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Which structure works best for a property management business: Departmental or Portfolio?
This is a topic that can be pretty polarizing in the industry.
Welcome back to The Property Management Show, where we deep dive into the world of property management, marketing, and entrepreneurship.
Today, we’re talking with two prominent property management business owners in Central Florida.
Welcome to Maryann Hoffman and Andrew Dougill of Hoffman Realty and David and Stacy Wilson of Wilson Management Group. These experts are talking about the structures they’ve adopted and offering some advice to property management owners who have not yet decided on how they want to organize their businesses.
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Hoffman Realty
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Wilson Management Group
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What Do Successful Central Florida Property Management Companies Look Like?
Let’s take a look at who we’re talking to today:
- Hoffman Realty is based in the Tampa Bay Area. They serve communities as far north as State Route 54 and as far south as Apollo Beach and Wimauma. They’re a departmental structure and have about 450 companies under management.
- Wilson Management Group is in Orlando. They’re a portfolio style management company and serve all of Orange and Seminole Counties, with part of Lake County, Volusia County, and Osceola County within their scope. They also manage about 450 doors.
How Do These Structures Differ?
At the NARPM Broker/Owner Conference this year, Matthew Tringali of BetterWho presented a framework called The Team Structure Checklist, which highlighted the fundamental differences between each business structure. Here’s what Maryann reported from that event:
- Departmental Structure. Most people are in the office and available for phone calls, answering questions, and serving more specialized areas of expertise. There’s one person managing inspections for all properties and another person managing the accounting or the leasing. One point of contact takes care of customer service. There are property management departments.
- Portfolio structures would have one professional with a portfolio of 75 to 125 properties and they handle everything. The entire experience of that property is under their purview, whether we’re talking about maintenance or leasing or tenant management. The primary point of contact is the property manager overseeing the portfolio.
Does the Company Structure Impact Quality of Service?
When we talk about departmental vs. portfolio structures, is it merely an internal operational decision that owners don’t notice, or are there differences in how service is delivered and perceived?
It depends.
When we talk about portfolio models, we’re often talking about companies that cover a larger geographic area, and to expand the business portfolio is necessary. Departmental structures work better for smaller service areas.
Both structures can provide excellent client experiences. This depends on policies and procedures and how effectively and consistently the company can apply those.
It also depends on staff. A leasing agent having a bad day in a departmental structure will not affect an owner who calls to talk about accounting. But in a portfolio structure, the property manager may be having a bad day, and that can affect any owner who calls for help.
The answer to high-quality service delivery in either structure?
Having strong systems.
Which Model is More Scalable for Property Management Companies?
Property management companies may want to know if one type of company can support growth better than the other, but the answer comes down to company goals and vision.
- Portfolio property management companies are geographically based. Each property manager has a portfolio that they manage, and the properties assigned are based on maintaining boundaries geographically. There’s always a bit of overlap, but it’s not going to work to have property managers crossing counties while trying to provide great service. David and Stacy want their property managers to concentrate on their portfolios to the best of their ability. So from an expansion perspective, portfolio works for management companies that want to grow geographically. It’s possible to add another property manager when new doors are added in different neighborhoods or cities.
- Departmental management companies grow best within a tight service area. Maryann and Andrew note that their employees go home at night without being on call for owners or tenants who might need them (Maryann hands out her cell phone for that purpose). The point is to have good property managers who communicate well with existing clients before growing. A new client joined Hoffman Realty because he had not heard from his previous property manager for three months. It turned out his assigned manager had left the company, but no one there had told him.
In each business structure, growth is only possible with good systems, clear assignment of duties, and smart staff.
What Are Some of the Weaknesses in Portfolio and Departmental Property Management Structures?
What if a tenant doesn’t pay rent?
What if there are complaints that repairs are taking too much time?
What if a key property manager leaves the company?
Portfolio
The main challenge for portfolio companies is the loss of that knowledge and expertise when a property anger leaves. And it’s also important to be clear about who owns the client. In a portfolio system, you would not want a property manager to leave your company and take your clients with them. Property management is a relationship business. Internal controls are needed no matter what your structure. You will need:
- Management agreements
- Independent contractor agreements (this is how Wilson hires)
- Policies and procedures
David and Stacy have done a great job of mitigating risk and establishing that clients belong to the company, not the property manager. Most of the professionals working for them have been with the company for over 15 years.
Departmental
For departmental companies, it can be a challenge to juggle all the repairs. It requires a lot of time management to negotiate every single lease renewal. Things come up and Maryann and Andrew must decide when the limits of their system have been reached and it’s time to hire another person.
Another weakness in departmental businesses is that sometimes owners and landlords can feel passed around from one person to another. They’re talking to someone different about maintenance and accounting, for example. As the Business Development Manager, Maryann makes sure she is the point of contact for any struggles owners may encounter. There are lots of questions when they’re being onboarded, but once the path is clear, things settle quickly.
How Are Florida Property Management Companies Unique?
The housing collapse in 2008. COVID eviction moratoriums. Massive hurricanes. Post-pandemic pricing surges. Major relocation of new residents into Florida. Major insurance crisis. Florida management companies have been through a lot. How does each business structure approach these elements that are unique to Florida property management?
