Unfortunately it has never carried a glamorous nor exciting feel to it in comparison to the hype and interest that the sales arena captures.
With the increase in profile and appreciation of Property Management departments by principals, there has been a vast change in mindset about Property Management positions.
Long-term we offer an opportunity for people to have ownership in the business. This is something that is normally only provided to high performing salespeople within a business.
Recognising that Property Management has undergone some huge changes but still has a long way to go, Leased Magazine invited four leading Property Management professionals to comment on areas needing immediate attention and make some predictions about the industry’s future. They were interviewed individually for this article but met up for a roundtable discussion in Sydney. You can see the video at eliteagent.com.
Chris Rolls. At just 34 years of age Chris Rolls has had a remarkable career in small business over the last 10 years. As Managing Director of Rental Express, Chris has grown Rental Express to become the largest privately owned residential property management business in Queensland with over $1.5 billion of residential investment property under management across 300 suburbs operating from four locations in SE QLD. Each year Rental Express conducts over 9000 property inspections and accommodates around 6000 tenants. Chris regularly writes for the national publication Your Investment Property Magazine, and is the resident Property Management expert for Brisbane’s 4BC radio show “Real Estate Talk” He is also the auctioneer of choice for Brisbane’s largest annual charity ball, The Brisbane ZIG ZAG Charity Ball. He is a regular keynote speaker at conferences and events around Australia.
Kate Lorden. Kate joined her sister Sarah in establishing Sarah Lorden Real Estate during 1996. She brought with her almost ten years industry experience and a commitment to creating a Real Estate agency of unrivalled quality. Kate’s fresh ideas helped establish Sarah Lorden Real Estate as an innovator within the Real Estate industry, while her infectious enthusiasm for customer service helped make the business a favourite among clients. Kate believes that above all, the reason for her success is an unwavering desire to get the best results for clients and ensure their satisfaction. In association with Sarah and General Manager, Jacqueline Smith, Kate manages the business and guides the future direction of the company. Kate is also actively involved in Property Management, overseeing the Property Management team and working to continually improve the service provided to clients.
Darren Barlow. Throughout his 18 years in the Real Estate industry, Darren has acquired extensive, first-hand experience across a broad range of Real Estate and franchising sectors. He has a professional background specialising in Property Management and franchising. He has been with Stockdale and Leggo for a total of 13 years, including owning his own franchised office. Darren stresses the importance of understanding franchisee businesses – from the franchisee’s point of view. Darren is a licensed estate agent, holds a Certificate IV in Workplace Training, and conducts training in the Agents’ Representative Course and Certificate IV in Property at the Real Estate Institute of Victoria. He has been a keynote speaker at several industry conferences, sits on several committees, including the Education Committee at the REIV, and has won the highly prestigious REIV Industry Service Award.
Tracy Billings. Tracy is a Licensed Real Estate Agent who has been in the industry for 13 years and with Raine & Horne Bondi Junction|Clovelly/Coogee for nine of those years. Tracy also holds an Associate Diploma in Accounting. As the Property Management Team Leader, Tracy manages eight senior property managers, four property officers and two administration staff members which help to ensure that the highest level of service is offered. She enjoys the continuing daily challenges real estate provides as well as the variety of work involved. Property Management and the balance of landlord, tenant, and contractor relations is second nature to Tracy and a specialty that she is proud of. Her wealth of experience and exceptional ability is an asset to the team. Tracy’s success in real estate is due to a combination of keeping up with all the developments in the area and her ability to attend to all matters quickly, efficiently and fairly.
1. Many people believe that Property Management, whilst always an integral part of a Real Estate business has been the victim of an identity crisis, carrying an image of the poor cousin of Sales, both within the industry and from outside it. Do you agree with this and if so, what do you identify as the top three areas that need to be addressed in order raise the profile of Property Management?
CR: I think it’s fair to say that Property Management has been seen as the poor cousin of sales in the Real Estate industry for quite some time. I think it is also fair to say that we are starting to see the beginning of a trend that is changing this perception. The top three areas that need to be addressed in order to raise the profile of Property Management are as follows:
Education of Real Estate business owners:
One of the reasons that Property Management is seen as a poor cousin to sales is because of the lack of focus that Real Estate business owners place on this part of their business. More than anything this is because of a lack of understanding of the potential that Property Management has, as a source of income and as an asset.
