e-Property Management: Fad or Fail?
It feels like every day I get an email about an online real estate service that’s starting up … or shutting down.
You’ve probably heard of Purplebricks … the UK company that tried to entice Aussies into selling houses online. It’s ditching its Australian venture having lost $80 million in three years … and a ton of credibility judging by unhappy home owners’ online reviews.
The latest property e-solution I’m hearing about is online property management. Yep, like online grocery shopping, but instead of getting Coles to deliver your weekly shop you’re turning a major asset over to a company you’ve never met in person to manage for you.
So what is this new trend, and what are the pros and cons for the people it’s being targeted to: hard-working property investors?
e-property management: what’s the deal?
My inbox is cluttered with pitches from agencies offering cheap, convenient online property management that is handled remotely, rather than by local “bricks and mortar” real estate agents.
(Apparently this is also a potential source of “passive income” for buyers’ agents like myself who could, in theory, refer their clients to e-property management companies).
As an advocate for buyers, I understand my clients have put down a big chunk of money on their investment properties. They want to protect their major assets, ensuring high rental yield and capital growth.
The spiels I’m seeing go something like:
- The company will take care of all people’s property management needs at a cheaper rate/ flat fee.
- They handle details like property photos, advertising for and screening tenants online.
- They have links to local agents who deal with the daily nitty gritty: maintenance issues; routine inspections; and chasing up unpaid rent.
Everything is usually managed through a “state of the art” online portal and I’m seeing a lot of buzzwords like “end-to-end solution”, “full service”, “360-degree management”, etc.
Looking beyond the spin and looking out for my clients, I want to know: for owners of investment properties … what’s in it for YOU?
Pros and cons of online property management
Here’s my quick take on the pluses and pitfalls of e‑property management.
- Online property management is definitely cheaper than your neighbourhood real estate agent. Companies can charge lower fees because of lower admin overheads. They’re not running offices or paying and training a team of in‑house staff.
- Another upside is convenience. If your portfolio includes interstate rentals, virtual management may seem more efficient and practical.
- Lower quality of service. There’s a false economy if lower fees lead to poorer service. With companies outsourcing rental inspections, is this backed up by quality assurance to check local agents are doing their job properly?
One of my clients came to me after another property manager failed to do regular inspections. Let’s just say … nobody wants to find out the hard way their tenants have been raising chickens in a 2-bedroom apartment!
- The remote model means service isn’t personalised. Property owners are entrusting their biggest asset to a person at the end of a keyboard. Are you expected to email about a plumbing emergency? It’s just not the same as having a personal connection with your neighbourhood agent. What if there’s repeated rental non-payment? Say your tenant is ignoring an eviction notice. It’s great knowing Jill from the agency two blocks away can do a quick drive-by and check out whether anyone is still living there.
Online property management: “one-stop e-shop” … or e-flop?
Do the cons outweigh the pros? For me, the e-solution is price and convenience-driven but I feel it lacks good ole people focus.
I’ve been on all sides of the story as an agent, investor, property manager, and tenant. Based on my experiences, the keys to successfully managing investment properties are:
- Acquiring the right property in the first place.
- Ensuring solid ongoing management of the property.
To get the best out of your investment property you need good tenants – and good relationships between tenants and property managers!
I believe when a tenant KNOWS a property manager as a person, they feel a sense of accountability and responsibility. They are more likely to pay rent on time, treat the property with respect, and keep it clean and tidy.
As a buyer’s advocate, I’m all about customer-centric experience. To me, it’s ideal for a tenant to know their property manager and for both to be in the same area (or at least the same city). The idea of screening tenants purely on the basis of online databases and reference checks has me shaking my head.
You can’t outsource relationships. Or trust.
My mantra is real estate is as much about psychology as property. It’s also about people.
Property investors are regular people who have worked hard and spent big. Their money and their family’s future is at stake when they make financial decisions.
From Amazon to Airtasker, plenty of online marketplaces work just fine. I totally understand the temptation to jump on new trends brought about by the wave of e‑business. But is online property management the path of the future … or will it lead us down another Purple Brick Road?