How to Build a Commercial Property Management Portfolio in Your Real Estate Business

Many commercial real estate agents know the value of having a property management portfolio as part of operating their business.  They can easily grow that property management portfolio from targeted property leasing and sales activity.  Over a period of 12 months a portfolio of quality properties under management can grow fee opportunities and longer term listing leads for the brokerage.

In starting a property management service, here are some valuable ideas to consider:

1. The right people with the knowledge of property management processes will be a necessity if you want to control properties effectively and professionally for your clients.  Good property managers are skilful business people; they know how to control property financial performance, tenants, landlords, and legalities.  Select your people for the role with care and focus.  Don’t pass the role to a junior receptionist thinking that they know what they are doing; that will be the beginning of a disaster.
2. Every successful lease or sales transaction with an investment property should be subjected to a property management analysis and proposal.  Help the property buyers and landlords see how the property can be improved over time with careful financial and tenant management.  Put forward your best people with the right skills to pitch for the property management.
3. What can you do in managing properties that would be helpful and professional for the clients that you serve?  What reports and control systems would help you take an ordinary property to the next level of financial and lease opportunity?  What can you do that is better than your competitors when managing properties?  If you know the answers to those questions you will have some strategies to utilise in selling your professional services.

You can see from these things that the growth of your portfolio should in the main be built from existing transactions and known clients.  Your agents and brokers will need to open up the subject of property management with all of the people that they know at the right time and in the right circumstances.  Of course many of those brokers and agents in your team will only be motivated to do so if there is something of value in the process for them.

To help with that problem, consider offering a percentage of the property management fee from a newly managed property to your agency staff if they are successful in introducing that new management to your team.  It is quite common to offer a bonus payment to introducing agents of one month’s management fee payable after 3 months of continual management.

So the message here is for you to start small in growing your property management business, and for you to do so as part of successful sales and leasing activity.  Understand the skills and the limitations of your people and select the properties to suit.

There are significant differences between retail, industrial, and office properties by type; the size of the property will also have an impact on levels of work involved in each management, so don’t just set your fee on a percentage of passing rent, but have due regard to the levels of work involved in controlling and improving the property for the landlords that you serve.