Most property management companies are designed around the departmental organizational structure. 3 Options Realty is much different and there are good reasons why. Our structure melds principally with our six company core values:
Achieving these core values is one important reason, but the main one is that our landlord clients love it. Here’s why:
There are three key roles in most property management companies. In our company, these duties are mostly performed by a sole agent. We find that most landlords appreciate this because it’s less confusing and because of this they can build a more effective professional relationship. These roles are 1. Property Manager. 2. Leasing Agent, and 3. Maintenance Manager/Coordinator:
This role can be both diverse and inclusive, but generally has to do with any duties associated with an occupied rental property. It includes such things as:
Depending on role assignments, some of the leasing agents duties are the same or similar to those of the property manager. These duties apply during rental property vacancy or in the final month or two before a tenant vacates. In our model the property manager performs these functions also:
This person handles coordination of service requests for managed properties. In our model, we have a separate staff person to handle this principally, but our property managers also actively participate in these functions because they need to be aware of these things so they can keep the landlord apprised and discuss solutions:
Property managers with a broad skill set can handle solo up to as many as 100 properties as long as the properties are in close physical proximity to one another. This works for us because our agents ideally manage property within about a 20 minute drive of their personal home. This way they can be most responsive to issues involving their properties.
Under the departmental model, each distinct function in the property management business has a department dedicated to serving that function. Diagram 1 depicts a basic departmental organizational structure. Note that this is a very flat, horizontal structure with little delegation of supervisory responsibilities. In this instance, all employees report directly to the company owner. In such organizations there can be as many property managers as the company owner deems necessary and the same is true for the leasing agents.
Most experts on organizational theory tell us that three or four direct subordinates is the most that supervisors can reasonably expect to manage. In the model depicted in Diagram 1, there are eight people reporting directly to the company owner. It might be hard for this owner to properly supervise that many people. If this company grows it will continue to weaken the owner’s ability to lead and manage.
Basic Departmental Organizational Structure
This example is just one of the possibilities for organizing under the departmental organization model. Regardless of how this is done, there are some distinct disadvantages that will derive from virtually any departmental alignment:
In contrast, take a look at our portfolio model depicted in Diagram 2. In our organization, reception and bookkeeping would be roles very similar to the departmental organization but the property managers are entirely different. First of all, ours are paid purely on commission tied to their individual productivity. But perhaps more importantly each property manager performs all related tasks for each property in their portfolio except that they are supported by bookkeeping and a maintenance coordinator. They don’t have to keep the books! That’s particularly important because the aptitude and temperament of these property managers usually doesn’t favor bookkeeping. Each of our property managers handles their portfolio somewhat like a separate business entity. They feel individually responsible for the contentment of their client and customer bases and take pride in watching their own portfolios grow and succeed. They are able to definitively measure the fruits of their own labor.
We have two principals in our company (Dan and Terri). They share leadership duties. Terri serves as our general manager as depicted in Diagram 2. Dan serves in the role labeled Company Owner. Terri oversees the operations side of the business. Office manager duties are actually performed by KC, who also serves as our principal bookkeeper. Dan collaborates with Terri and KC to achieve maximum efficiencies in operations. This structure frees Dan from day-to-day operating issues and allows him to work on other aspects of the business. Dan is able to work on things like business networking, training the agents, and developing marketing systems to enhance the company’s overall performance. Dan focuses on working on the business, while Terri focuses inward—working in the business. It’s a great combination that has yielded great results.
There are distinct advantages for the portfolio organizational structure. Probably the biggest advantage is that because the agents manage virtually all aspects of their assigned portfolios, communications between the company and the property owner is vastly enhanced. The same is true for the tenant relationship. Here are some other advantages:
There is another aspect of our model that separates us from the pack. It has to do with business mindset. In business there are two basic mindsets:
Relationship thinkers believe that if they take care of people, the bottom line will take care of itself. The bottom liner focuses on company profits and makes policy to support that even at the expense of creating an unhappy workforce. The bottom line thinker is more inclined to choose the departmental organizational structure, while the portfolio thinker tends to be more of a relationships person. The owners of 3 Options Realty have a relationship mindset. We care about not only the clients and customers but also our staff.
Another critical organizational difference between 3 Options Realty and many other companies is that we place ourselves between the public and the landlord. We become an obstacle through which the public must navigate before getting to the landlord. We believe that, compared to the property owner, we have the experience to better deal with any adversity that may arise. That’s why we put our company name on the lease as landlord. Service of process in such case will be delivered to our company.
Many companies want to avoid this legal liability and therefore put the property owner’s name on the lease as landlord. This does not really protect the company but it gives the illusion that it does. The real problem with putting the landlords’ name on the lease is the mindset behind the decision to do so. It would be appropriate to inquire about such companies’ loyalties.