DAVE SKOW is the owner of Wagga Property Management in the NSW Riverina. Grabbing an opportunity to open a property management only business in the area, he has grown his rent roll from zero to just over 500 properties in under three years. Passionate about growth, this is his remarkable story.
Firstly, Dave, tell us a little bit about your background.
I grew up in a town called Lockhart, population 900, on the western side of Wagga. My first job when I left school was in a little independent sales office. After a couple of years there, I moved to Sydney for about six years, working at the REINSW teaching certificate and CPD courses. After that I moved back home to Wagga.
I was the general manager for the RE/MAX office in town for four years, then it sold. For me, that was the catalyst for change.
Wagga is a great place to invest; the yields are good and growth prospects are strong. There are two big defence bases and a big university, so there’s always a constant supply of tenants. I was amazed that there wasn’t a property management-only business [there already]. Within the three years I had been thinking about it nobody else had, so I thought, ‘Well, I’ll do it!’
Your business is property management only; what are some of the things that really differentiate your business from others in the area?
I think it’s the things that come with being property management only – that is what gets people to call, or it gets them in the door. In hybrid businesses, the service in property management lacks in most cases. And most times it’s in the area of communication. For example, landlords not finding out their tenants were in arrears until the end of the month comes and they don’t get their money; routine inspections being done once or twice a year, maybe. Whereas we have a hard rule on four inspections every year, so our service levels are high. Our fees are high too, but you get what you pay for.
Your investors and landlords, are they mostly from Wagga or outside the area?
It’s about fifty-fifty. There’s a big chunk that do come from Wagga or within the Riverina District; the other 50 per cent come from Melbourne, Canberra, a couple from Brisbane, and scattered around other places as well. There are some investment groups that plug Wagga as a good investment spot, and we have good referral relationships with some of them.
You started your business from scratch. How has your structure evolved since day one?
We’ve grown rapidly so we’ve had to adapt at each stage. Right now, we’re at about seven staff, and pretty much portfolio-based.
Mind you, at very beginning we were task-based because it was just me doing everything in the first six months, until we got to about a hundred managements. When we put the first staff member on, we were more task-based because we were both managing the portfolio but doing different things. I was doing business things as well as repairs and maintenance and she was doing routines.
Then once we hired a second staff member we switched back to portfolio. And then, with the fourth staff member, we went back to task-based within two portfolios. So during various growth phases we’ve had a bit of a hybrid system to match the levels of staffing that we had at the time.
What do you think has been the main factor in your rapid growth?
Communication with landlords is probably the number one reason why we’ve taken over managements from other agents; out of that a big chunk has come from one or two. The main reason is not because they were dissatisfied with their way of doing things or the people that were doing it; it was just that they weren’t told where things were up to. We run almost 50 per cent on new business. That 50 per cent has come to us from properties previously managed by other agents. The other 50 per cent are new owners, or owners who are moving on, for example. So our whole system around managing property and all our procedures have all been communication-based.
We also don’t take on every management. There are streets and certain suburbs in Wagga where it’s just not worth our while. As an investor, if you bought a property without seeing it from out of town, be wary! We get people from Sydney who will pay $140,000 for a little ex-commission house in Ashmont which is surrounded by trouble. They get broken into when they’re vacant, and the windows are all boarded up. Sales agents sometimes don’t tell them that [laughs].
So you pro-actively educate your current investors?
Absolutely. At the end of the day, because we don’t sell homes, we don’t mind what people buy or who they buy it from because we’re not compromised by that. So if you come to us (and we get it all the time) and say, ‘Look, I’ve seen 1 Smith Street for sale’, or ‘I’ve seen this for sale; what do you think?’; we are limited in the advice we can give because we’re not licensed under the Financial Services Act. But we would say, ‘Look, this is about what you’ll receive in range, these are the elements that we manage there’. Or, ‘We don’t manage property there, and if we don’t manage property there, there’s a reason for it. Maybe you need to rethink your strategy.’
