EXCLUSIVE: Eight industry thought leaders share their insights on the property management industry
IN AN industry first, Residential Property Manager has brought together some of the industry’s property management leaders to discuss, in an open forum, the major issues confronting property managers every day.
The following pages reveal some of the debate, thoughts and opinions from the roundtable, offering essential insights into the future of property management
1. How can you see property managers better using evolving technology?
DOUGLAS DRISCOLL: The key word there is ‘evolving’ – it’s important to see where we’ve come from as an industry. If you look at where we are today compared to just three years ago, it is a quantum leap. You’ve got things like fileSMART, PM BOSS, InspectRealEstate – there’s a whole host of these things – but the real beauty of technology in the property management space is that it is there to enhance efficiency. None of these things are gimmicks; every single one serves a purpose. And as good as technology has become, it’s all about the implementation – and that’s the key. If the person at the top, whether that’s the principal or the head of the department, doesn’t understand it, then they clearly cannot integrate it into a business. Time equals money, and once you implement these efficiency saving scales, you can obviously save a lot of money.
GERRI KEAYS: Exactly! We’re in a process-driven industry but we aren’t using technology to its full potential. We’re working on software at the moment where you minimise certain processes that don’t require individuality, like the arrears process could be almost totally automatic. There is no reason for any individual to pick up the phone and say ‘pay the rent’. There’s a process, there’s an end result and that’s it. That’s what we’re working on. So when rent is due tonight, at one minute past midnight a text message is sent and the next morning the property manager will open up and check their email and it will say ‘Begin rental process for 1 Smith Street’. The first thing you do is ring the owner and let them know you’ve already sent a text. The scripts are there, and the scheduled email makes everything automatic. It’s mind-numbing work that we should be able to completely do away with.
AMY SANDERSON: Another issue that’s been raised with technology is around the recent disasters. We’ve had earthquakes in New Zealand, floods in Queensland and fires in Victoria. We’ve had major issues in those offices, especially around file notes in office computers.
GERRI KEAYS: Since [the Queensland floods], we’ve had all our offices move to Google Cloud. It was probably the best thing that’s ever happened to us and we learnt from our offices that didn’t have that already in place.
2. How does your group go about helping its members/franchisees find good staff? And what can the industry do to ensure good people stay in the industry?
MICHAEL CONOLLY: We have a role in our business for a head of people, who is directly responsible for recruitment, for the culture and for retaining people as well. Keeping people in the business is all about the culture, so developing and training them and recognising their achievements.
I believe that recognition is a big part of retaining good staff, which is something we do at our annual awards night and through benchmarking and leader boards.
DOUGLAS DRISCOLL: When it comes to recruiting staff we talk about placing ads and hoping people flock to us, but we have to abandon this reasoning.
I think there are great property managers that we encounter every day when they serve us coffee, but we don’t see them because we are in real estate mode. We have to be mindful of that.
SANDRA LARKIN: That is true and then after you have found good staff, there is really that need for a solid induction and ongoing training. The registration course you do – I think it’s seven modules over four days, and only one module is property management – means a property manager really doesn’t come out knowing anything.
The real estate institutes are always trying to lobby the government to have that changed. But until then, it is so important to have ongoing training available for new recruits.
3. Is there room for better use of social media in the property management space?
VASILI HADZELLIS: The simple answer is yes. Social media needs to be seen as another tool to use to communicate with your clients. It is a great way to mass communicate with people who like you and are doing business with you, and it also allows them an insight into the business as well as you as a person.
I think social media has some great applications and Facebook is definitely one of the key ones that our agents are using. Initially, our offices all set up corporate style Facebook pages, but now we are seeing a lot of our agencies creating more socially engaging Facebook pages for their business. We have one office in New Farm, Queensland that instead of having the standard Richardson&Wrench New Farm page, has a page called ‘I love New Farm’ which speaks about what is great about New Farm. It’s a new way of engaging people.
GERRI KEAYS: Another interesting point is that as property managers we aren’t just renting properties, we are communicating the lifestyle of living in that home. There is a great agency in New York that uses social media each day to talk about something relevant in their area. One day they might do a video on a great coffee shop down the road or say, ‘Last night I took my girlfriend to a restaurant called…’. The audience are getting to know the area and the agent.
SEAN GREEN: It is the same concept of driving potential buyers or renters around in your car all those years ago – on the way to the properties you would be showing them great restaurants and shopping centres. Social media should be thought of in the same way. Putting open home times on your Facebook page is not going to interest anyone.
AMY SANDERSON: Social media is also forcing us to be more transparent with how we run our business because if you are not, there will be someone who will hold you accountable on
4. For the next 12 months what topics will be the main focus of training in your group?
KAYLA BISHOP: We are a registered training organisation at Harcourts, so training has always been really important for us. Our first focus this year has been business planning. In order to implement technology successfully it must be in your business plan and the property managers need to be involved in that. Time management has also been a big focus of the year, and technology forms part of the time management strategy
We have a two-day property management induction training course and we run property management workshops. They are relevant to what is happening in the market, such as current legislation changes.
We have a BDM club every two months as well. We deliver training in a variety of different ways, including webinars, head office training and going to our offices to deliver training.
SEAN GREEN: We try to educate our business owners on the importance of training. We actually put people on minibuses and take them around to certain businesses that are known for having large property management departments.
They sit there captivated, listening to their peers and the importance other businesses are putting on their property management division. It is office to office training and sharing ideas.
