As a finale to Transform PM 2016 our four PM Directors were joined by Charles Tarbey, Fiona Blayney, Chris Gray, Richard Bray, Julie Davis and Neil Williams for an industry round table discussion on the future of property management and how to best serve the needs of property investors. The session was facilitated by Alister Maple-Brown of Rockend.
In this first video of our 8-part series, we focus on Investor Trends, including how you should improve communication and transparency – plus why you need to be the expert for your customer.
Alister Maple-Brown: Great to have everyone here. Obviously, it’s been a long and, no doubt, really rewarding journey for not also the directors, but also the coaches. I think where I’d like to start the conversation is to get a better understanding of our true customer in the property management game, and that is the investor. The voice of the investor is critical to your success, and understanding what’s important for them today and what’s important for them in the future. I’d like to start off, Chris, with you, if you could share your insights.
Chris Gray: Sure, so I’m the passive investor, and I guess I educate a lot of investors around the country on how to invest. A lot of people automatically think property investing, they haven’t got the time for it because they’re too busy with work and family, and they think managing a property is an absolute nightmare. So, the education is, it doesn’t have to be.
Quite often we speak to our investors and we say, “Look, if the property management maintenance is under $1,000, don’t even call us. Just automatically do it. If it’s over $1,000, then maybe send us an email, and then we might put our two cents in, but it’s not worth doing it.”
The main cost of holding property is all in the mortgage. The actual expenses and the property management fees are peanuts. Again, as I always say, whether you pay 4 per cent fees, 6 per cent, or 8 per cent, we pay 12 per cent in the UK. It actually, when you look at the dollar value, it doesn’t actually make any difference.
If you get a really good property manager, and they get you zero vacancy or get you a better tenant or an extra $10 a week or even just look after your investment better, it pays for itself. It’s trying to get people away from money-conscious-type things.
Alister: It’s about understanding what’s really key and important to them.
Chris: Yeah, and you’re the expert so you tell them. Even when it comes to buying for our clients, is we’re telling our clients what they should be looking for, not necessarily listening, which in customer service and sales is the complete opposite. “The customer is always right.” But if you set yourself up as the expert in your local area, there’s nothing wrong with dictating to the customer, “We can do that but we wouldn’t. This is how we’d run it.” So we want to take a lead role in property management.
Alister: Talking about lead role. I think Charles, it’d be great to get perspective from you across the nation and obviously over into New Zealand, as well with your exposure to property investors, and what they’re looking for, not only now, but into the future. Where you see that trending.
Charles Tarbey: It’s a matter of getting agents educated in terms of understanding there’s only two reasons why a property doesn’t either sell or doesn’t let. That’s the marketing is poor or the price is too high, and some people will sit on their price thinking that, “No, I need it. I need it. I need it.” What they don’t realise is that need for that extra few dollars could be the downfall of them being investors at all.
The issue that I discussed with the guys in the early days of this concept starting with Sam was the structure, I believe, of property management business, and I still stand by it. The fact that I believe the structure and the way we run our property management businesses is not correct. It’s not good for investors.
The biggest complaints I always get from landlords who claim that they are going to move to another an agency is that you’ve changed property managers too many times, or people don’t get back to us in time, or they didn’t do the inspection in time, or they didn’t notify us about this.
There’s this massive communication issue. It’s not that property managers are not capable of communicating. It’s in today’s world when everybody’s so busy, we’re all bouncing around and there’s this constant to-ing and fro-ing of leaving messages and emails and so on.
I think that the serviceability of property management needs to undergo a major overhaul. I think it really needs to come back to the fact that a landlord should be able to pull at any time and get whatever they want at any time from anybody in the business.
That’s the area that I keep trying to drive my business in and if Chris is an investor or he’s got a hundred investors on his books, he’s got many, many more than that. If they have problems and they ring him, if he can make one phone call and he has to deal a property manager who happens to be in a meeting or busy at the time doing inspections, well then down the line it goes and it reflects on his reputation.
Alister: What’s interesting when you dig down into that a little bit further because a lot of those needs for communication are when the property management doesn’t have as much autonomy to do more. So it’s you allow them to have more autonomy, potentially, some of the communication needs decrease as well.
Charles: We always talk about the fact that that same old line, “systems run a business and people run the systems”, and I think that the systems are lacking in property management. We’re still back in the days of when I was a property manager, back in the ’70s and we’re doing exactly the same thing. We’re doing exactly the same things and it’s not the issue of work ethic. It’s the issue of having information at your fingertips and the ability for a customer to get that information immediately.
