The growing trend in property management is outsourcing various tasks either as a trial, temporarily or as a permanent process. So the one question to ask your property manager today is
“What part of your responsibility are you outsourcing at the moment?”
These are some of the tasks that are commonly outsourced.
Arrears – an extremely time consuming task for the property manager is chasing arrears, especially if it involves endless arguments with tenants about when the rent was paid vs when it’s due. I would argue that your property manager’s time is better spent elsewhere. This process can easily be outsourced and can assist the property manager in spending more time on tasks which require a local person to be present, for example, routine inspections. If done well, outsourcing arrears benefits everyone. Ray White MetroWest has never outsourced arrears.
Routine Inspections – Routine inspections are a chance for your property manager to go and check in on the property and see how the tenant is treating it and if there are any maintenance issues that have gone unreported. The routine inspection report also gives your property manager an opportunity to notify you of possible future maintenance or capital expenditure required. Your property manager (in most cases) did the entry condition report so it is not ideal to outsource this role to an external company who isn’t familiar with the property. This is one of the most important tasks in property management. Do you want this part of the role outsourced to a third party? I don’t think so. After all, your property manager has been managing the maintenance so knows where your property’s weak spots are. Ray White MetroWest has never outsourced routine inspections.
Lease Renewals – Lease renewals are a time consuming task. Your property manager needs to ascertain whether the tenant is likely to stay on (this can take several phone calls) and then seek your instructions and guide you as to the rent review. Leases are then sent out and tenants have to be persistently followed up and secured in order to ensure the property doesn’t lapse into a periodic tenancy. Alot of this task is purely clerical and from what I’ve seen of outsourcing this part of the role – the outsourcer is mainly taking paperwork off your property manager’s desk. In my opinion, outsourcing parts of the lease renewals process could be a good thing, however, Ray White MetroWest has never outsourced lease renewals.
Trust Accounting – outsourced trust accountants can do all parts of the process including: receipting bonds, receipting rent, daily bank reconciliations, processing invoices, end of month disbursements and owner statements.
At the end of the day the Principal Licensee is responsible for the money held in trust so whether the trust accounting is being done in-house or externally, it’s still the Licensee’s responsibility. In the old days, payments were made by cheque and only the Licensee could sign that cheque. Now we have digital bank uploads which should be signed off by the licensee. If the external trust accountant had access to be able to push the button on the upload that would be hugely risky. We have outsourced various parts of trust accounting processes on temporary basis’ with varying degrees of satisfaction. External trust accountants are ok as a band-aid solution. In my opinion, nothing beats having an in-house trust accountant.
If your property manager is outsourcing a part of their responsibility that they shouldn’t be – It might be time to change.