SINCE STARTING out in the industry nearly 40 years ago, I have made every mistake in the book.
I often get asked for advice by those who are just beginning in real estate.
One of the most important messages I have for them is that property management is not a mistake-free zone.
It is all about doing the little things well and not fretting over the inevitable issues that will arise.
Here, for property managers – and their bosses – are some of the simple but very important lessons I learnt during my time in the industry.
STOP MANAGING FURNISHED PROPERTIES (UNLESS YOU ARE GETTING WELL PAID FOR IT)
As a consultant, I am constantly hearing complaints from property managers about dealing with furnished properties. I am not talking about high-end, executive or luxury furnished properties, but about older properties where the owner has dumped all the old furniture they don’t want any more in order to get another $30 per week in rent.
STOP MANAGING ‘DOG KENNELS’
We all know those undesirable homes, storage sheds and lock-up garages that we have under our management. I would encourage principals to have a look through their rent rolls, identify those properties and then get them off the roll. They are not good for your business reputation.
STOP DISCOUNTING YOUR ASSET
Your asset in property management is your rent roll, and the value of your rent roll is based on your management fees. So, it frustrates me when I hear that principals are discounting their management fees. Personally, I am against discounting. But if you are ever tempted to do so, the last thing you should discount is your management fee because you are not only discounting your cash flow, you are also discounting your asset. If you want to offer a client or potential client a discount, a better option would be to waive or reduce one of your other fees.
STOP MANAGING PROPERTIES IN AREAS YOU CANNOT PROFITABLY SERVICE
While technology has expanded the geographical boundaries of property management, I encourage principals to think twice when an owner wants to give them a management that is an hour and half’s drive from the office.
NO WEEKLY RENTS
There are still many agencies that are allowing tenants to pay rents weekly. Just recently, I was working with an agency that had more than 800 properties on its rent roll in suburban Sydney. More than 90 per cent of the rents were being paid weekly. Why would you want to put yourself through the pain of 52 transactions per year when you could do 26 or 12? It doesn’t matter if you are from Cairns or Karratha; there is no reason to be taking rents weekly – especially when you consider the bank transaction fees you are paying.
STOP DOING EXTRA THINGS FOR FREE
The public is now used to the concept of ‘user pays’, so the fees you charge your clients should be commensurate with the amount of time you need to devote to servicing their needs. If clients want more ‘touch time’, they should pay more.
STOP HIDING FROM CUSTOMER COMPLAINTS
Some bosses get themselves a nice little office with a door and they keep it closed in order to hide from customer complaints. It is important for bosses to get out there and be ready and willing to sort out complaints as soon as they occur. As a business owner, you can turn customer complaints around purely from your position of power. Clients and customers like to talk to the person at ‘the top of the tree’. I encourage bosses to get out of their offices and sort out complaints eyeball to eyeball, rather than by email or phone.
Leading Property Managers of Australia