In part two of this exclusive RPM roundtable discussion, three industry figures look at expansion, management fees, incentives, team building and more.
Daniel Bligh and Kate Towerton believe in integrating sales and property management to create cross culture while Justin Spencer uses mealtime to create team bonding.
What is best way to expand a rent roll? Should property managers incentivise their tenants? Is there a right way to set KPIs and good company culture? Our roundtable tackles these questions during this riveting discussion.
The three property management professionals also share details on team building practices and growth strategies.
Kate Towerton: Do any of you market to your landlords to expand their portfolio? If so, how and has it been successful in growing your rent roll?
Daniel Bligh: We do a monthly newsletter that is PM specific. I know other agencies have a monthly or fortnightly newsletter that is sales-bias as opposed to PM. Our content is predominately PM content, which is great. We also have referral programs in place as well. If someone refers friends or family they might get a reduced commission or a small gift as an incentive, so there are various methods you can use.
Kate Towerton: Our BDM in Neutral Bay has been in the business for four years now, so he has a relationship with probably half of the investors in that portfolio. Recently we went through the prospecting process where he got in touch with every single landlord that he had brought into the business; just as a courtesy call to see how things are going, if they have other properties that we don’t have under management, and if they are looking to expanding their portfolio. I think as a side to that, align yourself with a good mortgage broker. If someone shows some possible interest in growing their portfolio but doesn’t know if they can do it, being able to make the suggestion, ‘property values have gone up and have you had your property revalued, perhaps you could borrow against it – so and so could help you with this’. You are also establishing a cross-referral relationship with somebody else that can feed business back to you as well by referral.
Justin Spencer: We have a projects department where we will do off-the-plan sales. Prior to our BDM moving into his new role, he was a client relationship manager, so he had the opportunity to go through our database, speak to owners and see what point they were at. We also do an hour, sometimes two hours, of calls every week to 20-40 owners, where we ask that question.
Daniel Bligh: How can BDMs and PMs stand strong on their management fees?
Kate Towerton: I think you have to understand what sets you apart from your competition. You really need to understand why you are better than that person
that is charging less than you. If you feel that you don’t do anything different than that person that charges five per cent, you are going to have a really hard time demonstrating that value.
Daniel Bligh: I think also educating the clients about what you actually do for them and having transparency around why they are being charged ‘x’ amount here, ‘x’ amount there. A lot of people think ‘oh you are charging me for that internet advertising, but isn’t that free?’ It is not; it costs us significant proportions of our bottom line to be on there.
Justin Spencer: I think if you don’t understand what you do as a business, you can’t expect the client to understand what you do as a business. That is where you won’t get the fee that you are asking and that is where they will negotiate. If you can explain yourself concisely and say ‘this is what we will do’ and obviously deliver on it, that is where you will get the desired fee or you won’t have to negotiate as much.
Kate Towerton: I think breaking it down to a really distinct calculation for some people is the key, so if your average rent is $500 or $1000 a week, know the difference between what five and seven per cent is. Where I was before it was $500 per week as an average, so I knew that it was only $11 a week difference in management fees. ‘Our vacancy rate is half of the local average, which means we are leasing property twice as fast as the average agent in this area, so can save you anywhere from $500 to $1000. We have already become better value than the person who is charging five percent. On average our rents are $21 higher per week than the average agent in this area’. For some people that logic is what will do it and for others they want to win and you need to work a different way.
Kate Towerton: Do you provide any incentives for tenants? Any kind of mini-competitions, such as tenant of the month, to keep your tenants on side?
Daniel Bligh: A couple of years ago, I tried to introduce an incentive between tenants and landlords of a cash-back deal. If they provide great access and great presentation while we are trying to relet the property, they get a cash-back deal where they’re given a certain amount of cash if the property was leased while there was still tenants in there. That was a proposition that a few landlords were pretty keen on and that just reduces vacancy altogether. The incentive was to minimise vacancy for the landlord, minimise disruption for the tenant and the tenant gets a bit of cash back as well.
Kate Towerton: In the past we have done a gift card referral program where if you have got your own property for the tenants or if you refer a friend across, but nothing structured at the moment.
Justin Spencer: We are the same; we have nothing structured. If it comes up we might give some free management fees or something like that, but we just do our best to avoid it at this stage.
How important is team building within your offices?
Kate Towerton: The larger your team is, the more important it is. Between PM and sales is a really key part of it as well; integrating the two teams so there is not that split. It keeps everyone cross referring. You generally spend more time with work people than you do your family, so I think people tend to connect more when you remove the work part of it. We do things as a business and then things as a property management team.
