Your Ideas on Better Service to Landlords?

[Rob Honeycombe]

If you could design a property management business from scratch what would you do? We're long term fans of Jan's and have recently joined the forum to hear and share ideas on property investment. Despite having 15 years in the industry I've just started a new agency and would love suggestions on how to improve on the current offerings to landlords from their managing agents.

I read plenty in here about wanting better communication and agents who'll actually do what they say they'll do - but other than remembering simple good manners we'd love to hear your suggestions!

thanks for reading

cheers
Rob

 

[Simon]

I think the major issue is that most RE Agencies treat the pm section as a bit of a sideline and hire people who are happy to earn what is a below average wage. I did a loan recently for a girl who is a pm. She seems very good at what she does but I was shocked when she said that even with the 100% bonus she confidently expects to hit for signing on new rentals he income will top out at $28K.

I think that the majority of complaints from landlords boil down to the skills of the pm. What can you expect when the pm is such a low earner. Surely if they were cluey they would soon move onto better paying careers? Even a hairdresser earns more ....

We have a local business here that just does property management. They seem very smart and organised and win award after award - not only for property management but all sorts of awards for local businesses, businesswomen etc. They charge no more to manage a property either.

Cheers,

 

[Xenia]

Hi Rob, I recently asked the same question on another forum. Some good ideas came out of it, here is the link:

http://www.propertyinvesting.com/forum/topic/25264.html

 

[alexlee]

A few things I've been unhappy with regarding my PMs:

1) They change PMs and don't tell me about it. A simple email would do.

2) Not keeping me up to date with lease renewals. I have to end up calling them. Again, a simple email saying 'your tenant is away and hasn't signed the lease yet' would have been fine with me.


One thing I really like is when I get statements in pdf form. In this day and age I think that's essential. I think PMs should send everything electronically: inspection reports, statements, scanned invoices, etc. For some reason even agents who email monthly statements don't send the annual statement in pdf form, which I can't understand.
Alex

 

[The Y-man]

One thing my wife said last Christmas (as we were doing our rounds to the PM's) - it'd probably be one of the more thankless jobs around - being the middle person between grumpy landlords and grumpy tenants....

Cheers,

The Y-man

 

[quintets]

Our PM uses her PM side of the business to train her daughter and other relatives. 'nuf said.

 

[mitta]

each inspection report from one of our PM's has a new A5 size colour photo of the front of the property which we think is rather refreshing. it's nice to be reminded every 3 months with a photo, you think wow that's our's, well not really it's the bank's.

also their inspection reports are extremely thorough in detail and we do mean thorough, it is about 4 pages in length and contains absolutely everything that you would want checked.

this particular PM certainly is a standout compared to our other PM's in regards to their inspection reports and this would certainly sway us towards who we would pick for the job with future investments.

regards

Mark

 

[mitta]

One thing I really like is when I get statements in pdf form. In this day and age I think that's essential. I think PMs should send everything electronically: inspection reports, statements, scanned invoices, etc. For some reason even agents who email monthly statements don't send the annual statement in pdf form, which I can't understand.
Alex

and also we totally agree with Alexlee, only one of our PM's email and that is only for the statement, I think we will ask all of our PM's to consider doing this.

Mark

 

[sailor]

I've had some horrors in Cairns, and consequently manage my own IP's that are close to home. Some of my horrors were:

• No property inspections
• No renewal of lease on expiry
• No thorough screening of potential tenants
• Tenants who disrupted their neighbours with wild parties, drugs and police visits.
• Forgetting the property was vacant! (Go figure!)
• Letting the rent fall into arears without follow-up.
• Lowering the rent without consulting me first.

We have a magic PM at Innisfail for our 4 IP's there. Her secrets to success are:

• She only selects tenants she would want in her own IP's.
• She sends .pdf statements at the end of every month.
• Rent is transferred electronically to my account every month.
• Inspections are done in a thorough and timely manner with written reports.
• She has an excellent network of tradies who are punctual, reliable, and reasonably priced.
• She emails immediately something needs fixing, with quotes she has already obtained, and she follows up to see the work has been done properly.
• She always has the next tenant lined up for when a property becomes vacant.
• She has excellent communication with the tenants, so they think she is wonderful too.
• When Cyclone Larry hit, she and her REA husband, visited every rental property, phoned all the owners within 4 hours, to give a report on habitability of the property, and helped those dehoused find alternative accomm. When I went down the following day, they had set up a dormitory on the lower floor of their office, for all the out-of-town property owners (from all over Australia), to stay, whilst they tried to fix their damaged properties.

Hope that helps.
cheers
Sharon

 

[duncan_m]

We have a magic PM at Innisfail for our 4 IP's there. Her secrets to success are:

• She only selects tenants she would want in her own IP's.
• She sends .pdf statements at the end of every month.
• Rent is transferred electronically to my account every month.
• Inspections are done in a thorough and timely manner with written reports.
• She has an excellent network of tradies who are punctual, reliable, and reasonably priced.
• She emails immediately something needs fixing, with quotes she has already obtained, and she follows up to see the work has been done properly.
• She always has the next tenant lined up for when a property becomes vacant.
• She has excellent communication with the tenants, so they think she is wonderful too.
• When Cyclone Larry hit, she and her REA husband, visited every rental property, phoned all the owners within 4 hours, to give a report on habitability of the property, and helped those dehoused find alternative accomm. When I went down the following day, they had set up a dormitory on the lower floor of their office, for all the out-of-town property owners (from all over Australia), to stay, whilst they tried to fix their damaged properties.

