The Business Case for Centralized Services
Reduce the Complexity of Managing Multiple Services
By Jason Myers
Single-family rental (SFR) property owners and operators of all sizes face a similar challenge when it comes to working with multiple vendors for different required services, and that is hoping that those providers can get the job done efficiently and on time.
Regardless of portfolio size, SFR investors, institutional owners and property managers commonly rely on their local or regional employees to farm out the services, often with many different providers. Navigating this maze of vendors, service providers, contacts, services, and schedules frequently becomes more complicated—and more costly—than it needs to be. Additionally, many smaller providers often lack the technology, processes and redundancy that larger, more established players can offer.
How are we defining centralized property services? When you contract and manage a reduced number of services partners, you’re centralizing (or consolidating) services. That can mean working with a single partner nationwide or a select few providers in each region or market.
Many of our SFR clients are making a strategic shift to adopt a centralized approach. Centralizing property services such as inspections, lawn care and preventative maintenance can help eliminate hassles and even yield cost savings. So, why are SFR companies making this shift, and why does it make so much sense?
Saving time and hassle // Centralizing core property services can offer a one-stop solution, allowing the provider to handle the service, back-office support and logistics, while enabling you to maximize efficiencies and shift talented staff to revenue-generating roles. And if the same partner is already handling other tasks at your properties, you can reduce the number of touches required to complete projects within a single group and minimize the staff required for oversight.
Redundancy // Working with individual service providers not only creates more complexity, but it also leaves you more vulnerable if something goes wrong. For example, if a truck breaks down, equipment isn’t working or a contractor doesn’t show, there’s no redundancy in your system to deliver a backup plan. The key is choosing a single source with access to multiple service providers, whether they are self-performing or outsourced, so you know you’re always covered.
Consistency // Working with a larger, established provider yields both efficiencies and consistency in the work they deliver. You know you can count on them to be there when scheduled, as well as the next time you need services performed. And one key benefit is their services will be performed in the same manner—and to the same standards—across all of your properties.
Protection // Managing multiple services vendors also can lead to other headaches—for example, increased exposure to risks, such as uninsured or underinsured contractors. Working with a single company with a large footprint ensures you’re covered, from background checks and licensing to insurance, safety training and more.
Technology // The technology capabilities that a larger company can deliver offer a better line of sight and peace of mind. When their portal connects to your platform, you can add, track, and confirm jobs (with before-and-after and check-in/out photos) without leaving your desk. This furthers the time savings for your team, allowing a smaller group in your vendor management department to be more effective.
Financial savings // Working with a larger company may even yield financial savings due to their buying power, but it requires looking at the complete picture. For example, you might be paying $5 more per service, but if you’re able to reduce headcount (or shift it back where it needs to be), you can still end up with overall savings and improved efficiencies. MCS has seen centralized programs priced competitively with local crews based on the total number of assets being serviced in a market.
How Do You Get Started?
Moving to a centralized service model requires careful planning and leadership on the front end as well as time to evaluate and recalibrate as the program gets up and running. Here are a few key things to keep in mind to help ensure the success of a centralized model.
A thorough and realistic definition of the scope of work
Work with your service partner to define the scope of work so it’s mutually understood and agreed on. Clarity is key: A detailed scope should list and describe the services you expect a potential partner to complete and when and how you expect them to be completed, so there are no surprises in the ultimate results or costs.
Communication from the executive level to local managers
Just as frequent and clear communication between you and your provider is essential, how you communicate this substantial business shift within your organization will be critical to its success. How will you roll out this new model (and new partner relationship) to your local leaders? Many may have long-term relationships with current providers, so your messaging will need to address an understanding of their situation and also provide the reasoning behind the decision and facts to support the shift.
Easing into the relationship with your provider
Going from numerous services providers to a single source may be a bigger shift than you’re ready to make. The good news is you won’t have to start with an exclusive partnership to see success. A centralized program can be phased in over time to help foster a smooth transition.
You may also consider starting out with two or three providers so quality work can be rewarded with increases in property share, and it provides redundancies as the program starts.
Technology integration to easily turn on and off
You need to be able to shift services as properties enter or exit your management portfolio, and relying on regional managers to communicate this for each property can lead to missed or duplicated services. A robust technology platform can help track this information and prevent missed services and duplication of work.
Consolidating your service partner list can reduce the headaches and complexity of managing multiple services for your SFRs. When you select an experienced company with a large footprint like MCS, you’ll be able to stay in the loop with your properties via their technology, reduce your exposure to risks, never need to worry about a backup plan to complete your services, and save money in the process.
