ANALYSIS - Facing ‘problem’ landlords

Dealing with problematic landlords can cost property managers more than just their time. Real Estate Business explains why it’s critical to be proactive when managing troublesome clients

‘Problem’ landlords continue to plague most property managers, new data has revealed. But most industry specialists have clear guidelines on how to deal with them.

Leading Property Managers of Australia director Bob Walters claims spending up to three hours a day dealing with problematic landlords will eat away at business profits.

“As a property manager, dealing with problem landlords is part of the job, but if you find yourself spending up to three hours a day dealing with the same client, all profits made from their business will be completely swallowed up,” he says.

With reference to the Sydney market, Mr Walters explains the average property management fee is approximately $1,400 a year, or $27 a week.

In order to make a profit from a ‘problem’ landlord, agents may need to negotiate higher fees with their client.

“If you find your client is being unreasonable and taking up a lot of your time, most agents will attempt to negotiate with them and assure the client they are a professional that can handle the matter in an effective manner,” he says.

“In dealing with my business, I have assessed our client base and identified the clients that continually take up several hours of our time. From there I will negotiate higher fees with my client and in some cases will terminate the contract if an agreement cannot be made.”

These comments were in response to a recent Real Estate Business straw poll of 238 respondents, in which three in four agents (74.9 per cent) believed up to 10 per cent of their business was made up of ‘problem’ landlords.

As all property managers are well aware, dealing with a problematic client comes with the territory, but there are ways to mitigate some of the headaches and associated costs.

Mellissa Helbig, of Elders Real Estate in Clare, South Australia, says agents that educate their client from day one will have a more successful relationship with them over the longer term.

“This is why educating the client on what their rights and responsibilities are is so important at the initial stage,” the Real Estate Institute of South Australia (REISA) 2010 property manager of the year, says.

Real Estate Institute of Western Australia (REIWA) property management network co-chair Jenni Wood believes agents need to thoroughly inspect the property and landlord prior to taking a listing.

“The problem is most agents spend a lot of time assessing a tenant during the induction stage, however, spend little time assessing the landlord,” Ms Wood says.

This rings particularly true when dealing with new property investors. Ms Wood says while they may consider themselves market savvy, most first time investors are generally uneducated about the property management process.

This means fledgling landlords need a more intensive training and induction process, and this may take longer and require more effort on a manager’s part, there are likely to be fewer issues down the road.

And the time can certainly add up, she says. “If 10 per cent of your property management business is made up of trouble clients, agents will easily be spending up to 40 per cent of their time resolving these problems.”

In a similar vein, Michelle Aslander, partner to Jenni Wood as REIWA property management network co-chair, has developed an effective means of inducting and educating new clients.

During the induction process Ms Aslander gives both her new landlords and tenants a new owner’s handbook. The manual outlines the roles and responsibilities of both parties as well as important information such as contact details, rights, and the state’s tenancy laws.

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