Chris: Which is all about transparency.
Charles: That’s the part, yeah. That’s the part that I think we need to overhaul.
Richard Bray: To your point on property managers leaving agencies, do you think it’s the agency, not…? They feel like it’s poor service or their reputation that people are moving on and the property managers don’t wanna let the landlord know that now Suzie’s left and Bill’s in their shoes. Do you think they want to keep that away from landlords because it looks like their business isn’t sustainable or it’s not a good reputation of high turnover or do you think it’s just too time poor?
Charles: No, I think the biggest issue and again, something we discussed – good to see you in person, by the way. It’s something we discussed at that time about the fact that relationships with landlords and property managers can be either fantastic or very fragile, and if they’re fantastic that the more fantastic they are, which you think is a good thing, is also very, very dangerous because everybody’s trying to poach good-quality staff and I mean that. Let’s talk about it openly.
Poaching is massive in the industry and people get tickled with a feather and you notice how fantastic they are and off they go. They may have arrangements in place or contracts in place where they’re not supposed to contact landlords. But again, let’s be open and honest about it. It happens. Straight away, your business is at risk because there’s that relationship with the property manager, not with the business.
Alister: Fiona, moving into the real estate consulting work that you do. You, no doubt, see a lot of these trends and things. What more input can you provide, certainly around that communication piece, and that process of when property managers do shift and change and how to combat against that?
Fiona Blayney: I think that one of the initial pieces is that when I look at a consumer now and we talk about all the varying elements and I think the surveying that REA particularly has done has been quite eye-opening. When I look at it though, if you look at all business sectors, there’s an automated process, like a tech-based automated solution that is in place in many industries, not unlike ours. You see that in the insurance industry, as an example.
That might not even involve the interactions with a human at all. Then the second part is you’ve got a low-fee process with perhaps low service or minimal service, and then you’ve got a high-fee, high-service approach. I think in the main, for most business owners, even if they’re attempting to provide low-fee option, based on how they’re charging, they’re still presenting themselves as being a high-service based solution for a landlord.
The challenge I think that we’re all forgetting is that those same landlords, the technical for them is expected, so I expect you to be able to do all the technical elements of property management. I expect you to be able to price my property correctly, to be able to do my condition reports, get my vacancy down, maximise my returns, maintain my property.
The thing that I’m ultimately wanting from you now is I’m wanted service, and I believe that the service levels that we are setting expectations for our clients that we’re going to deliver, there’s very, very limited delivery of that service level across the nation really.
I think that, to Charles’ point earlier, and your point as well, Chris, is that it’s because our businesses are not structured to provide the service levels that clients are now expecting based on the needs for communication. You’re right. We’re setting our businesses up, these issues that we’ve created are self-created because you can only speak to one person and that same person is typically out of the office during routines, ins and outs. Maybe they’re doing a bit of backup support for leasing. When they’re not there, they’re meeting and greeting a new owner. They’re helping in accounts every now and again.
Even if you’re in a split system we’ve got BDs and leasing and PMs and back office, you’re still in and out of different functions, and we’ve really got to break our thinking around how we deliver the service to our clients.
Communication, which is key, because that’s not the technical. That’s the service piece. That’s how quickly can I get a response? How easily can I get access to particular pieces of data that, if I rang my bank, I’d get him in 30 seconds? How can I make happen?
And so for me, it’s about not just looking at, okay, well, they’re happy with what they’ve got ’cause they’ve been happy with what they’ve got since I got in in ’92. We’ve run the same things the same way, albeit some tech, thank goodness, from you guys. But otherwise, the systems, the processes, the methodology around how we operate a PM business has not changed.
Consumer sentiment is changing. We’re not moving with it. In the gross main of people in the room, we’re not necessarily dealing with the Chrises of the world in terms of their investment prowess and so they’re coming at us with a very different approach and so we’ve really got to step up our service levels if we wanna maximise our businesses going forward. Because consumer mindset is changing, just even based on satisfaction and that prevents us, obviously into the future. Structures have got to change. I’m very passionate about that.
Alister: If we can wrap up this section on investors, are there any final comments on where the trend is moving, what we’re seeing more of that we didn’t see even 12 or 18 months ago, that either investors want, need, think they want?
Philip Bell: I wanted to ask a question about cloud-based technology. Charles touched on it with communication. Communicating to your clients and have them having access like they would with their bank to where maintenance is up to where the tenants pay to, how much they’re likely to get end of the month in their account and all that sort of stuff.
