We’ve all heard it before, the old saying “quality over quantity” but does it ring true for the property industry?
I had an interesting conversation on the phone with one of our freemium users a short while ago and as we spoke about how business is going during the current pandemic he explained to me that he likes to take the quality over quantity approach when it comes to growing his business. I found this interesting. While many agents I speak with on a daily basis might have upwards of 100 or 200 properties within their management, this particular agent explained that his main focus circles around a smaller amount of properties each day.
His approach is a simple one. Aim to acquire properties that achieve a high rent amount while maintaining the same management percentage fee as his competitors and capping his portfolio at 15. It may seem pretty straightforward but there is more to it than meets the eye. By managing 15 properties as opposed to 150 properties this agent is able to really focus on increasing profits within his business by delivering an extremely high customer service level. Being able to focus on a smaller amount of properties means he can spend more time building relationships with each of these landlords without being over stretched. Having a cap on his portfolio also helps him create an air of exclusivity to his management service which in turn can facilitate a perception of being in demand.
There are other benefits too. Typically, properties with a higher rent value can see less annual maintenance costs as they tend to be either in an excellent condition or fairly modern. This could potentially save a lot of time dealing with contractors and maintenance requests during his day to day allowing him to focus on the revenue building areas of his business instead. Clever. However, it’s not all roses!
Firstly, not everyone has the luxury to be so selective when it comes to business. Don’t get me wrong, not all business is good business, but there does need to be a criteria you set out for your own business when it comes to a client and their property’s eligibility to be managed by your agency, that comes down to you really, what your parameters are and should be based on what a healthy portfolio of properties looks like. That aside, like I said, not everyone has the luxury to pick and choose which leaves us wondering, is the quality over quantity approach great in an ideal world but not a fair representation of everyday business?
There are of course benefits to managing larger portfolios of property. A glaringly obvious one would be the absorption of lost business. If a landlord chooses to take their business elsewhere or perhaps they sell their property and you are no longer the managing agent that could be a huge blow to your portfolio of 15 properties but in a portfolio of 150 it will be quickly absorbed by your current stock which will naturally fluctuate from time to time. A larger portfolio allows for fluctuations, which is only natural, particularly in a cycle driven industry.
Another benefit I have experienced while managing larger portfolios is the opportunity for referrals and networking. The more landlords and investors who are aware of you and your services, the better. As another old saying goes.. “word of mouth is the best form of advertising”. The chances of being referred business more times in the year are a lot higher when you are dealing with a larger pool of people.
A big opportunity that perhaps the quality over quantity approach agents may miss out on are online reviews. If you are dealing with less people this means you have less chances to request an online review. Think of your own behaviour as a consumer, you jump online and search for a hotel (pre-Covid times, bare with me!) to start planning your holiday. You see a hotel which is labelled with 5 stars, on the face of it, it looks good, but when you take a good look you realise that there has only been 2 reviews, both 5 stars and perhaps not as convincing as the hotel next door which has a mixture of 4 star and 5 star reviews from over 3000 guests within the last year. Importantly you do see some bad reviews which only really brings a further air of authenticity to your perception of this hotel. In this instance quantity has trumped quality.
It should also be considered that what works for one agent may not work for another. There is no formula, achieving business success cannot be boiled down to one particular idea or statement as it simply isn’t a one size fits all solution. You might be an agent who specialises in investors with their own large portfolios, if this is the case, the quality over quantity approach won’t work for you. You might be a one man band already working a 60 hour week, in that case a portfolio of 250 properties may not be manageable on your own. There is no right or wrong, only what you believe to be the best fit for you and your agency.
Which takes me to my next point. Whether you are a one man band managing 15 properties or a multi branch agency managing 1000 it’s a people business at the end of the day. So, although quality over quantity may not ring true for everyone, consistent customer service and communication will always be a good place to start when it comes to retention and growth.
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