How to Prepare for the Future of Management

The Challenge

Here’s the problem: it’s called capital investment. Management companies don’t have it. We get our management fee and what are the extras? The extras are when we do extra work, not anything else. You do the window guard notices, you get a fee. You do the closing, you get a fee. It’s not like a broker, who sells an apartment and gets six percent. No management company makes that. We work the entire year for the extras. As a result, there is not one young person coming into the business.

The Solution

In the future, the management office we know today is not going to exist. There’s no reason for it. Ask anybody how much they pay in rent. It’s not sustainable. The only ones that are going to be in Manhattan are the ones who own their building. I only need a conference room so that packages can be accepted and three people in my office: a person who does closings, a payables and receivables person, and me. Everybody else can work remotely. Everybody in my organization has an iPad, a laptop. I am going to be completely remote. Why do I want to waste the commuting time for my agent? We’re already in the cloud.

The Lesson

What’s going to happen is the next generation of property managers are going to be smart guys and they’re going to make money. They could be foreign companies. They’ll be bigger companies with large portfolios and multiple properties. All property managers are pitted against one another for the same dollar, so at the end of the day, the buildings are the beneficiary. Everybody thinks they’re paying exorbitant fees to managers. They’re not.