While a lot of property managers dream of rinsing their hands of difficult landlords, one Melbourne office kicked a third of their clients to the curb and have been reaping the rewards ever since.
Director of Melbourne-based Marshall White James Connell said that while the property management department is not his company’s focus, a recent overhaul has seen profits sky-rocket.
“After looking at our rent roll, we realised that 70 per cent of our profit was coming from half of the properties. That means that 30 per cent were taking up half of the resources needed to run the property management department,” Mr Connell told attendees at yesterday’s Ideas Exchange in Sydney.
“We were gaining and losing about 17 properties a month, so we were stagnant and needed to do something to inspire growth.
“We learnt that you need to stop thinking that it’s the number [of the rent roll] that counts; it’s the quality of those properties.”
According to Mr Connell, if the management had a difficult landlord, was a bad property, or was on reduced fees, he sold the managements.
“Not only did that give us $1.4 million to invest elsewhere in the business, but we had freed up 50 per cent of our time and resources to cater to the clients we wanted to keep," he said.
“We sold a third of our rent roll, and immediately realised what we’d been missing.
“We didn’t have any more difficult landlords to deal with, we stopped the turnover in the team because it was a better environment, and our service levels jumped so we started growing immediately.
“Very quickly we’d made up for the 30 per cent drop in our rent roll size, and we turned the rental department from a nine per cent profit yield to a 30 per cent yield.”
But most importantly, Mr Connell claims learning to not just take on any listing and to keep your standards high was the best thing that came from the experience.