To strengthen their relationships with clients, property managers should utilise the recent tax changes as a touchpoint and demonstrate that they can continue adding value to assets under management.
Just weeks after the latest federal budget decision to slash negative gearing and the capital gains tax discount, property managers (PM) have been warned they must utilise the reforms as a chance to add value or risk losing clients.
Managed head of finance and compliance, Alexander Laureti, said that while the recent tax changes announced in the latest budget seemed “catastrophic” for property investors, the truth was more mundane.
He said that while the new tax rules were a lot for PMs to digest, the role remained fundamentally the same.
“Tax is a cost of doing business, but it’s also an opportunity if done wisely,” Laureti said.
According to Laureti, PMs needed to be proactive and use the tax reforms as a touchpoint for client consultations to ensure they were maximising their relationship.
With the reforms having different impacts depending on the investor, Laureti said that PMs should understand how their clients typically acquire properties and prioritise communication with those most affected by the changes.
By understanding the types of investors and their portfolio goals, Laureti said PM could use the information to inform their management strategies.
“Knowledge is power, and at the end of the day, if you can help business owners understand their numbers and the metrics of their business, they can make better decisions.”
Laureti said that PMs were excluded from strategic conversations with investors about their wealth-creation plans, despite playing a pivotal role in managing the asset.
He said that if investors hoped to maximise the returns on their assets, PMs should be heavily involved in the strategic conversations.
“PMs have the opportunity, just by the nature of the way that they work, to have more touch points with owners and their tenants,” he said.
“Touch points are opportunities to add value along the way. If you can find a way to integrate extra value, you can really do great things and build that relationship.”
Laureti said that a stronger relationship would benefit both parties.
While owners would receive enhanced service from their PM, PMs would have more information and be able to make more informed decisions to guide the portfolio’s growth.
According to Laureti, every existing relationship a property management business held was worth significantly more than its annual revenue.
He said that every PM’s client was worth about four times its cash generation, as referrals were often a means of acquiring more customers.
“If you protect that relationship and grow it, ultimately you are protecting your business value,” he said.
Additionally, Laureti said that the best agencies utilised property management as a major support pillar, driven by the consistent and reliable revenue it can provide.
“Because if you stop selling, your commission stops coming in, and if your number one agent leaves for a competitor, your sales are gone.”
“But if you have a property management business with a recurring income stream, something catastrophic has to happen in order for you to lose all of your tenants in one hit,” Laureti concluded.
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