What’s your property management portfolio worth? To many agencies it’s a pain, but it should be a gold mine says Dawie Verryne, CEO of Property IQ.
In Australia there are anywhere between 380,000 and 550,000 residential property sales per year. On average, 30% of those sales are to first home buyers (the current figure may be greater). So who are these first home buyers? Usually they are renters.
Where do your tenants go?
How often do you lose tenants because they have bought a house? How often do they buy through another agency? Generally, the first time a property manager knows about tenants buying a house is when they decide to leave.
Wouldn’t it be better to sell the tenant a new house and make a sizeable commission – certainly more than you make finding a new tenant? Why wait for someone else to take your tenant away from you? Simply change the relationship between you and the tenant – make them a happy buyer.
Who’s ready to buy?
According to the Bureau of Statistics, roughly 70% of all first home buyers are 34 years of age or younger. They include singles, couples and couples with children. Then there are those who are not first home buyers, but renting for any number of reasons. You can imagine how many property sales are slipping through your fingers.
What can you do about it?
Make your tenants’ feel comfortable about the prospect of purchasing a house in the future. Ask them when they are signing the Tenancy Agreement: “When do you think you might like to own your own home?”, or put the question on the Tenancy Application Form. Then:
- Let them know that you are available to discuss such a prospect
- Allocate each sales person to a portion of your tenant base
- Have them follow the tenants up on a regular basis.
Double your money
What will landlords think when you sell a house to tenants? Firstly, the landlord was going to lose them anyway, as the tenants were ready to buy.
Secondly, why can’t you sell them the landlord’s own house? When you think about it, the tenant is happily settled, usually in an area they like, and not relishing the idea of moving since it’s such a drama.
If you sell them the landlord’s rental property, they are likely to pay a higher price than on the open market. Then you can sell the landlord another rental property…two sales for the price of one!
Even if you don’t sell the tenant the rental home, it is easy to forego the re-letting fee to the landlord as you’ve made a good commission on the tenant sale. On top of that, your company is in complete control of the timetable (sale and re-letting).
So, the key message of this? Make good friends with your tenants today. They are your buyers of the future.
Dawie Verryne is the CEO of PropertyIQ and brings a solid understanding of software, IT and internet-based business models to his role as CEO of PropertyIQ. A joint venture between CoreLogic and Macquarie Bank, PropertyIQ gives property professionals a single operational view of the industry and their business through an integrated, cloud-based software platform. Accessed anytime, anywhere, and on any device, PropertyIQ provides greater insight to improve efficiency, profitability and professionalism.