I'm gobsmacked! Sounds like the PM from heaven.. post her details! She deserves some Google Juice and referrals from here

 

[sailor]

Hi Duncan, Helen Hensler is a gem...wonderful lady...brilliant PM. But she only does properties in and around Innisfail, which is one of the reasons I bought my last IP down there. I've asked her if she can do my Cairns properties, but she prefers her own backyard. She and her husband Des, run a good show...very ethical, very helpful, very reliable. Happy with that!
http://www.hensler-realty.com.au/

cheers
Sharon

 

[redwing]

I think the cornerstone of a good PM should be Tenancy Management rather than Property Management as this is where the majority of issues come from and where most PM's fall down on the job..collecting the rent when all is going well is "easy peasy", its when a problem arises that a great PM *shines*.

In WA I think many PM's could take a leaf out of thier Eastern States counterparts; I mean photo's with your statement How much extra does that cost (its $2.50 per photo here in WA)

 

[thefirstbruce]

Can anyone with insight into a PM business or dept check these assumptions about how profitable such an operation is. I have assumed the operation is a dept within a REA office.

Gross Income
No. of rentals on the rent roll 120
average rent / week $250
week/yr 50
tenant turnover 1/yr
Mgt Fee 7.5%
Letting Fee: 2 weeks rent = 4%

= 120*250*50*(.075+.04)
= $171000


Expenses
Staff
- 1PM 45000pa*(1.25) = $56250
- 0.33 of a receptionist/PA =30000*.33*1.25 = 12375
Advertising $60/tenant change = 7200
Telephone $1500
Office Supplies $2000
Lease on Office Space 15m2@$300m2 = $4500
Travel Costs $5000pa
= 88825

Net Profit
= $82175

 

[mitta]

In WA I think many PM's could take a leaf out of thier Eastern States counterparts; I mean photo's with your statement How much extra does that cost (its $2.50 per photo here in WA)

at the moment we only have new properties, so there is no and there is no extra charge for this service

mark

 

[lizzie]

tfb - i'd say you're telephone and travel costs are rather low. i know my brilliant pm lives on her phone between landlords, tradies and tenants. i'd hate to see her bill per month. also, by the time you take in car expenses (tyres, insurance, green slip, servicing), and then petrol on top it would come out at waaaay more than $100/wk. i know my last full service with 4 new tyres came in at just under $1000 alone.

do you know any pm's that you feel friendly enough with the ask them these things?

 

[thefirstbruce]

Yeah Lizzie, you might be right about the phone.....but....I was working on around 1 call out every 10-15 minutes every opening hour of every week, for one staff member. When you consider that incoming calls about rental enquires are probably double to triple that rate, then I query whether I've underestimated. Suppose I haven't allowed for calls to mobiles though....

So let's quadruple the phone bill = $6000 pa

As for travel costs, I suppose a lot of young employed PMs would use their own car, and be reimbursed via employer and ATO on a per km rate. I know a couple of PMs and they never arrive in a company car. And they never seem too run off their feet when I have been in their offices.

Whoops, realized I left out of the gross income the kick backs/loadings on work by favoured tradies, locksmiths, and carpet cleaners....

Maybe some of the members who work in the field can illumine us.

I only did the exercise to gauge why PMs are so poorly paid. Can't see why they would be if they had a 100+ rentals on the roll.

 

[sailor]

I only did the exercise to gauge why PMs turn over so much, and are poorly paid. Can't see why they would be so poorly paid if they had a 100+ rentals on the roll.

I agree...even if we theoretically dropped the bottom line a few $K's, PM's are still making a good return on their investment in the PM business.

From my short experience with PM's, they seem quite disorganised...not following up and not doing their paperwork properly. Maybe their bosses are paying them peanuts (perhaps less than you estimated) and we end up with the monkeys!

cheers
Sharon

 

[thefirstbruce]

Sharon agree that most PMs are probably paid less than what I allowed for. Just used that figure to see if it was viable to pay them a reasonable wage.

Would also agree that being a successful PM means matured systems in place.......the right software would help tremendously in that respect.

 

[The Y-man]

Some thoughts....

Other oveheads - book keeping, accounting, legal compliance, tribunal representation.

At 120 properties, that would also be 240 half yearly inspections per year - so average 1 inspection per day.

...oh and 30% tax on your net profit

Your supposition as part of an exisiting REA would therefore include:

1. Office fit out, workstations, printers/copier/fax, and consumables.

2. A good internet connection and a hub to connect workstations.

3. Security for accepting cash rental payments.


Cheers,

The Y-man

 

[Peter_Tersteeg]

What I want from a PM is quite simple. I want them to walk a mile in my shoes.

This means that they how IPs as well and rent them through an agent. From this they learn they work for me, not the tenant and they understand that issues with my rental returns/vacancies/repairs etc can hurt my hip pocket.

I've generally found that PMs who have their own properties have a better understanding of what their landlords really need.