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Strong rent roll could be crucial to future profitability

14 April 2015 Elyse Perrau & Nick Bendel

Property management divisions have been highlighted as potential saviours that could help agencies withstand a feared property market downturn.

Property management divisions have been highlighted as potential saviours that could help agencies withstand a feared property market downturn.

The Reserve Bank of Australia put a possible downturn on the agenda last month when it warned that speculative investment activity could ultimately trigger a “significant” fall in prices.

Eview Group director Manos Findikakis said agencies could suffer in a future downturn if they don’t start giving their PM divisions the respect they deserve.

“More than ever, property management divisions shouldn’t be playing second cousins to the sales division,” he told Residential Property Manager

“We can’t lose focus on our property management division; we need to make sure they’re getting stronger and bigger, so the cash flow is protected in the downturn.”

Mr Findikakis said agencies will sometimes feel compelled to sell their rent roll during a downturn to keep the business afloat.

“That’s probably the worst thing you can do. You need to build up that asset so it has that recurring revenue so you can maintain your profitability,” he said. 

Mr Findikakis said the best way to grow a property management division is from the sales division. 

“Instead of the sales team focusing only on the next seller, they should make sure that every buyer and every vendor is asked this question: ‘Is there a property that our rental department could possibly help you with?’" he said.

“The way we do it is by incentivising them, so it’s an additional revenue stream for the sales team.” 

Realmark executive director Anita Percudani said it is imperative agencies have a strong PM foundation so they can manage properties that fail to sell during a downturn.

Otherwise, PM departments might struggle to handle an influx of properties that unsuccessful agents suddenly send their way, she told Residential Property Manager.

“If the PM department is not strong with process, skill sets and function, then of course they can’t cope with the number of properties that are coming through,” she said. 

Ms Percudani said agencies preparing for a downturn need to encourage stronger customer service within their PM team. 

Agencies also need to invest in proper training and staff retention to make it through tough times relatively unscathed, she said.

[Related: PM training lacking in a crucial area]

Strong rent roll could be crucial to future profitability
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