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Outsourcing aspects of real estate management – what is the process and best practice?

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Managing community schemes involves wearing a number of service hats, and juggling different functions daily, which becomes increasingly complex the larger the scheme becomes. Trying to keep all of these functions running at peak performance simultaneously can sometimes go against the old belief that if you want something done right, do it yourself.

Many community schemes favour the idea of self-management given the associated level of familiarity and comfort, but soon realise that they are not geared toward adequately managing every aspect of the scheme, and this usually leads to the decision to separate the strategic components from the background operations and to outsource at least some functions. The obvious and most popular candidates for outsourcing include those processes that are vital to the sustainability of the scheme: the administrative and accounting functions.

 

When is delegation by outsourcing necessary?

Management issues in community schemes can take their toll on the efficiency and viability of the scheme. The manner in which a scheme is managed can directly impact the value of the properties and the desirability of the scheme. This applies to both homeowners’ associations and bodies corporate.

The risk lies in the array of functions dealt with by in-house community scheme managers. Maintaining the administrative and accounting functions can lead to a reduced focus on the equally important day-to-day operational management issues of the scheme. Routine maintenance of the scheme, defusing disputes among neighbours, keeping up to date with the administration, and maintaining an accurate accounting environment may end up tethering the success of the estate.

A number of schemes are now looking at outsourcing certain aspects of the management of the scheme. They are handing over some, or all of the most important management functions to experts in the property management field, and these schemes are finding that in the long term it is the best practice from a cost saving and efficiency point of view.

 

What functions should be outsourced?

Historically, many in-house community scheme managers run up against a brick wall when it comes to accessing and managing the systems, technology and skills required to effectively handle the administrative and accounting functions of a community scheme in-house.

This is where outsourcing proves indispensable, and is increasingly being regarded as best practice when it comes to effectively managing administrative and financial functions. Managing agents with a long and successful track record – like Pam Golding Property Management Services (Pty) Ltd. (PGPMS) – offer a wide range of benefits including flexibility in changing conditions, predictable costs, and lower investment in terms of systems infrastructure and staff.

These operations function as an extension of the in-house management team, and they are usually capable of providing first-level legal advice, access to technological accounting and administrative software, as well as knowledge of suppliers and contractors. Managing agents employ individuals with a solid financial and administrative background and offer indispensable experience in the community scheme industry.

 

What are the benefits of outsourcing?

Outsourcing the administrative and financial functions of a community scheme to a reputable managing agent will take the pressure off the in-house management team and allow them to focus effectively on the day-to-day problems on the ground while the managing agent focuses on preparing and presenting accurate monthly financial management accounts, paying suppliers and effectively collecting outstanding levies.

The manner in which PGPMS is structured and operates ensures that in-house managers have unfettered access to the support and knowledge required to manage and improve the community scheme, and PGPMS prides itself in its ability to assist struggling schemes to become successful and sustainable.

 

Pam Golding Property Management

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