When you receive a new management enquiry are you excited at the prospect of a possible new property being added to your rent roll? Don't get caught in creating an unnecessary workload for your property management team
After more than 29 years in property management I have learnt that not all business is good business. I even remember the first new management that I ever signed up. It was a little studio apartment in the basement of the owner's fibro residence (the owners lived up stairs), which had the aroma of rising damp. All I could think of was that I was increasing the rent roll by another property. After all, this was the direction I was given by the Principal. Increase the numbers of the rent roll, I have a goal of 100 new properties this year.
Has your team discussed the types of new management properties that you should say yes to and the ones you should say no to? Does your team have a selection criteria that you consider before saying yes?
Following are some thought provoking tips to assist in building a profitable rent roll, with minimal stress and less time spent on non-productive hours in managing the property, such as excessive rent arrears, maintenance, disputes, complaints and tribunal hearings:
1) What is the condition of the property? Does it need painting, new carpet or an external tidy up? The quality of the property will reflect the quality of the tenant you will attract, which will ultimate impact on the time spent managing the property.
2) What is the weekly rent? Is it profitable to take on the property? Do you know the average costs it takes to manage a property? Our bottom-line report calculator (which is included in the PPMsystem) will reveal the average management cost per property as well as how many team members you need to manage the rent roll. If you would like a consultant to guide you through establishing your bottom-line report, please feel welcome to contact our office. Many of our member agencies are choosing not to take on non-profitable properties. For example: Properties with a rent that is less than $300 per week.
3) What is the landlord's attitude? Are they obliging to attend to your improvement recommendations of replacing the carpet in the lounge room or repairing the back step? If they are resistant to maintenance at the commencement of the management process, during the tenancy is going to be no different.
4) How far way is the property? Generally, if you don't have a plan in place to manage a wide geographical spread of properties, taking on management that are more than a 20 minute drive from your office can consume more travel time (showing properties and conducting inspections) than it is worth the fee. I do appreciate that in regional and rural areas this principle would not apply. And most importantly, don't forget the secret to working smarter not harder. It has never been about numbers. It is about profits.
400 properties @ $180 per week
Will generate exactly the same dollar value in commission as
200 properties @ $360 per week
Take the time to carefully analysis the properties that are consuming 80% of your time. Are they really worth managing? Maybe it is time to recommend that the properties be upgraded, get the landlord to sell and upgrade to a better quality property, cull and terminate the management or consider selling a portion of your non-profitable properties.
Running a successful property management department is all about working out how to work smarter, how to reduce your stress levels, how to reduce your workload and how to stream-line your internal processes.
And one last tip... When establishing rent roll growth targets focus on a dollar increase value rather than an increase in property numbers.
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