Justin Spencer: We will do a lot as a property management team. Our whole business is based around food. Monday’s are ‘deli-meat Mondays’, so we will have meats and cheeses and everyone can eat that around lunchtime. Fridays are ‘Fat Fridays’, so there is always some special treat in the afternoon. There is Mad Mex around the corner, so last week was the kilo burrito challenge. Then we do team building exercises as an office, so every year we do a lock-away, which is where we go away for the weekend and do training. It is a good chance for everyone to get together. At the moment we are trying to convince the department head to let us go go-karting.
Daniel Bligh: From my previous experience there was kind of a disparity between the sales team and the property management team, which actually drove me out of the business in the end because of that culture. I think it is really important for agencies to combine both the sales and the PM departments because it is so crucial to one another, so long lunches, having beers and having laughs.
Do post office box drops still reap results for your business?
Kate Towerton: I think yes, but you need to have the capital to do massive volumes. My husband is in sales and he does a lot of it. You have to look at the ratios. We did about 3,000 drops and we got one or two here or there. From who I have spoken to in the industry, if you get two or three leads out of 10,000 drops, then you are doing pretty well. And that is a pretty serious investment when you are looking at printing and delivering. I think you need to have exhausted other avenues first. We have a sales team and a database that is nine to 10 years old; there is so much already in the business before investing a huge amount in marketing to people that you don’t know if they are investors. For us, we have just decided to focus on other things first, with some letter box drops.
Daniel Bligh: There is so much junk mail that I don’t think a broad campaign with 10,000 letter box drops is effective. I think targeted to buildings and streets where you have just leased a property is crucial, because everyone wants to know what the neighbour across the hall has gotten for their rent per week.
Justin Spencer: Only the sales team use the letter box drops. In terms of PM marketing, we don’t have too much in place. We still use the local paper. Every now and again we might put some information on the team as a whole, along with sales listings as well. Being the size that we are, without sounding arrogant, it is almost like an attraction business. With our presence on the internet, we use the ‘feature’ listing for everything. Even if the landlord does not pay for it, we will still feature list it. At least that way if you do look at Parramatta as a suburb, in theory you should see LJ Hooker. When people are looking to rent their house out, they will see most of LJ Hooker, make that inquiry call to us and it goes from there. Most of our BDM leads come from the phone or sales referrals.
Justin Spencer: How important is it to have KPIs in an agency?
Kate Towerton: I think it drives results. For the BDM side of the business, it is an absolute no-brainer. We introduced new KPIs at the beginning of this year and saw the performance of the portfolios increase as soon as we put that competition out there. It benefits the satisfaction of the staff, it benefits the results for the landlord, and it keeps people accountable for what they are there to do. I think it is a constant process that evolves throughout the year. We track everything on a weekly basis so that it feeds up for our monthly reporting, and we amend things if necessary. We have changed a few things over the last three months. The more we have got into it then the property managers actually wanted additional KPIs. If you can see that the dollar value of arrears is quite high, they also want to see how many properties that is, or what percentage of the portfolio that is. Then it gives you a true idea if there is one outlier or if it is a whole range of general results that are leading to that. We had no resistance with the team; it actually spurred them on and they wanted to excel.
Justin Spencer: We run ours similar. We will have ‘weeklys’, which we will go through at the weekly meeting; ‘monthlys’ where we have one-on-ones amongst the teams; and ‘quarterlys’, which get reviewed as well. They are always changing. There is no real set date that they get reviewed, it is just depending on your progress as you go along.
Daniel Bligh: Every week there are certain things to look at – arrears, new business, phone calls to tenant and landlords. All of these things are done on a weekly basis. Time set aside to look at these things is crucial and consistency is crucial. There is no point doing it one week here, one week there, and then all of a sudden you lose focus on what you are tracking, so consistency is crucial.
What areas of property management do you think are lacking the most when it comes to education and training?
Justin Spencer: For me, the entry point. I think it needs to be tougher to get into the industry, rather than just complete a certificate. I went through a traineeship, which went on for 12 months and that was through REINSW. The information that I got out of that helped more so with the day-to-day than just your certificate does. The certificate was just the starting point, so I think the entry point to the industry should be harder.
Daniel Bligh: It is too easy to get. Anyone can do it without doing it properly. That is why you see a lot of agents that are not really growing from that point, because such a low bar is set. They get the certificate and go, ‘what’s the point now in expanding my knowledge? I have already got a job, I am getting paid.’
Kate Towerton: The certificate of registration is very heavily legislative-based. It doesn’t give you any on-the-ground training or prepare you. I found when I first got into real estate, I did my certificate registration and you don’t identify with anything in that. Then when I came back to the industry and I had already had that experience, I identified with what they were actually teaching in day-to-day situations. Because it is a requirement to get into real estate, you do your certificate first, and you can’t relate that text book information and prepare yourself to what you are getting yourself into. I think over the last couple of years BDM training has come to the forefront.