Are you looking for a new way to structure your property management company? As you may know, a well-structured business is often the key to success. 

When each of your team members has a designated and clearly defined role in your company’s structure, you’ll be able to benefit from smoother operations and less employee turnover. This will also allow you to serve your customers more effectively and handle problems efficiently. Creating a property management SOP will also help with both of these things.

But what exactly is the best property management structure for your company? Well, it all depends on a variety of factors, including the size of your company, the types of services that your team offers, and your client base. 

If you’re not sure which one to choose, we understand. Luckily, we can help! Below, we will discuss the two main structures that you can choose for your property management business. They are called the departmental structure and the portfolio structure.

Keep reading to find out how they work, and whether or not they are the right structure for you and your business!

Departmental Structure

The first property management business model that may be the choice for you is the departmental structure. This is generally where most property management companies start when it comes to building their business. 

You can begin this company structure by hiring individual employees that are experts in one specific trade. This can be anything relevant to your business, such as marketing, leasing, administration, accounting, and more. 

Group of five people in suits, two of the are shaking hands across a table

Then, as your property management business begins to grow over time, the larger departments of your business can be broken down into directors, managers, and assistants.

Once your property management company gets big enough, you could even end up separating your departments into sections based on regional and local levels, or residential and commercial categories. By using this specific business structure for your company, you will be able to focus on more specialized roles with your employees.

For example, you can hire maintenance coordinators and technicians to work across all the properties that you manage, instead of simply employing a maintenance person who would be responsible for responding to the maintenance requests at a single property. 

Pros of Departmental Structure

Using a departmental business structure has a long list of advantages. Here are some of them:

Pro #1: Everyone Is a Specialist

The staff members that you hire to be on your property management team will be experts in their field. This makes them uniquely equipped to handle specialized problems that may arise with your property or with your tenants. 

Additionally, you can lower your own workload by being able to delegate responsibilities to trusted and professional members of your team. You can rest knowing that each job within your company is being completed by an expert in the field!

Pro #2: Mentorship Is Easier

Mentorship is one of your greatest assets with this business model! Due to your team being full of specialists and experts, new employees can be trained quickly and efficiently. 

A couple looking over a document with a leasing consultant wearing a suit

You won’t have to worry about any knowledge being lost in translation or missed. Each and every one of your employees will be properly trained and equipped to handle any problem that may come your way. 

Pro #3: The Work Is Shared

There are multiple employees doing the same property management tasks. By using this setup, landlords and tenants that you work with will have an easier time getting a hold of someone on your team should they need anything. 

This will improve your relationships with your clients and help you to maintain rapport with those that you work with. Client retention is key, and the best way to retain customers long-term, whether they are owners or tenants, is to be available whenever they may need your services. 

Whether it’s a repair on the property, finding a new tenant, or settling disputes, your team will be able to handle it quickly.

Cons of Departmental Structure

Now that you know some of the great advantages that come with a departmental structure for your property management company, let’s talk about some of the disadvantages. While this structure may be a great fit for some property management companies, there can be downsides as well. 

Con #1: Increased Chances of Miscommunication

Communication between your company’s departments can often be slower and more prone to miscommunication issues. Due to departments not working together to serve the needs of one property, they may not have a collective shared vision of the property’s value or the tenant’s needs. 

Notebook open to a page that says property management on a messy desk

Without a distinct commitment to excellent communication between departments, problems may arise and signals can get lost. Additionally, different departments may have interpersonal issues and shift blame onto each other. 

To prevent this, you will need to be intentional and careful with who you employ. Ensure that each new hire is one who will fit into your company culture and share your team’s values and goals when it comes to managing your portfolio of properties. 

Con #2: Lack of Consistency

Your clients may end up frustrated if there is a lack of consistency regarding who they are contacting. With a departmental business structure, a tenant or an owner will generally not be able to reach the same contact when they go to connect with your company. 

Con #3: Potential Decrease in Client Retention

If the issue that they need to be resolved is recurring, then this lack of consistency regarding their communication with your team may heighten the problem and increase their frustration. 

This can also decrease your client retention if tenants and owners don’t feel that they’re being heard or if they feel their problems are not being dealt with in an organized manner. 

To combat this issue, it is wise to keep a detailed and running history of each and every tenant and property owner you work with, including any concerns they have had in the past. 

One person leaning on a table while two other property managers look at a document about security deposits together

Make this information easily accessible to everyone on your team to ensure that they can always be up to speed when helping a client with an issue. Additionally, using a reliable online portal can help streamline communication and empower the owners you work with.

