Business owners chasing bigger rent rolls could be overlooking a more valuable opportunity, with under-rented properties and poor financial visibility eating into potential profits.
Having played a pivotal role in rent roll management for a large network managing tens of thousands of properties, LJ Hooker head of property management Australia & NZ, Cathie Crampton, understands the typical pitfalls property management businesses face.
Speaking at the Property Management Excellence Conference in Sydney, Crampton said one of the most common challenges agencies face was misunderstanding the value in their rent roll.
By undervaluing rents on the properties they manage, Crampton said agencies often left money on the table.
“I have to be honest and say that almost every business I’ve gone into has a distinct portion of their rent roll that is under rented,” Crampton said.
“Never has it been more critical for you as a business owner or portfolio manager to be looking at what these properties are renting for and what the return is.”
She said that once PMs understood their return potential, they could begin to strategise on how to achieve it.
Rather than looking at top-line revenue, Crampton said PMs should focus on bottom-line profit as a performance metric, taking operating costs into account.
She said the ability to have complex conversations about the financials could create a point of difference
“It’s not enough to say that we’re the best because we have the best days on market. You need to actually be able to turn that into a financially oriented conversation that is a benefit to the client.”
Navigating the shifting sands
Crampton said the property management industry has undergone significant transformation over the past year, with the rapid pace of change leaving some PMs playing catch-up.
“I’d be surprised if anybody in this room isn’t feeling slightly overwhelmed at times,” Crampton said.
”But I also think it is giving us an opportunity, and I’m very big on seeing what we can do.”
Crampton said that, of all the changes seen in recent months, the government’s May budget had been a seismic shift in PMs’ expectations and how they operate.
“The biggest shift is in what we can do for our clients with the properties that they currently have.”
“It’s becoming important now for us to have that level of financial literacy. You’re not being a financial advisor and crossing that line, but we need to get really good at connecting the dots.”
Crampton said the best property managers stayed at the forefront of the changing industry and understood how to help clients navigate the market’s complexities.
She said PMs need to be comfortable having big conversations with landlords, particularly in the wake of sweeping property tax changes.
“The biggest conversation you can be having right now with your clients is ‘If you don’t need to sell, don’t.”
“Why? Because they get to keep all the benefits that still exist around negative gearing. So what we need to get great at is that total ROI conversation.”
The right tech to attract the right people
According to Crampton, the shifting nature of the property manager role has made it challenging to find the right staff.
She said it was hard to find people with the required skill set who were also motivated to do the job.
Crampton said that in order to attract new staff, agencies needed to look at how they structure their business.
“What we need is not to be more busy, but we actually need to be more productive with how we use our time,” she said.
She said AI could boost productivity, and PMs should use it as a tool to deliver more effectively.
“The smarter you are using tools like AI or using your tech stack, the more effective you’ll be, and the more valuable that makes you.”
By automating repetitive tasks, Crampton said PMs could create more opportunities to provide more value to their clients.
She said that while automation could create efficiencies within the business, agencies need to balance it with human-led workflows to maximise service quality.
“Automate the predictable, but elevate that which is going to make a difference. That means having those conversations that are going to make a real difference for those clients.”
“We’re advisory-led, but we’re tech-enabled.”
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