Chris Thorman from SoftwareAdvice.com recently contributed a well-written article to Realty Times, "What Real Estate Agents Need to Know about Property Management." In it, he details the similarities and differences between the role of a real estate agent and a professional property managers, concluding that, in this economy, property management may be an attractive addition to a real estate office's menu of services.
Here are some of the key points that Chris makes in his article. Visit Realty Times to review it in its entirety. It is a worthwhile read.
- Property Management requires a knowledge of both fair housing regulations and Landlord-Tenant Law.
- Property Management requires the ability to manage an on-going service relationship with both owners and tenants, balancing the needs and priorities of both parties to the benefit of all.
- Property Managers need a team of vendor partners to manage ongoing property maintenance and improvements.
In his concluding statement, Chris states:
A Turnkey Operation In this market of foreclosures and short sales, investors are shopping for bargains. These transactions will be completed in the sales division of a real estate company. If a real estate company can assist in a sale and offer to manage that property, they are providing a turnkey operation. With the proper organization, a real estate company can provide additional properties to investors that they may consider purchasing and in turn, bring in additional property management accounts on those properties.
While "What Real Estate Agents Need to Know about Property Management " is an excellent overview of the additional skills required of a professional property manager, I think there are some lingering questions that need to be answered.
How does a real estate agent get the training required to become a true property management professional?
There are organizations that provide coursework and certification specifically for the property management industry. They provide education and networking opportunities that will help you understand the ethics and acquire the knowledge needed to serve your clients well. Two such national organizations are NARPM (The National Association of Residential Property Managers) and IREM (The Institute of Real Estate Management). Learn more about NARPM and IREM.
You may also choose to participate in more informal communities, like Let's Talk Property Management, to learn about current trends, hot topics, and to benefit from the experiential insight of property management professionals across the U.S. and Canada.
How can real estate agents who are not suited to become a property manager benefit from the property management market without providing the service directly?
If your real estate company is best suited for the transactional relationship of real estate sales, rather than the service relationship required for professional property management, then you should not provide the management services. Instead you should look into partnering with a local professional property management company that has a strong reputation in the industry.
This referral relationship can be mutually beneficial. You will be able to offer the same type of "Turnkey" solution that Chris Thorman mentioned in his article, without actually acquiring the additional skills, education, and/or staff. You can focus on your strengths, which may include identifying strong investment opportunities and selling rental properties, but pass off the service / maintenance relationship to a company who excels in that arena.
What should you look for in a referral partner?
- A high standard of professionalism. NARPM and IREM members are more likely to have the training and commitment required.
- A strong reputation with current clients and in the community. Remember, your reputation will be intertwined with that of your referral partner and reputation is a "priceless asset". Ask for references. Investigate online reputation by doing a Google / Bing search for the company and company owner's name. Talk to other industry professionals.
- An agreement that you "own" the sales relationship with the mutual client and that the property management company "owns" the service relationship. Ask your property manager partner to commit to referring sales opportunities back to you.
- A referral program. Make sure you understand the financial terms of the referral relationship. Will the property management company pay you for leads or for contracts? Are the rewards based on a per-client or per-property? It is better to proactively address this topic.
Although it is tempting for real estate companies to turn to property management when the real estate market is down, not all companies and teams are well-suited to this transition. Make sure you fully evaluate your potential and commitment for success before you dive into the property management world.
Let's Talk. Do you have a story to share about successfully adding property management as a service, or transitioning from sales to property management? Do you have a cautionary word of wisdom?
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