5. What fee structure do you advocate in your group?
GERRI KEAYS: We use a formula called the ‘water levels’. It is called ‘water levels’ because an agency needs to stay above a certain amount per year to keep their head above water. Each agency comes up with an amount they want to make from each property on their rent roll per year. Let’s say the water level is $1,200 per year – just a management fee. Using a formula, you can work out that if a property rents for $400 a week, the minimum amount you can charge is ‘x’ per cent. It has now put the fact that the owner isn’t providing a product good enough to negotiate with back on the owner – if they had a better quality product, we might be able to negotiate on the price.
It has been very successful for our property managers to have this tool because they can look at it and say, ‘No, sorry, we can’t do that’ and show the vendor. I think that is one of the most successful things we have done with fees.
AMY SANDERSON: When we talk about fees, one of the things I work hard on with our network is getting into the heads of the property managers that when they are talking to their prospective landlord clients they must be delivering the right message. I have three key things I work on with them, the first being communication – let people know that will be the basis of what our relationship is going to be and ask how they would like us to communicate with them.
The second thing is to do what you promise. The third thing is that our job as property managers is not about rental arrears or inspections. We have two jobs – it is about maximising our clients’ investment return and minimising their exposure to risk – and it just so happens this is made up of those other things. But that needs to be in your dialogue to prospective clients so they understand the importance of your role and how qualified you are.
MICHAEL CONOLLY: I think that is a great point. The qualifications a property manager must have are not reflected in their title and that is why we are getting rid of the senior property manager, property officer, portfolio managers and new client consultants. It is important to change that mindset and then develop through training.
6. How many of your offices advocate Landlord Paid Advertising (LPA)? What hurdles face the offices not doing so?
SANDRA LARKIN: Our franchise agencies are all individual, so some will do an all-inclusive fee which will include advertising and some will actually charge for it. So it’s a mixture out there, and this can be a real mind block for BDMs. When I started with Place 18 months ago, I had a lot of BDMs who couldn’t get their head around LPA, so we are now doing an all-inclusive. I put the management fee up because they couldn’t get the mindset right to sell advertising on top of everything else. In the beginning it did create challenges for us because I said to them ‘It’s this or this’. They went out and tested the market and when they came back they found that the all-inclusive ended up being more positive.
AMY SANDERSON: It has come down to putting a dollar value on those items that a property manager or BDM is essentially giving away for free when they slash prices on LPA. Outstanding advertising money is a huge detriment to a business.
VASILI HADZELLIS: I am very passionate about LPA. It goes back to a mindset and the property manager having the conversation with the landlord. People buy what you believe; if you’re sitting there demonstrating the reasons why LPA can maximise the potential of the income, get the best quality tenant and minimise vacancy, it is something they can’t do without.
7. How would you rank safety standards in PM?
AMY SANDERSON: It is certainly becoming something that is a bigger concern for me. Not necessarily within the offices, but with the clients my property managers are dealing with. At the moment I have been trying to engage with different tradespeople so they can offer our property managers a certain level of expertise. Take a property inspection for example – which I think is the wrong term – I can’t do a property inspection as I am not qualified. I can do a tenancy inspection and if I see something is broken, I can report it. But if I can’t actually see that it’s broken, I’ve missed it. Property managers can’t be all things. I have been very conscious about working with professional property inspectors or tradespeople about how we can package this stuff up so it is more palpable for a client to take so that ultimately, our property managers are better covered.
GERRI KEAYS: The only way we can increase safety standards in the industry is to educate our landlords to ensure their properties are of a safe standard.
The tax office have a yearly brochure called Renting Properties. On page 9, there is a list of what they call ‘Immediate Deductions’ and most of the things that we are talking about now are there. I recommend that best practice is that a property manager use a hard copy of the Act, with the Tax Office brochure when they meet with the landlord. They can use it to point out all those things, like cleaning or pest inspections that are almost entirely tax deductible. We need to learn to work more with the tax office for our owners.
If a landlord can see the deductions they are more likely to comply with safety standards.
8. What will the future of property management look like?
VASILI HADZELLIS: Around all the questions today there has been mention of technology playing a part and I think technology is going to underpin the future of property management. I see a place where the tenant or buyer is going to come into an office and choose which property they want to see and do it as a walkthrough, as opposed to needing to make a time with the vendor or tenant. It is a convenience as well; a tenant can see the property when they are ready, as opposed to Saturday at 10:45am. I see technology playing a massive part in our future.
MICHAEL CONOLLY: We should also be aware of what is happening in China at the moment, and the amount of money that we are going to see pouring into this country as we see the middle class emerge from mainland China. We are going to have a new homeowner, and that owner is going to be predominately Chinese. We are going to have a new type of tenant and that tenant is Gen Y and they will be focusing on lifestyle and not necessarily purchasing property. They say 18 months is the average lease, but this could become 24 months or more. So we will have longer tenancies and a change in demographic in terms of who our owners are. We need to learn to understand how to tap into the mainland China and south east Asia market.
GERRI KEAYS: I think the sizes of the rent rolls will double in the next five years. Macquarie Bank tracks rent rolls, and what happened with the floods in Queensland was that rent rolls doubled because a lot of the smaller companies went out of business and sold their rent rolls. So Queensland went from something like an average of 362 up to 480 properties, and that was in a five-year period.
KAYLA BISHOP: I also think with the introduction of the commission-only property managers we will see more flexibility for property managers in the future, especially as we still see a majority of females being property managers. I think that will grow as well and we will have to adapt to that.
AMY SANDERSON: I think another thing that will come is our loyal clients demanding something for their loyalty. ‘I’ve been with you for five years, what are you going to give me to stay?’ And they will want more flexibility around the fees.