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In-house or external property management?

Apr 30 2014

Comment of Beata Jońska, Head of Property Management Team at Kulczyk Silverstein Properties

 

It could seem that the answer to the question of which kind of property management is quite obvious, and the vast majority of cases are in favor of hiring professional firms specializing in management rather than doing it in-house. Why? Because those firms employ specialists, have vast experience, manage portfolios of many different companies, can use effect of scale when negotiating prices with third party service providers.

 

Quality matters

Real possibilities of companies are verified by daily experiences in property management. In practice, the quality of these services is not always at the highest level. We have to deal with heavy competition in the market which influences price decrease for property management. A growing trend of employee turnover in a situation where managers themselves are responsible for the management of several properties is observed in the property management companies. What supports the idea of internal property management? If you look back a few years, in-house property management left much to be desired. Lack of knowledge and experience, focus on profit, lack of investment in property, but such attitudes of owners are now outdated. Today, owners create special departments for property management and employ specialists with experience. As a property manager representing an owner, what we get is a level of comfort and greater satisfaction. For obvious reasons, care and attention devoted to property is a priority for the owners. Increasingly, they focus on the quality and longevity of relationships with tenants. The quality of property management provided by owner’s representative significantly differs – for the better – from the service provided by an outside company. Why? Among other things, an in-house provider is able to offer a more flexible approach, fast decision making and responsiveness to tenants’ needs. An external property management company acts on behalf of the owner under the management agreement in the scope of granted powers of attorney. It means that all important decisions must be agreed directly with the owner of the building, which often takes time. In practice this time is often longer, especially if the property owner is a foreign company such as an investment fund, where the structure of decision-making is complex and not always understood by the local real estate market. Internal property management does not cause such problems. The owner is very familiar with the property which in most cases makes it much easier to decide quickly on the necessity to incur expenditure or investment to not only maintain the property and its value, but also increase its value and standard. For what it's worth, the manager has daily contact with tenants, allowing him or her to respond to their requests on time, quickly address issues and meet their needs.

 

Source: The City, no. 3 /(45) April 2014

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Katarzyna Mazurkiewicz
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k.mazurkiewicz@kulczykinvestments.com