WHEN SCOTT MCELROY, managing director of hockingstuart’s Carlton, Brunswick, Northcote and North Melbourne offices, is hiring property management staff, he takes it very seriously.
“When the market is tough I need my property managers to be doing a great job, probably more so than my sales guys,” he says.
“The property managers are the income producing databases, the engine room for the business, the pay roll and rent roll – all of those things really do highlight the importance property management has for your business.
“When times are tough those businesses that have strong rent rolls will ride out the hard times.”
According to Mr McElroy, the high burn-out rate in property management stems from principals’ not selecting carefully the right staff at the recruitment stage combined with a lack of training and incentives to keep property managers motivated when times are tough.
“The hard thing is that without good training and without nurturing your staff there is a high burn-out rate,” he says. “It is a thankless job most of the time – you never get people calling up saying ‘I am having a great day, I hope you are too’.
“It is just one of those jobs that you probably need a thick skin for. You‘ve got to be someone that can take it on the chin; you really are in customer service, that is what it’s all about.”
FINDING THE RIGHT FIT
It is obviously crucial to find someone with the right skills to handle the job and who is suited to your management division, and to the company as a whole, says Mr McElroy.
“There is a list of skills that really make up a great property manager. Often they will be handling complaints so they’ve got to be good problem solvers and pro-active in fixing an issue when it arises.”
According to Mr McElroy, communication is key to a successful relationship both with tenants and landlords.
“The big challenge is communication,” he explains. “A candidate must have empathy and build a rapport with their clients, whether it is a tenant or a landlord.
“They’ve got to be able to find that common ground and be working for the owner, but at the same time to be receptive to the tenant’s needs and wants as well.
“So you’ve got to be a bit of a chameleon and work between the two quite well.”
Mr McElroy has been in the real estate industry for over 25 years, starting out as a property manager at age 18. Over the years he has seen principals make the same mistakes again and again when hiring property management staff.
“They rush the decision and they often don’t interview a person more than once,” he says. “They need to take the time, and if that means interviewing someone two or three times then so be it.
“It is very easy to put someone on, but very hard to put them off.”
According to Mr McElroy, the easiest way to ensure a potential employee will fit in with the culture of the office is by getting another colleague to interview them.
“It is best to give someone a trial to see how they gel with the team or to get someone else in the team to interview them after you to get a second opinion.”
According to Mr McElroy, principals also underestimate the value of the asset they hand over to new employees.
“The decision to hire a new property manager should be regarded with the utmost importance because they’ve got to be somebody that you can hand over a very important asset to,” he says.
“A principal could be handing 180 to 200 properties to this person. How much is that portfolio worth to a business?”
Estimating that figure at between $600,000 and $700,000, Mr EcElroy says the person needs to be trustworthy and to understand what that portfolio means to the company.
“If you look at multiples of what a rent roll is worth, a typical property brings in around $1,000 a year and a typical multiple is around three times what the recurring income is,” he says.
“So, if you are talking $3,000 a property, multiplied by 200 properties, that equates to $600,000.
“We are putting a lot of responsibility on – sometimes – a 23 year-old’s shoulders. They’ve got to be someone that understands the importance of what they are doing. You want them to build a business around themselves.”
Mr McElroy believes too many principals undervalue the importance of a good property management division. In order to motivate his staff he uses structured incentives and ensures there is a solid working and social culture.
“We do six-monthly discretionary bonuses – they range from $1,000 to $2,500 each six months – for doing the job.
“If we think they’ve done everything right, we’ve had no complaints and they are up to date with all their work, then they get the maximum bonus,” he said.
Nurturing current customers is paramount for Mr McElroy’s Melbourne-based businesses. Giving a property manager an incentive to ensure their client is well looked after is simply good business, he believes.
“Another thing we do that other agencies don’t, is that if a property is sold off the rent roll, then we give the property manager who looks after that client a percentage of the selling fee as a bonus for nurturing that client to the point where it hasn’t been difficult to list,” he says.
“That is another reason the manager will nurture that client more. If they treat the client well then they know there will be properties to sell and a bonus coming their way.
“Quite frankly, I want property managers to earn as much as sales guys can earn. That is my ideal scenario.
“I don’t want property managers to be the poor cousins of sales.”