Most Real Estate business owners have become business owners because they have excelled as salespeople. Because of their excellence in sales, these people have then had the financial ability to open a Real Estate business. It is only through educating Real Estate business owners, who have a sales background, that the profile of Property Management is likely to increase.
Franchise groups and the way they derive income from their franchisees are partly to blame for the poor profile of Property Management as a profitable part of a Real Estate business. To a large extent the majority of Real Estate franchise groups in Australia derive their income as a percentage of sales income. Because of this they constantly push that success in Real Estate is dependent on large volumes of Real Estate sales. They encourage recruitment of sales people, sales-based training and reward sales success, because this is what generates their income.
They don’t push Property Management in the same way, because they have not come up with a business model that allows them to generate income from the success of their franchisees’ Property Management businesses. Those that have tried to generate income from their franchisees’ Property Management businesses have been faced with resistance. This is partly because the franchisor has not been able provide any value in terms of Property Management training, knowledge and skills. Until the major Real Estate franchisors find a way to generate revenue from Property Management, it will continue to be seen as the poor cousin to sales.
The third reason that Property Management is seen as a poor cousin to sales is because successful, confident, ambitious and driven people only want to be employed in areas of a business where there is a genuine career path, and an opportunity to earn an excellent income. In most Real Estate agencies around Australia this opportunity does not exist. Until it does, the best and brightest young people entering the industry will continue to seek a career in Sales as opposed to Property Management. This means our best leaders are opening businesses and running them with a bias towards Sales, because this is what they know.
KL: The roles of Property Management and Sales are vastly different but in our business the focus is on delivering on Customer Service whether that is in Property Management or Sales. With the changes to industry guidelines there has been a much improved level of transparency and service to our clients, whether Landlords or Tenants.
Property Management in itself has evolved and become far more accountable within industry guidelines and the days of simple rent collection has been surpassed by far more stringent rules, advances in technology and the responsibilities and accountability by Property Managers in themselves and within the industry. There are far more relevant obligations on both the landlords and tenants and better procedural guidelines, making Property Management a business in itself.
The top three areas that need to be addressed I believe are:
A clear understanding of roles and responsibilities between Sales and Property Management then improving the communication between the two departments to enhance working relationships and improve lead generation.
The simple things change the perception. For example, making sure workmen are on time, returning phone calls, going above that level of expectation and remembering just because a tenant is renting it is still their home.
More professionalism, better technology, value add services, point of difference, professional proposals, regular communication, exceed expectations, customer service, follow on relations, community involvement.
DB: Traditionally Property Management was seen as the poor cousin of Real Estate Sales. However, there has been substantial change or shift in the attitudes of both consumers and Property Management staff and principals. This change has increased the profile of Property Management departments. What used to be seen, in the eyes of many principals of Real Estate offices, as merely an adjunct to the business, is now being appreciated as a vital core. Not only is it adding asset value to the business, it is also adding cash flow which is imperative to any business. The more astute principals are also appreciating the value of their tenant base as an untapped resource as a future client base. The emergence of several specialist Property Management companies that purely deal in Property Management has also exemplified this. Those principals that are not actively promoting their Property Management department are being left behind as they are not in turn attracting the growth nor the right staff. The astute professional Property Manager is in high demand.
TB: Yes – I agree that Property Management is the poor cousin to Sales, both within the industry and outside. Unfortunately it has never carried a glamorous nor exciting feel to it in comparison to the hype and interest that the sales arena captures.
The industry has always paid historically low and more often than not with no commission basis, this attitude by employers has resulted in Property Management being less attractive to high calibre people. There has been little incentive for strong performers to engage in Property Management let alone maintain a career. With this in mind I believe that employers need to get with the times and accept that job satisfaction and money create direction as well as motivation. Accepting that management fees are driven by market conditions to create increased revenue affording competitive salaries, one needs to operate their business with a point of difference. It’s a snowball effect and a mindset and it’s up to the employer to change that. The difference between Sales and Property Management for an employee is that Property Management invariably provides a greater level of security.