I know in Albury, there’s five or six agents going to cloud property management software, and none of them want to give their clients access to it, which, to me, seems like a no-brainer that you give them access. It means less phone calls and everything else. Our mentality would be [to] give them everything because that’s gonna stop the inbound phone calls, asking questions you don’t have to answer.
Alister: I’ll make a comment on that because I think it’s really interesting, and I agree with all of the comments around communication and transparency. It is funny because a lot of businesses believe that cloud-based technology is the same process. It’s just deployed differently. Whereas the reality is it’s a completely new paradigm of how to communicate with people.
Every single person in Australia or adult in Australia uses Facebook or something very similar and that is a platform for communication that we didn’t have a number of years ago and it’s transformed the way we can keep in touch with each other and transparency with each others’ lives.
I think it’s an absolute shame that people are looking at moving to cloud, but not saying, “Hold on. This is my opportunity to fundamentally change the way I communicate with our customers.” It’s not the mechanism. It’s the value that it brings and the ability that it gives you.
Philip: I’m surprised that they don’t have a wider vision on it, though. Surely when they’re talking to whoever the software provider is, that it’d be the shining light.
Fiona: I think people have fear because they see it as their data but the agency sees it as, “I don’t want to give them access to my database or our database or our process.” Whereas, I see it as you’re allowing them, the client, that is, the consumer, access to their data in real-time so that they can access it when they want.
That’s that fundamental shift because my element is authenticity, love, and care. If I’m authentically caring about the client, then I need to provide the client what they want when they want it, not necessarily what I want for some – I was going to use the word ‘prehistoric’, so I will – prehistoric idea around what’s yours and what’s mine. Because it’s not. I’m providing a service. You want access to that. It’s great. We’ve all got access to everything. You’ve got to give the access.
Philip: Plus, that puts in another level of … compliance is not the right word, but another level onto the property manager to make sure that the job’s done correctly because the client’s got [it] all.
Charles: We have a seller login platform that I introduced in 2003 (web-based) a long time ago and I remember one franchise owner saying to me, “Why are you doing this? The vendor’s going to know everything that’s going on.” I said, “That’s the concept.”
What I found really interesting is the number of times a seller logs on. We could see when they log on and every time we did an EDM, it would show up on their file. Every time we did an advert, it would automatically show up in their file. Every time there was a web hit, it would show up on their file, and they were logging in quite religiously.
Chris: A counter-argument, though, is that we’ve heard from some property managers is they want the client to call because suddenly if everything’s automated, they never speak to the property manager. They can lose them straight away because there’s no relationship, so it’s maybe trying to have that balance. They can get the basic stuff.
Charles: You can have landlord functions. You can have landlord events. You can invite people to various things, whether it’s you coming to speak, Chris, but the analytical approach to property management really needs to be left to machinery, in my view. To software.
Fiona: Even, Chris, to your point there. To me, if I’m gonna build a relationship with my landlord, the relationship should not be based on me providing simple data, like process data, as in…
Chris: It’s more strategic.
Fiona: It’s strategic stuff. Yeah, it’s not about when your inspection. It’s the fact that we’ve done your inspection and we’ve done a full review of your property. We’ve looked at the leasing. We’ve looked at the rent. We’ve looked at the asset, everything.
Charles: What about, “Listen, the sales guys were telling me about a property they’ve got we think that might benefit you.” There’s no connection and I struggle in my business to get the connection between the two to happen.
Richard: It should be more of a portfolio management tool rather than on a single agency dependency. It should be the investors that put multiple properties in there. They should have market advice about maybe even from our area, how many people are searching in that area? How many people are applying for properties down there? Maybe how many people are going to open inspections.
Fiona: Imagine you had data where it was like, “Your asset has increased by this.” “We estimate your equity would have increased by Y.” “Using that equity, do you know you could buy X and here’s the local mortgage guy who’s going to be able to get at blah-blah rate.” “Let’s have a look at your review.” “Now, let me maximise your return by getting you into your next house,” because ultimately, all landlords want – the whole reason they’ve got it in the first place – is financial freedom, and we forget that.
Richard: When someone’s buying an investment property, they’re not buying it to be managed. They’re buying it to grow wealth and grow investment. That’s the biggest disconnect that I can see. It needs to be two parts to that role. You have my property investment manager and I expect you to manage the property and tell me investment advice to maximise the return on that asset. That’s the bit that’s left out.
Fiona: Maybe they’re two different roles.
Richard: You said it’s two different roles or it’s two different mindsets.