Tuesday, April 29, 2008

Communication Issues (9/2/2007)

This is going to start out as a rant based on a problem we have in the management of single family homes, but it will end up tied directly to our core values of what we do for our clients. One of the big challenges facing us in our business are based on the facts that

1) The properties we manage are spread all over town and
2) Many of the questions that come up can only be answered by talking to the property manager who has visited the property.

This creates problems for our clients and their tenants because; when anyone has a question which needs to be answered the person who can best answer the question is almost always not available.

Tenants are particularly frustrated because they want the property manager of the single family home to be like the manager of an apartment, where they can walk into the office and talk to their property manager about a problem they have. Tenants walk into our office without an appointment and get mad because the property manager for their home is not there to help them. And I don’t mean frustrated, I am talking rip roaring, ready for Jerry Springer mad! It is very hard to explain to them the fact of why they cannot get immediate help without escalating the situation. When we tell them that the property manager is not available because the homes he manages are not here at the office, it is impossible to say it without sounding like a schmutz.

In the current world everybody wants everything NOW. We are spoiled by the fact that we have so much information available just by typing in a Google search; people don’t understand when they cannot get an instant answer. When we started putting a version of the owner’s monthly statement on-line the first thing we got was a complaint that the on-line version was simply a reflection of the monthly paper statement – everyone wanted the data up to the minute and real time. The reason why more information is not available more quickly in the property management business comes down to money, pure and simple. I should more appropriately say lack of money. The business of professionally managed single family homes is not large enough to provide funds to create the systems for the broad based real time technologies you get from your bank. It is only in the last 5 years that my utility providers all provide me with the ability to view and pay my bills online, and almost every single one of the 150 millions households in the United States has utility service. The high technology tools will come over time, but we need to wait for the technology costs to shrink much further.

One fact that will never change is the importance of the property manager who needs to put his eyes on the property and provide first hand factual accounts of the situations. One person needs to put their eyes on the property, record what they see, make trained and informed decisions. Property Management is not a situation where our answers are a piece of information that can be pulled up from a computer by anyone with a one week crash course in how to use a computer program. Again the costs of managing a single family home is higher then apartments because answers can take hours instead of minutes, simply because of the time it takes to travel to the product. Not only is the product spread out over town, but each product is unique. In an 800 unit apartment complex you may have 8-10 different variations of the same product, the same product assembled differently – and you always have back-up product which can provide raw materials to provide almost instant fixes. With 800 single family homes you have 800 different products. When we have tenants who have a need for any air-conditioning problem be solved within 24 hours we recommend they live in an apartment or a hotel.

One of the big accommodations we request from both clients and their tenants is time. Time is used to juggle our resources to solve problems in a cost effective manner. Neither the landlord nor the tenant wants quick answers if it becomes costly. Remember the piece of paper in cubicle world where it asks, your want it 1) Done Fast 2) Done Right and 3) Done Cheap? In any well managed situation you can usually get two out of three. This business is not usually life and death where speed can be more important than all else, so we usually sacrifice the immediacy in favor of costs reduction. There are exceptions to this rule, and it usually involves when lack of speed starts to impact revenue. It can make sense to spend slightly more if it reduces or eliminates the cost of a tenant turnover or can reduce a vacancy. The ability to solve problems more quickly will improve over time as the number of professionally managed homes increases and more large organizations like Prime Properties participate in this industry.

There will always be delays in this business as we apply critical thinking to the unique facts of each situation, but the application of technology to assist in the decision making, affect results and to communicate to all will continue to improve as we use the revenue stream to invest in better technology and training. Our current strategy is to use our current revenue stream and cost model to improve the technology without increasing costs to our clients. In order to make changes happen faster in our current business model we need a larger revenue stream. If you want us to get better faster then refer more clients and tenants to us! Another option on how to increase our technology spending is to increase our fees and that is the opposite of the direction we want to be. As we continue to increase our revenue stream we will be able to provide better service, faster service at a lower cost for all our clients. It’s not the size of the organization which will make these improvements happen, it will just allow the improvements to be available at a lower cost. We always sum up our three main goals as:

1) Be the best at matching the proper resident to a home as quickly as possible
2) Be the best at keeping the total cost of ownership low
3) Be the best at educating our clients and their tenants to help achieve a quality rental experience for both

Everything I spoke about today is based on items #2 and #3 above. Those of you who have been around Prime know that I am responsible for making items #2 and #3 happen. David Kadleck, my business partner, will go on his own rant about #1 at some point in the future as David is the king at figuring out ways to get the right tenant in a home in a timely manner.

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