Con #4: Workflow Can Be Unbalanced

Your staff members may feel overworked or spread thin while working with multiple rental properties. If your company doesn’t have enough staff to ensure a balanced workflow, then this property management business structure may end up causing more stress to your employees than it is worth. 

If your team members are spread too thin across the entire portfolio of properties that you manage, then they will not be able to apply the same amount of individual care or interest in the individual homes. 

This may hurt your company’s relationships with your patrons. If you are not able to hire enough staff to ensure a balanced and streamlined workflow within your team, then a portfolio business structure may be the choice for you. 

Portfolio Structure

If the departmental structure doesn’t seem right for your property management business, then the portfolio structure might do the trick! With the portfolio structure, each rental property or region that is under your company’s care will receive the undivided attention of one property manager

As you experience business growth and you begin to manage more doors, it may start to become too difficult for the departments of your team to keep up with your clients and take care of the unique needs that each rental property has. This is when you can introduce the portfolio structure to your company. 

Close up of someone using a laptop with an external white mouse and keyboard

Using a portfolio structure will help to foster a cohesive and familiar relationship between the property managers on your team and the clients that you work with. Generally, rental property owners tend to feel more secure and taken care of when they have their own designated property manager that they can work with. 

This way, any requests, concerns or questions can all be directed to a singular person, rather than worrying about being in contact with too many different people and dealing with frustrating miscommunications. This will ultimately help your team to build rapport with owners and keep your clients long-term. 

When a client is in contact with only one property manager who is in tune with the property’s unique set of needs, they will feel better-taken care of!

Based on the size of your property management company, each property manager on your team may work with independent contractors on an ongoing basis. Or, if they decide a different approach is more effective, they can have their own lineup of specialists and experts who report to them regarding things like maintenance, accounting, leasing, and more. 

Two excited people looking at plans in a kitchen with their property manager

Pros of Portfolio Structure

Using a portfolio structure for your property management company has a wide variety of advantages that can help you grow your property management company and create long-lasting, positive relationships with your clients. Below is a list of these advantages.

Pro #1: Clarity in Communication

There will be more clarity regarding communication between your employees, your clients, and your tenants when it comes to dealing with specific properties that you manage. Any ongoing issues will be easier to deal with as they will be handled by one designated person, rather than different departments. 

Pro #2: Increased Accountability

Accountability is easier to enforce and your team can be more efficient in the way they serve your clents. This will result in higher quality work, quicker response times, and more satisfied customers. 

Pro #3: Deeper Connections with Clients

Clients and tenants that you work with can have a deeper, more personal relationship with your employees. Due to customers primarily dealing with one designated property manager, trust can be built more easily. 

By allowing your staff to build a strong rapport with your owners and tenants, you will be able to keep both property owners and tenants long-term. This is a win for everyone involved! 

Further, your clientele will appreciate the transparency of this business model as they will always be kept in the loop when it comes to knowing which team member is responsible for the requests they have. 

Overhead shot of four people working on computers

Cons of Portfolio Structure

While the portfolio structure may be excellent in some ways, there can be disadvantages too. The following are some of the downsides of choosing this structure for your business:

Con #1: Slower Overall Growth

Due to your staff having a more devoted and diligent approach to a fewer number of units, your team may end up moving at a slower pace than you would like. To combat this issue, it’s important to communicate the importance of time management to your staff. 

Con #2: Hiring New Employees Is Harder

Every person you hire becomes a pillar in your company, meaning replacing any staff member, whether they’re an administrative assistant or property manager, may be a long and frustrating process that makes it hard on the whole company.

Everyone’s property management methods and knowledge should be documented meticulously in case a turnover should happen. When looking for a new staff member, client expectations must be taken into account. 

Con #3: Potential for Workflow Interruption

When a property manager or staff member goes on vacation or is out of office, your company’s workflow may be greatly interrupted. Due to each property manager on your team having a great amount of responsibility, losing them for even a short time can be a hassle for both yourself as the company owner and the tenants of the property that they manage. 

For example, if a maintenance issue should arise, tenants won’t have a contact who can resolve the issue quickly. Or, your employees may not have a leader to grant final approval on a decision or provide help or guidance with an issue. 

Two smiling people looking over a document

To prevent these situations from becoming too messy, we recommend implementing a clear hierarchy and a flow chart to help you, your staff, and your clients navigate what to do. 

Bottom Line

At the end of the day, you need a structure for your business in order to be a successful property manager. Regardless of which structure you choose for your company, you should always have clear job descriptions and communicate the responsibilities of each staff member clearly.

By doing this, your company staff will be better at their jobs, you will have less employee turnover, and your clientele will have a more optimal experience when working with your company. This is only possible when you have established a clear workflow and an organized business structure.