Reforms are part of enticing and maintaining good staff, assessing the overall job description of Property Management. By this I mean, does the industry need to look at reforms, more than we have in recent times, to help remove some of the time wastage and tasks that seem meaningless? A lot of employees in Property Management become overwhelmed and often underwhelmed at the insignificant interruptions to their true task at hand and that is maintaining a property in peak condition for their client.
Qualifications (University vs TAFE):
Currently there is no university course that is available for someone thinking about embarking on a career in Property Management. I also think that there is a stigmatism generally that a university degree is far superior to a TAFE diploma. Perhaps the introduction of a specialist course in Property Management may increase the profile and provide more respectability.
2. Young people and those new to the industry often see Property Management as just a stepping stone to a sales career. What will it take for Property Management to become an attractive long term career path, particularly for entry level employees?
CR: Part of the reason that young people see Property Management as a stepping stone to a sales career is because there is no career path in Property Management. The reason behind this is because most Real Estate businesses are too small to have a career path in their Property Management departments. It is not until Property Management businesses are managing over 2000 properties, that there is any real opportunity for a genuine management position that commands a salary that is comparable to that of a good salesperson in the sales department. The reality is, that there are just a handful of businesses in the Real Estate industry across Australia that manage this many properties. Until the Property Management industry consolidates, and large businesses managing many thousands of properties emerge, with genuine career paths, most young people will continue to see Property Management as a stepping stone to sales.
KL: Over the years, it has become increasingly obvious that Property Management is a definite career in itself and that an extremely successful Property Manager has a vastly different skill set to those that make a successful sales agent. In saying that, there will always be an overlap in these skill sets that are useful to both sides of the Real Estate fence.
Property Management requires the ability to have a long, mutually rewarding relationship that must be expertly handled between client and tenant, to always retain the client’s best interests whilst also finding that balance for the tenant. Client nurture relationships are an integral part of our business considering a large proportion of our tenants are in fact landlords themselves or become landlords or purchase property within our area. We have a strong local market within a small village and word of mouth is paramount.]
It is no secret that Property Managers have a high burn out rate and the role of Property Manager can be perceived to have small rewards in relation to Sales. Property Managers require the skills to manage conflict in a way that sees outcomes that are mutually rewarding to both sides; in fact some of the many skills of a Property Manager are that of peacemaker, mediator, resolver, advisor, whilst enhancing the profitability of the investment property.
Property Managers work largely under a structured and procedural environment and we have taken this approach to develop systems and incentives that allows our Property Managers to track and evaluate their performance therefore enabling them to work at maximum capacity whilst removing the burn out. By offering incentives and a reward structure it promotes a positive work environment and encourages the staff to work as a team.
DB: I believe Property Management is already seen by many as an attractive long term career path. With the increase in profile and appreciation of Property Management departments by principals, there has been a vast change in mindset about Property Management positions. There are now a great number of differing roles on offer to those dedicated to Property Management. These roles can be from an assistant position right up to a department head. Many staff are now making the conscious decision to forge a career path in Property Management. Property Management traditionally was seen as a sub industry of Real Estate, however, it is now being seen as an industry itself.
TB: Property Management is more resilient to market cycles and, as such, this benefit needs to be pushed to entry level employees. You can never fight against the pull that Sales offers youth today in terms of money and prestige. What you can do is show them in the early stages of their career that Property Management offers stability and, within the right employer environment, hopefully an attractive income can be generated.
You must be realistic as an employer and understand that youth should want the very best that the industry can offer them and if this means allowing them to experiment in Sales so be it.
What you need to do as an employer is show them a productive and rewarding time in Property Management and if the employee decides that they want to experiment with Sales then given time they will be equipped to make the decision as to which division of the business suits them best. It is really unrealistic to expect a 20 year old to be focused on a career in Property Management forever. While you have the young person’s focus and hopefully enthusiasm, invest the energy and time to show them that Property Management can offer long term prospects as well as job satisfaction based on providing service.
