Improving Profitability Through Property Management

Navigating the headwinds of today’s real estate market, apartment and commercial real estate firms are increasingly turning to third-party service providers to lower their overhead and focus on core competencies. While large REITs and major privately held management companies have the resources to develop in-house efficiencies, mid- to smaller-size owners often seek third-party providers for property management, leasing/marketing and maintenance services. Innovations in centralization and proptech are making outsourcing even more appealing. Here are a few tips and tactics for evaluating hiring third-party property managers.

Identify key objectives and KPIs

Owner-operators should first identify their key objectives and current KPIs. Consulting with an accounting firm or a specialist can help determine how outsourcing can benefit their operations. Important KPIs to consider include leasing conversion rates, repair-service efficiency, and unit-turn time frames and costs. Time is money, so it’s crucial to evaluate third-party firms on their ability to manage regulatory and legal requirements and implement ongoing improvements.

Evaluating third-party firms

Key questions to ask include: Does the management company have the necessary capabilities, experience and commitment to quality? Can you ‘test drive’ the firm with a smaller commitment before outsourcing an entire department or function? Does the firm offer robust reporting systems? Modern technology allows third-party service firms to manage tasks more efficiently than ever before. However, some companies still rely on outdated methods, which can impede transparency and real-time reporting, crucial for meeting investor demands.

Proptech tools to monitor performance

Partnering with third-party firms that utilize advanced technology can optimize daily services and provide comprehensive performance evaluations. For example, centralized leasing tools can automate routine marketing and leasing tasks while offering real-time data, enabling agents to match renters with available apartments more effectively. Access to detailed information—such as unit types, amenities, rent ranges and neighborhood features—enhances agents’ ability to close deals successfully.

As owner-operators continue to navigate the challenging real estate markets, they will increasingly consider third-party outsourcing to save time and money, allowing them to focus on their core competencies and succeed in the next real estate cycle.

Jay Pedde is senior vice president of operations for Veritas Investments, and Greg Goglin is senior director of repair and maintenance for Veritas’ GreenTree Property Management unit.