If you are a Principal with a rent roll, you will need to get into the drivers seat of your business to finish this financial year a winner. Story by Simon Cox.
I am sure that by now you have written all your property management plans for the year and invigorated your teams to achieve greatness in 2012. However, in order to achieve greatness you will need to get out of the back seat and really drive your property management team.
At this time of the year we all hear the great forecasts like the ‘this year will be better than the last’ or ‘2012 will see the return for profits in real estate’, and I am not one to dampen that positive drive we all need, but let’s face it, the best thing every Principal of a business with a rent roll needs to do is ‘take control’.
Re-invent yourself with knowledge and understanding of the rent roll, as it is the economic engine of your business. Make sure that in 2012 your knowledge of the rent roll ’s expenses, income and growth is greater than your employee’s knowledge. Approach your existing landlords with purpose and get into their mind that having one investment property is not enough and you can help them grow their financial wealth by adding more.
Here are some simple facts that should get you motivated:
- Rental property growth across Australia is still moving forward. For example, Queensland is expecting an average growth forecast of seven to 10 per cent in rental prices for the financial year, which can only mean one thing – more commissions!
- Almost 90% of rent rolls have no involvement by Principals. Here is a question for you – ‘Would you lend your Ferrari to a staff member without any thought or worry?’ No! So why do you have your rent roll managed by staff without your involvement? Your rent roll will be your biggest asset in 2012; and the one thing that will mature in value throughout the year in both cash-flow and asset value, so look after it.
- Consumer confidence will continue to be a hard thing to gauge. Expectations will always increase as people expect more from your services. Be prepared for more demands from all parties in 2012 and don’t let it be a one sided street, you also have the right to have higher expectations and demands from your clients, so raise the bar, increase the fees if you are doing a better job now than you did in 2011 and make sure you deliver.
Now that you know what could motivate you to drive the business further in 2012, it is now vital that you have a clear understanding of critical areas that are often overlooked by Property Management teams. You do not need to be an expert in these areas but make sure you know what to look for so your staff can act in your best interests.
The critical areas that you should be looking at are:
- Rent increases – weekly reports are vital to ensure that the staff have attempted to gain market values on all renewal of leases. Don’t assume that your staff are on the ball as in most cases I find rent rolls are undervalued with no firm strategy to increase Property values in line with market trends.
- Days on market – Keep your staff under control during the period of a property vacancy. The risk applies to both you and Landlord when a property is empty, so daily summaries will be needed on activity, lead generation for tenants and opportunities to resolve the income losses. You should be all over it; much like when a property is on the sales market.
- Enquiry management – Get your staff to record enquiry rates, sources of enquiries and get a weekly report so your business is not missing out on opportunities. Enquiry registers and website reports showing the interest in your property listings are a good way for you to see if your staff are working hard on all opportunities.
- Vacates – almost eight out 10 vacates have the potential to end in a dispute. Disputes take time, energy, and resources away from growth. Manage these carefully, ensure your staff communicate effectively and get involved with the process to resolve it quickly and get the staff back on track. Principal involvement in this process can resolve issues quicker. That is a fact!
Now, whilst this might appear to be all too hard, think about the consequences and affect it has to your business. Assets are hard to build and managing them is important to your future plans, so focusing and driving your asset to success can be the most rewarding result you will ever achieve in Real Estate. Being in the ‘driver’s seat’ means one thing – You decide where the business will go!