locally based and only want to work with the easiest of properties. Most owners will find themselves dissatisfied with the cookie cutter approach to all problems. In my 30 years in the business, many problems have to be figured out using years of experience to know what the most likely solution is.
What is the solution? In my opinion, the best approach is to compare companies services on an equal basis. Technology is a requirement in today’s world. But it is not the only answer. Get these features from the company you choose and you will be well on your way to solving the issue of who your property manager should be.
These are the features to look for in a property management firm.
- The firm software is cloud based. This shows that your data is secure.
- You can access your account online through the firm’s website.
- You can make payments to your account through the website with no fees.
- You can receive payments directly to your checking account, no mail, no fees.
- Your tenants can pay their rent online 24/7 with no additional fees.
- Your tenants can initiate repairs requests 24/7 either by phone or the website.
- Emergencies are addressed 24/7.
- Rental inquiries are addressed 24/7 via the firm website.
- Rental applications can be submitted and paid for online 24/7 without having to print.
- The firm has a procedure to inspect your property annually and handle government mandated inspections.
- Your main contact with the firm is a licensed real estate agent and that person is involved with your tenant as well.
- The firm you are working with has a track record of many years. There are too many stories of the rental income going missing. Relying on a new firm that has no experience handing hundreds and thousands of rents is not a good plan.
- The office has some regular office hours and the office is within a reasonable distance to your property.
- The management rates make sense for what you are getting.
Having these issues taken care of will better insure you and your tenant are satisfied. Technology is no more important that safety, education, training, and experience. I would submit that technology is a prerequisite, but does not end the discussion. There is so much more that is required to be an effective property manager. Don’t be fooled into thinking that technology will solve all of your problems. Only a good property manager, using technology, can get close to doing that.