As luck would have it, the first year of the GFC was Cathie Crampton’s first year as a property manager. She recalled how she still added $420,000 to a rent roll during this period.
In a recent episode of REB’s Property Management Excellence (PMX) podcast, LJ Hooker head of property management Cathie Crampton joined REB director Alex Whitlock to detail how getting the fundamentals right and doing the work consistently held her in good stead even during one of the biggest economic upheavals the world has ever seen.
While sales agencies across Australia watched their commission lines dwindle in the first year of the Global Financial Crisis (GFC), Crampton was running a property management business that built momentum. She continued to do what she had always done: reviewing rents, sitting with owners at lease renewals, and evaluating every property in the portfolio against the market it was operating in, not the market the owner had bought into.
By the end of the year, she had added close to $420,000 to the value of the rent roll. Funnily enough, she noted that she didn’t even notice it happening.
"All I did was make sure that I reviewed all the rents and I had oversight over the lease renewal process," Crampton said in the podcast.
Crampton stressed that the work was unglamorous. She assessed every property in the portfolio against current conditions, not just those due for renewal. They included properties where rent had drifted under the market over successive lease terms because nobody had scrutinised those investments.
Crampton was diligent in showing data to her owners and their desired next steps. She had honest conversations with tenants about increases that were grounded in evidence, not speculation.
She said that this process work sounds boring because it is – and that is exactly why so few agencies do it well.
Working against the grain
What she did not factor in, when she started, was the timing. The conventional wisdom in 2008 and 2009 was to hold rents steady so tenants would not leave, even as sales were under pressure.
Crampton said her approach ran counter to that instinct. She was not pushing rents aggressively. She was ensuring that rents reflected market conditions, and providing owners her reasoning for increasing rents when required.
Her approach paid dividends, with her portfolio revealing the cumulative effect of methodical reviews across hundreds of properties at the end of the year. This was just the residue of doing the work properly.
Crampton's reflection on the period has stayed with her, and it is the line she keeps coming back to when she talks to PMs today.
“Anyone who operated during the GFC will truly know the value of a rent roll because it was the only repetitive consistent income that pretty much anybody had,” Crampton said.
“There is still so much opportunity to improve not only just the value of the asset, but also the management fee income and/or other ancillary income that comes into your business.”
Be diligent with reviews
The lesson, in her view, is not that rent reviews are a growth strategy. They are not. They are a value preservation strategy that quietly generates growth as a byproduct of being done at all. Most agencies treat them as an administrative task – something that happens at lease renewal if there is time, gets skipped if the market feels uncertain, and never quite cohere into a discipline.
Her view is that the agencies that build a systematic review process – every property, every year, against current conditions – are the ones that hold their rent roll value through whatever market they happen to be in. The ones that do not are leaving money on the table they will never see, because the loss is invisible.
Nobody complains about the rent that was never increased. The owner does not know what they did not gain. The agency does not realise it has been giving away revenue, year after year, until someone like Crampton examines the figures and calculates the potential returns that would otherwise have gone unnoticed.
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