With so much going on each day in a hectic property management department, it can be easy for fees in addition to your basic management charges to go astray. Natalie Hastings, Director of Hastings+Co offers some handy pointers on making sure you’re earning all you deserve from the rent roll you care for so diligently.
A well-oiled property management department and water-tight rent roll are the jewels in every Real Estate Principal’s crown. Sales may certainly be the cream on the cake – but accruing property managements and streamlining cash flow is at the heart of a healthy estate agency. Here are my top 8 ways to make sure that you are collecting what you deserve in your PM department.
Accountability First – Focus On Detail
Ensure everyone in your property management team plays their role in recovering chargeable services. Implement internal checks and balances to ensure that you are charging all amounts due to you as per your authority – it’s amazing how much money is lost due to details being incorrectly entered into property management software. Most software systems automatically calculate and deduct fees as entered by your team, but it is often the additional fees (think letting fees, renewal fees, advertising, tribunal attendance fees and credit checks) that are overlooked and subsequently difficult to recover and account for correctly.
Harness The Power of Your Property Management Software
Now is the time to harness the full reporting capability of your costly property management software. Take the time to upskill yourself or your team with additional training if necessary – the return on investment will soon be apparent! Have your management team create a list of ‘newly leased’ properties each month. This list should be cross-checked with the relevant ledgers for letting fees, advertising, registered post, credit checks and any other ‘file start up fees’ relevant to your management authorities. In short – all properties on the ‘newly leased’ list should have a corresponding charge on letting, advertising and credit check internal ledgers.
Check, Check Again
Have your management team produce a list of tenancy lease renewals at the end of each month. This report must be cross-checked with your internal revenue lease renewals account to ensure lease renewal fees have all been charged and collected. It sounds simple, but with hundreds of properties on a rent roll, costly fees slip easily through accountability ‘cracks’. Train your management team to avoid a large amount of periodic tenancies. Such tenancies limit your ability to charge annual lease renewal fees, ultimately affecting your cash flow via lost revenue opportunity.
Cover Up Nothing and Clean As You Go
Ensure your property management team keep your software clean and bullet-proof by archiving all lost managements. A common problem for those evaluating the worth of their property management portfolio is over-inflation of net worth due to inflated portfolio numbers as a result of poor property management software use. Avoid such disappointment or embarrassment by ensuring no one tries to ‘cover up a loss’ by neglecting to archive lost managements!
Monitor Archiving Practices and Average Fees
Use your software system to keep an eye on archiving practise and average fees achieved in your business. Export management reports into excel, and filter to display any properties which have not earned a commission for the month. This lack of income might be legitimate – i.e. the property might be vacant, the tenant could be in arrears or advance – or it could be the direct result of a property loss. Such a report will also allow you to monitor your fees. You might think that your standard fee is 7% – but can you be certain your property managers are charging accordingly? Such reports can keep you up to date with crucial activity on your portfolio, removing stress and uncertainty. If you don’t know how to execute these functions, invest in software training now.
Tribunal attendance is costly – both in time of case preparation and attendance. Don’t short-change yourself by forgetting to charge for this special service. Set property reminders in your software system to print a report detailing all tribunal attendance each month. Cross-check this report with your internal revenue account for tribunal attendance, and don’t miss a beat (or a cent).
Every Little Bit Counts
Consider other fees for which you might legitimately charge, resulting from your time and skill yet unrelated to the management of your client’s property. Do you charge an End of Financial Year reporting fee? Consider doing so – many agencies charge between $20.00 and $50.00 for such a service. It all adds up – a portfolio of 350 properties could return $7,000 to $17,500 worth of revenue for an EOFY report service. Prioritise checking your managing authorities and ensuring your EOFY report fee is entered into the system. Overcome any landlord objections by highlighting that their own accountant would likely charge by the hour to collate and calculate each monthly statement.
Upskill Yourself or Get Help!
Consider engaging a reputable Real Estate Accounts Support expert to run a health check on your portfolio, ensuring you are charging for all the fees you are due. Such a professional will know how to maximise your property management software, creating further business efficiencies and even offering outsourced trust accounting to your business. I recently had the experience of working on a rent roll of 650 properties, helping them recover uncharged fees in excess of $20,000 – an investment of time well made on their behalf! Alternatively, an auditor, accountant or software support provider may be able to assist you streamline elements of your property management business.
There are lots of ways to maximise cash flow in your business – and not all of them have to do with cutting down on teambuilding activities or getting rid of company car parking! By taking the time to understand the tools you already have (think property management software), you’ll soon be able to identify weaknesses and inconsistencies in your portfolio asset. You’ll also be surprised at the amount of revenue due to you that is simply ‘lying around’, as yet unidentified or charged. Go forth and collect!