3. How are you addressing these issues in your own business and/or in the industry?
CR: At rental express we have a culture within our business that is almost the opposite of most Real Estate businesses. We are first and foremost a Property Management company. In our business, Sales, and Finance departments are often seen as the poor cousins to Property Management. This culture is what attracts some of the best Property Management professionals to seek employment at rental express. We offer a genuine career path, with good earning potential. Long-term we offer an opportunity for people to have ownership in the business. This is something that is normally only provided to high performing salespeople within a business.
KL: We have analysed and restructured our Property Management department on a number of occasions in determining they way that our Property Management team works best. Sarah Lorden Real Estate is extremely customer service driven and we felt in the past our department was perhaps not exceeding the standard it could be.
In determining our current structure we, as we do in all decisions within the company, held staff forums on what we believed worked best, where we wanted to go, what our clients wanted. We also surveyed our clients to ascertain their thoughts in this area. By identifying the key issues we were able to formulate a go forward plan that has now allowed our Property Management department to successfully achieve the desired outcomes and also plan for growth.
We have employed a Leasing Manager whose sole purpose is to manage a database of prospective tenants and be available to show property at anytime. We have an Administration Manager who can free up our more senior staff to do what they do best, and that is effectively manage investment property. We also have a New Business Manager whose role it is to grow the department.
By offering the staff smaller managed portfolios and better support, it has reduced the “burn out rate” of our team. We also have team bonding nights with all our staff to promote a better team environment within all aspects of the business. Our staff are rewarded at our quarterly meetings with performance awards. Sometimes such small acknowledgements mean the world. It is also extremely personally satisfying to reward our team for a job well done, as Managers. Recently we took the entire team away interstate for training which obviously took them out of their environment and was a great bonding exercise. We have built strong team ties which we believe is invaluable.
The Senior Property Manager attends our weekly Sales meetings and offers advice to our Sales people in all Property Management aspects. Our Senior Property Manager also attends our weekly caravan to appraise Sales properties should an investor intend to purchase. This is also a great cross over tool as our Property Managers are well versed in aspects of our Sales properties should these turn to managements. At the request of our staff each department now holds a monthly interoffice lunch whereby one department alternates in providing a staff lunch which is a great way to promote a healthy, happy team environment.
We have stepped outside the square and looked at Property Management as a business, insofar as we moved away from a typically run Property Management Department and bought it more in line with a Sales department approach. Property Managers need to have a degree of ability to sell the service of their skills to the client and be able to demonstrate a value added service and more for the cost approach. We always use the question “and the benefit to you is…” We have developed our proposals to reflect our success in leasing and broadened the knowledge base of our staff to have a clear understanding of what’s going on around them rather than just their own portfolios. Being able to clearly demonstrate statistically our success rates and have belief that our office offers the best service and then deliver that.
Sometimes clients are unaware what it is we are doing for them behind closed doors so greater transparency and communication is a vital key. We regularly communicate via newsletters to our client base (which we consistently grow each week), phone or community involvement.
DB: Promotion of your Property Management department is just as vital as the promotion you are doing with your Sales department. Real Estate offices traditionally had a huge marketing budget for the Sales department and yet little or no budget for their Property Management department. An effective and realistic budget needs to be established for the Property Management department and a dedicated profile plan as to how you are going to go about raising the profile of the department.
TB: Approximately 20 months ago this business focused on its internal structure of its Property Management division. This came about mainly as a desire for increased levels of service and job satisfaction for the Property Management staff. Meetings were held prior to this to raise issues that the Property Management staff were concerned about and these types of concerns evolved into not only service levels, but their happiness on the job. With this in mind, Management focused on creating a better environment for staff and in turn providing better service for its valued clients. In short, the business was redefined into segments, these included trust accounts, administration and day to day Property Management duties.
Within these segments there was line management creations, which helped define responsibilities and provided a better overall level of efficiencies internally. This restructure has clearly created increased job satisfaction, stronger team work and ultimately happier clients. As part of this restructure a business development segment was introduced and this component works closely with not only the Property Management division but the Sales division as well.