Agents looking to grow their property management business will need to have a realistic budget and resources in place, one industry pundit has claimed.
Over 80.9 per cent of the 262 respondents of a recent Real Estate Business straw poll said they will look to boost their property management business over the coming 12 months.
RUN Property chief executive Rob Farmer told Real Estate Business that agents looking to boost their rent roll and gain a sizeable property portfolio will need to create a decisive plan of action and prepare themselves for the long haul.
“The key challenge that most agencies face when looking to grow property management is the cash flow in that first year,” Mr Farmer said.
“The cost of actually marketing, putting on new business staff, paying commissions etc. probably means that in the first year you’re actually producing negative cash flow. It is not really until the second year that you will start to see positive cash flow generating from that management.”
However, Mr Farmer said those agents who do not stumble at the first hurdle and do pour the necessary resources into their business will be able to generate a positive cash flow stream through long term investment in property management.
“I think most agencies are absolutely capable but it just comes down to creating a plan and putting in the resources to focus on it, however as property managers themselves are so busy in the day to day managing of a portfolio, it is unlikely they will be able to fit in bigger-picture planning on the side” he said.
Mr Farmer said agents need to think hard about their long term objectives and create a business plan that sets out how they can grow their rent roll.
“You will need a realistic marketing budget and you will need to develop resources in the business that will focus on the property management, while monitoring the activity on a month to month basis.”