I came to the conclusion very early in discussions with potential new property management clients that an initial drive-by, preliminary meeting with the owner, if possible, and compiling facts about the property on my own internal “Real Property Inventory Profile” was the best approach for me to take in determining the information necessary.
Keep in mind, this approach is only necessary with local owners who were typically comprised of a partnership of local individuals or related persons who pool funds to invest in real estate.
If the potential prospect is an institutional-grade client, the approach is completely different as that type of prospect knows exactly what is involved and generally the real estate has been managed professionally. In that case, a discussion with the existing property manager would be ideal, or you can provide your request for key information included in the “Real Property Inventory Profile” initially. The key fact is whether or not the property has been managed by professionals or self-managed, or is being built or acquired.
Why are all of these differences relevant? Well the basic reason is that a professionally run property has systems and procedures and good habits in place, and generally a self-managed or new property requires much more upfront labor to establish all of the systems and procedures that all reputable owners will concur are necessary.
In my professional opinion, all of these key factors would need to be considered before ever providing a fixed quote to any client. A range would be safe, but never a fixed quote of any kind.
In addition, you need to determine the serious level of interest in this client actually wanting to go down the path of hiring a new management company. That is why I created my own “Real Property Inventory Profile” as my own cheat sheet of questions and information to gather so I could learn more. In some cases, I can just send this questionnaire to the owner and ask them to respond. The profile helps you to qualify the potential property owner and their level of interest up front. Why? Because providing a proposal to manage a new property is an investment in time and resources. Property visits, analysis, team discussions, research, and preparation of a professional proposal that speaks to that owner personally about their property takes significant time, effort, and in essence, if you do a good job, actually provides the building owner with insight into their own property.
The “Real Property Inventory Profile” is vital because it immediately tells me how much upfront work we would have to perform to actually start managing the property. In other words, were we going to manage something that was mismanaged and needed work from the ground up, or was this a well-managed property that was not going to require a “swat team” (see New Property or Facility Takeover: Where Do I Start?) to take it over and set up all of the processes and systems and procedures from scratch? That is a major point of contention with any new business assignment — how much labor will be required. Labor relates to cost and overhead, so when pricing an assignment, the upfront investment of labor is an important consideration.
It can also demonstrate to the client you are serious and want to know more about what type of owner they are. Are they hands-on? Are they an absentee owner or a rookie owner? Again, all of this information will enable the most accurate quote of labor, which is what business services is all about. Remember, in property management and leasing, time is our industry commodity, therefore we need to understand how much time all of the steps and tasks will take us to execute. There are many people who would take on any new business assignment, and that is fine, but it is fraught with risk and you must go into the assignment with your eyes wide open, as well as be prepared for price objections when a client states that something costs more than they are willing to pay. By doing your homework, you will be more prepared to handle the feedback.Read more on Scaling