But even the landlords we’ve got, in terms of making improvements and maximising tax benefits on depreciation schedules and things like that, we point them in the right direction. We don’t advise, but we give them suggestions on what they should be looking at.
You’ve emphasised the importance of communication, how do you keep on top of communication with your owners?
We’ve got a 24-hour messaging system that we use, and there’s one person responsible for taking initial calls. If they are simple, they take care of them. If it’s more in-depth then they call on the appropriate person, even if it’s outside of hours. Sometimes it’s a simple phone call to the landlord to say we’ll get onto it in the morning. But there has to be a phone call. It’s the no-phone-call that can give you a problem! The one or two managements that we’ve lost have been from lack of communication, not letting the owners know what things are up to.
How big a role does technology play in your business?
A big role, but probably no bigger than [any] modern agent; I think that most agents should have our level of technology. We’ve got staff who work from home, or work part-time from home. Remote accessibility to our server and our systems is important, so we’ve invested to make sure we’ve got that access.
Outside of that we use the typical inspection apps; we use Console so it comes with the Live Agent inspections manager, which we use.
Have you had any success with social media as a marketing tool?
Huge, from a new business point of view for sure. We haven’t used social media for anything other than new business. But from when we first opened that’s been a big contributor to our quick growth. We have a monthly property investor update video that we use and distribute through our social media channels. We’ve used what good successful sales agencies are doing, in a property management context, and it’s shaking things up.
What about video?
We’ve been doing market update videos for about 18 months. Now people stop me in the streets! For example,
when I got to the bank last Monday someone said, “You’re the guy from the videos. I’ve seen them; they’re great,
they’re informative, they’re quick but they’re relevant.”
Looking back on your path to growth, is there anything you would do differently if you had your time again?
Not really. The recruitment of staff is the main challenge because, at the start, the business is heavily reliant on the income it’s making to be able to support itself. So putting that first staff member on, when you go from where you may be making a little bit of money to making minus money because you’re now paying a wage until you build up again. That’s always the tricky thing, that balancing act when you’re too busy not to recruit, but probably not busy enough to put someone on.
How do you know when to put the next person on?
Good question! I suppose you just know. I remember recently I picked up on the fact that service was starting to slip a little bit in certain areas. We’ve got a policy where the managing agent has to phone the landlord once they get back in their car after the routine. Not to give them a run-down, but just to say ‘I’ve just done the routine at 1 Smith Street, just giving you a quick call. You’ll get the report this afternoon’. It should be a 30-second phone call; it’s just another touch point with the landlords. Landlords love it, but when we got stretched from doing so many routines they weren’t being done. If you see things start to slip a little you need to act very quickly. You need to have the right staff and the right number of staff.
What are your goals for 2017?
Continue growth organically, although now we’re in a position where we’re probably going to look at acquisition. But there is limited opportunity, Wagga has only got so many agencies and so many rentals that you can buy, but we’d like to be able to grow through acquisition as well as organic growth.
I think now that we’re sort of nudging 500 properties, we’ve got financial capacity. We don’t owe anything; there was a bit of start-up capital that we invested, which I’ve paid myself back for. So now we’ve got an asset that’s worth about $1.5 million, and it’s unencumbered. I think that there’s benefits to use that kind of capital to acquire.
I don’t think that acquisition from the get-go is right for everyone, though. I’m not sure you want to go into this business with a half-million dollar loan to buy an ‘old’ rent roll. I think that if you’ve got the opportunity to build a bit of equity in your own brand without having to spend any money – apart from operating costs – I think that’s a good opportunity first.
What are you speaking about at the Growing Stronger Together events this year?
Growth, of course! Growth is the thing that I always talk about; it’s the part of business that I’ve really enjoyed. Being able to sign a piece of business over any of the competitors that we may also have been up against is very satisfying. I really beat myself up if we miss out on business. We’ve grown quickly, and
if I can do it anyone can. It’s just about engaging with people
– not so much about the listing presentation itself, or selling your services once you get someone interested; it’s getting someone interested. Getting them to recognise you as a presence, recognising your brand within the marketplace, and picking up the phone and calling you.