In a recent episode of REB’s Property Management Excellence (PMX) podcast, LJ Hooker head of property management Cathie Crampton said property managers talk to investors about everything except the thing they care about the most. She’s frustrated and she wants to see change.
Crampton has spent the better part of two decades watching property managers talk to property owners about everything except the topic that could drastically impact their investment journey: money and yield. After sitting across desks from PMs and owners alike, she has settled on a diagnosis that is harder to argue with than it is to fix.
"There will be a lot of PMs out there, respectfully, who don't even understand how to calculate yield," Crampton told REB director Alex Whitlock in the podcast.
"It's not a hard thing to learn."
That last line is the one Crampton keeps coming back to. She is not describing a complicated capability gap. She is exposing an industry-wide habit, in her view, of training property managers to manage tenancies, chase arrears, and coordinate maintenance, but never quite getting around to teaching them how to talk about the asset on the other end of all that activity.
The owner sees the consequence before the PM does. A monthly statement arrives without context. A maintenance request lands as a demand for cash rather than a decision about preserving the value of the property. A rent that has drifted under the market sits unreviewed because nobody has the conversation about why that matters in dollar terms.
While Crampton emphasised that none of this is malicious, she noted that it is what happens when a PM has not been given the vocabulary to position themselves as anyone other than the person on the receiving end of a complaint.
Pivoting the conversations
The conversation she said she wants instead is one rooted in outcomes — what the property is doing for the owner this year, and what it could be doing if a few decisions were made differently.
She highlighted that the numbers underpinning that conversation are not complex. There are four ideas PMs need to hold in their minds, Crampton continued, to form a deeper relationship with their owner, regardless of how long they have been in the role. These are yield, depreciation, equity position, and total return.
"The old conversation is 'we manage your property,'" she said.
"The new conversation is 'your current yield is 3.2 per cent — the market supports 3.8. Here's the opportunity.'"
That is the idea she returns to when she is asked what changes in practice. The first version of the conversation positions the PM as a service provider being paid to do a set of administrative tasks. The second version positions them as a property adviser who monitors the performance of an asset and recommends actions to bolster it. From the owner's point of view, the second PM is providing a greater value proposition.
Musing on why so few agencies reach this point, Crampton said that while PMs could easily learn these skills by doing research online, it is harder to promote a cultural shift inside the agency. PMs who may have been told that their role is to keep tenants happy and houses standing have to be retrained to think of themselves as the person managing an investment.
A warning against losing owners and PUM
Crampton signalled that agencies that build a financially literate PM team will charge premium fees and retain their owners even when a competitor knocks on their doors. The ones that do not will keep losing managements one phone call at a time, never quite sure why the owner left for someone barely cheaper.
"Yield is the lifeblood for every investor," Crampton said.
“Whether the property is mortgaged or paid off, whether it is a growth play or a retirement income vehicle, the monthly return is the thing the owner thinks about when they look at their bank account. Their view is that PMs who learn to talk about it confidently – and have a point of view on it – are the ones who will keep their seat at the table.”
The rest, Crampton concluded, could be left competing on price while the owner never quite feels that the PM’s value proposition aligns with the fees they charge.
Managed was built to help next-generation agencies win market share fast. It is the only comprehensive property management platform that exclusively delivers secure instant and automated direct payments from tenant to landlord, eradicating the need for a trust account.
If you'd like to find out how Managed can help power your growth call Conor on 0452 298 394 or book a discovery call today.