- Andrew said that for Hoffman Realty, the 2008 crisis was one of the worst to manage. There had just been a huge boom and prices were high. Then, the market crashed and people who had no
intention of being landlords found themselves renting out homes when they could not sell.That included a lot of private equity firms.Maryann remembers a meeting with a huge company that was planning to buy hundreds of properties in 2010. It was exciting at first; the idea that they would get so much business. But the geographic area covered seven counties. Hoffman Realty would have had to change their entire operation in order to accommodate that management contract. - For Stacy and David, the COVID pandemic and hurricanes are particularly memorable.During the pandemic, people did not want to leave their homes but they needed to see properties. At that time, video walk-throughs were not common, but they quickly became necessary. They could not imagine doing without video tours, now. Property management companies in Florida have to adapt to manage these crises.In 2004, there were three different hurricanes that hit the Orlando region in a span of three weeks, including the very powerful Hurricane Charlie. That storm took out the power to the Wilson Management Group office for two and a half weeks. But they still had to operate. Trees were down everywhere and property managers could not use phones or email. This was long before the technology we have today. David was grateful that they had planned ahead and printed out what they needed and were able to physically check on their properties.
Diving Deeper into Hurricanes: How Do Business Structures Respond?
More recently, after Hurricanes Milton and Helene in 2024, Hoffman Realty had three pages of roof repairs that their properties needed. This is how the departmental process served them:
- One person was in charge of roofs.
- Another person was in charge of fence repairs.
- Another handled mold remediation.
- Separate people were assigned to insurance adjusters.
- Staff members were calling tenants to ask about any damage.
It was a mess, Maryann said, but everything was departmentalized already.
As a portfolio-based company, David and Stacy would have their property managers check in with tenants, first. In the first few days after a hurricane, roads were dangerous. There were no stop lights and trees were down across town. Before putting their property managers in any kind of situation where they had to go out and put eyes on a property, they’d ask their tenants for reports.
Instead of conducting 30 inspections a month, their property managers were eventually conducting about 30 per day.
What is the Relationship Between Team Structure and Company Size?
Is there a size where one specific structure makes more sense than the other?
It may not matter.
Regardless of the business model a Management company has, there is some level of overlap into different sorts of business models no matter what.
- Some companies have a pod style, with senior and junior managers and they have coordinators in that pod.
- Andrew and Maryann have a departmental business which is similar.
- In the Wilson portfolio structure, property managers still have back-office support for accounting and leases.
Overlap should be expected.
Scaling any of those structures can be challenging. For portfolio companies, property managers are geographically aligned, so if there is a burst of new properties that come under management, how are they assigned when all of the existing property managers are at capacity?
How Do Property Managers Know Which Structure is Right for Their Company?
Maybe you’re a smaller company at 50 to 100 doors, and you have to decide whether to form a portfolio or department company structure. What clues should you be looking for that might tell you which path is the best?
- Andrew says that if you’re growing from a one-person show to a larger company, you’ll realize you need help, and you should delegate the tasks you don’t like to do. Maybe you like leasing
and talking to landlords but you don’t like coordinating maintenance. That maintenance supervisor should be your first hire. - Stacy and David advise to be prepared for one thing: systems will break down as you grow. Whether you gravitate towards departmental or portfolio or something else, you’ll have to pivot or adjust at some point. You might start off with one model and pivot to the other.
Try to anticipate where the break might occur. If you can see it coming, you can prevent it.
How Can AI and Technology be Used?
Thanks to automation and AI, it’s possible to do more with fewer people. With the help of technology, property management owners know that they can focus more on relationships. And remember that AI is able to do a lot of things, but it can’t just be plugged into a property management business. Automating something that is broken will just allow mistakes to be made faster.
We’re saying it again: processes and procedures are essential.
Deploying AI will not magically fix problems.
Will Owners Care about Company Structure when Choosing a Property Management Partner?
Hopefully, clients will ask deeper questions about how your business functions.
- How are applicants screened?
- How quickly does the staff handle maintenance?
- How and when will my residents get solutions to their problems?
These are the things that help determine how efficient a property management business is. Company structure is rarely a part of the interview.
Property managers trying to earn new business will want to clarify with the property owners and investors what the long-term financial goals are. That may play into how they decide what kind of
company they hire. But that may not have to do with structure; it may have more to do with the perspective of the business and how they manage.
What Are the Last Words from Hoffman Realty and Wilson Management Group?
Here’s what our guests want to leave you with:
- Loving what you do is a big part of success.
- Start off with strong systems and get those down before growing a property management company.
- Owning investment real estate is great. If you’re starting off, keep moving forward.
How can you connect with our fantastic guests today?
Connect with Maryann and Andrew from Hoffman Realty at http://hoffmanrealty.com/
Connect with Stacy and David from Wilson Management Group at https://www.wilsonmanagementgroup.com/about
Thanks for joining us on The Property Management Show. If you have any thoughts about what we’ve discussed, please contact us at Fourandhalf.
