Over 95 per cent of rent rolls could be achieving better fees than what they are currently experiencing.
Most have the ability to boost their cash flow and profit margin, strengthen their business and improve it even further financially. However, less than 5 per cent of rent rolls actually do it.
In my experience working with property managers across Australia, New Zealand and now the USA, here are 10 factors that stop them realising their full income potential:
- The boss doesn’t believe it
If the ‘captain of the ship’ does not believe it is possible, then there’s no way the crew will come on board with it either. This is a big obstacle!
- The team is not on board
We’ve seen situations where a rent roll could be earning $50,000 to $100,000 per year more than they are and the fees could easily be improved, but staff members refuse to believe it’s possible. A boss once told me that a staff member even suggested they’d resign if the fees were increased!
- Cheaper agents
Another obstacle is the perception that there are too many cheap agents in the marketplace, and clients will get up and leave if their fees are increased. My answer to that is a question: Why haven’t they left already if there are cheaper rates to be had? The reasons they have stayed are the same reasons they will continue to stay, regardless of having to pay more. It’s their current peace of mind with your service that keeps them with your agency.
- Poor service
Most of the factors outlined in this article are mindset-based. However, if your owners are currently receiving a poor level of service and then you ask them to pay more, this could definitely result in losing your clients. Only if you’re offering a reasonable level of service, should you increase your fees.
- Too much PM turnover
Just like poor service, owners can also become unsettled if they experience too many changes of property managers over a relatively short period of time. This can lead to clients losing their peace of mind, and if you then increase their fees, this is what motivates them to weigh up their options and leave the business.
- ‘But my owners have been with me for years’
Sometimes people tell me their clients have been with them for so long, they wouldn’t want to upset them by increasing or improving fees. What they need to realise is that the longer they are with you and have peace of mind with your service, the more stable they are and the less they want to leave, even if they’re asked to pay more for the service that they are already happy with.
- Not committing fully to the change
Sometimes, when property management businesses do increase fees, they tweak one here and slightly increase another there, not wanting to ‘rock the boat’. A fee maximisation campaign can really only be done across the board, no more than every couple of years.
- Losing motivation
If you’re keen on this process, then placing it on the shelf to be done later will more than likely ensure that it will never happen. It’s interesting how motivation changes over time and distractions put it on the back burner. Time is a great way to reverse your motivation when it comes to improving fees.
- Business issues
Business crises occur every two to three months; it’s just normal. If you’re motivated, make it happen now! Don’t wait until everything is running smoothly. Once it’s done, it’s done – the results don’t reverse.
- New staff with smaller mindsets
Say your team improves their mindset and their fees, but two years later there is a staff turnover. Now you’ve got new team members that think your current fees are too high, and might start working the fees down to what they think is appropriate. Always train new team members about your fees and how to obtain them, particularly if they’re higher than those of other agents in the area. It’s only your team’s mindset that stops them.
If you improve your mindset, you can enjoy better cash flow, profit margins and financial security for your business.
Don’t let any of these 10 obstacles get in your way!