Insanity in property management

Hope is not a strategy

The definition of insanity is doing the same thing over and over again and expecting a different result.

"To repeatedly do the same thing and expect a different outcome" are "Einstein's presumed famous words on insanity". Although there's debate whether Einstein actually said that, frequent changes in Property Management are indeed a perfect example: On average Home Owner Associations (HOA) change property management services after just 4 to 5 years. That's a terribly high churn rate and bad for everyone. Buildings hardly ever get into stable maintenance mode. Property managers experience difficulty in terms of profitability as every new customers requires substantial additional time & effort to get familiar with.

The impact of perception

What fuels this negative spiral is largely perception. Owners & residents feel underserved when the property manager doesn't respond immediately to their issues. Property managers feel unappreciated. As they perform a lot of work in the background, much of it goes unnoticed. Simply put: "People can't appreciate what they don't see".

The disconnect in perception becomes clear in a recent study by "Building Engines". Over 600 property managers were asked whether they think their customers are satisfied with their services. 75% responded positively but only 25% of their clients actually agreed.

Considerations

Digitalisation is everywhere in our daily lives & buildings won't be left unaffected. A relevant question however is: "Is it fair to expect the property manager to deliver the solution?"

A. Property management is a low margin business facing a high risk of losing clients when prices are raised. Investment budgets are very limited. Add the prevailing perception that there isn't a acute need to modernise communication, and you know nothing is going to change anytime soon.

B. Property management firms, especially the smaller ones don't have relevant expertise in digital matters. Current uncertainties regarding GDPR makes the dead-lock even worse.

The solution lies in finding a new balance between what is expected of property managers and which digital infrastructure should be part of the building.

Future-proof asset protection

Let's start with an analogy on asset protection. We all find it normal to document every oil change and repair on our cars. So why would it be any different with real estate which is a far more valuable asset? Increased transparency adds trust & value.

As infrastructure goes digital (IoT), smart elevators, central heating systems and sensors, are only a matter of time. Data relevant to buildings, including documents, incident logs, contacts, etc. should be a fixed part of those buildings for the long term.

After all, what defines a building? 200 years ago it was bricks and heating. Today, it includes water & electricity. Having a digital layer is only a logical evolution in the 21st century.

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