As part of a recent industry survey, the team at WeconnectU confirmed what we had suspected for some time. The biggest goal and the biggest fear rental property managers have for the future are the same thing: portfolio growth.
While business owners are universally eager to tap into exploding market opportunities, they also have strong reservations over their capacity to handle more units. Maintaining service delivery, client satisfaction and staff retention under increasing workloads are key concerns.
Is it even possible to grow a portfolio in today’s climate without overheads overwhelming any extra profits? According to WeconnectU Director, Schalk van der Merwe, it’s easier than you might think when you know how.
“One of the primary reasons we started WeconnectU was to help property management businesses overcome the challenges that were holding them back from sustainable growth,” he says. “Over years of working with hundreds of clients, and refining our software solutions into the end-to-end ecosystem we have today, we’ve been able to unpack exactly where things are going wrong – and how to fix them.”
The self-imposed growth ceiling
The root of this particular problem, according to Van der Merwe, is that the traditional rental management business model is inherently biased against sustainable growth.
“The most obvious example is having rental managers do everything from mandate acquisition to maintenance and financials’’ he says. “That’s a massive workload, putting a very effective ceiling on the number of units each manager — and therefore the business — can handle. Portfolio growth under these circumstances either means pushing your managers beyond realistic limits, which isn’t sustainable, or taking on additional staff and growing your overheads right alongside your profits.”
Typical remuneration structures, which incentivise managers (through commission) to maximise the number of units they manage, only exacerbate the problem.
“There are only so many balls one person can juggle before it all comes crashing down,” says Van der Merwe. “Pushing managers to bite off more than they can chew in order to maximise their earning potential just leads to poor service delivery and burnout. Neither of those is conducive to sustainable growth.”
The structure of success
According to Van der Merwe, breaking through the growth ceiling means restructuring the business model that capped that growth to begin with.
“It’s time to break away from the old-school, high-risk, high-stress and low growth model,” he says.
Instead, he proposes a business structure that has already helped many forward-thinking rental management businesses achieve a sustainable upwards growth trajectory. A structure that spreads the workload across multiple specialists, with scalable workflows, instead of resting entirely on the rental manager’s shoulders.
“Essentially, we’re looking at a business model that divides the rental manager’s role into two departments — front office and back office,” Van der Merwe explains. “Front office is the Rental Manager, but instead of doing it all these managers focus purely on unit acquisition or portfolio growth. The back office is where the rest of the magic happens, shared between an Accounts Manager, Investor Relationship Manager, Maintenance Manager and General Admin/Tenant Liaison.”
Divide and conquer
According to Van der Merwe, this strategic division of labour enables each specialist to concentrate on their particular area of expertise. This creates a calmer, more focussed work environment with lower stress, higher morale and betterjob satisfaction
Supported by the right collaborative tools and workflows, this setup is also infinitely more scalable than the traditional “Jack of All Trades” model – not to mention more manageable, with better visibility, accountability and oversight
Clients, too, are kept happier with an Investor Relationship Manager able to focus on keeping their needs met and their asset performant. No more searching for insight in opaque property reports when you have a personal advisor on call
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“There’s a lot more to it, but ultimately, this model works because it streamlines the journey from lead, to mandate, to successful investment,” says Van der Merwe. “It creates a strong and scalable foundation that supports a better experience for investors, for staff and for business owners. That makes growth not only dramatically easier to achieve, but also to sustain. Is if different? Sure. But in order to get better, first things have to change.”