The end of the year is the perfect time to examine what worked and what didn’t when it comes to growing rent rolls.
I worked closely with owners in the start-up stage of growing their rent rolls (pre-200 properties), and it was clear two things made a significant difference in growth over the past 12 months.
Interestingly, there was one thing rent roll owners have been doing that hasn’t worked for them.
In the interests of learning from our successes and failures as we prepare for 2020, here are the strategies you need to leverage in your rent roll.
STRATEGY 1 – CURRENT LANDLORD REFERRALS
It’s probably a cliché to say, but the best business is referral business.
Happy landlord clients tell their landlord friends about your property management services, right?
Happy landlords thank you for a job well done, and promptly forget to tell their friends about you altogether.
It’s not that they don’t love working with your property management team, it’s just that they have their own lives, and they don’t spend a lot of time talking to their friends and family about their property manager.
Sure, they might talk briefly about their investment property, or even about their tenants, but they rarely discuss their property manager.
Which means it’s up to you and your team to actively source landlord referrals.
The referrals are there. You just have to go looking for them.
There are two ideal times to ask your current landlords for a referral:
1. When a tenant is first approved for a property
This is the moment a landlord loves you the most.
You’ve just solved a problem for them by securing a tenant for their investment property, and they’re grateful and relieved.
In fact, their gratitude and relief are directed at you, the property manager, leasing consultant, or business owner.
Once you’ve celebrated this success with your landlord on the phone, had discussions about lease commencement date and other details, it’s time to ask for a referral.
A script you might like to use is: “I’m so happy we’ve been able to secure this great tenant for you. I was wondering, do you own any other investment properties I could take care of for you?”
Or: “I’m super excited about securing this great tenant for you. Tell me, do you have friends or family who own investment properties in our town I could help?”
Or, if you’re the business owner, you might like a more personal script: “I’m looking to grow my business, and I love working with investors like you. Would you be able to help me grow my business by introducing me to someone you know who owns an investment property?”
There’s a good chance your landlord either owns other investment properties you don’t manage or knows someone who does.
It’s at this time that you can ask for an introduction, and contact details to follow up on the referral.
2. Happy calls
These are the phone calls we say we’re going to make but always forget.
The types of phone calls designed to connect with your landlord, check in on them, get feedback on their experience with your office, tell them everything is going well with their property and add value.
We know that most of the time landlords hear from their property manager when it’s some bad news – a tenant is in arrears, the hot water system burst or the front lawn has died.
Happy calls are the best way to teach your landlords to be happy to hear from you, rather than dreading a call.
If your phone call goes well, and you hear great feedback from your landlord, this is the time to ask to look after their other investment properties, or for an introduction to their friends and family. You can use the same scripts outlined earlier.
We’re going to side-track a little here, because you might be wondering whether you should pay a landlord for their referral. The answer: it depends.
You should always check your local state or territory legislation about offering incentives for referrals.
There are some areas of legislation that prohibit this.
If you are allowed to incentivise a referral, I suggest a concept that I’ve called Splitting the Spoils.
Rather than offering your landlord a $500 Visa gift card if they refer a new client to you, offer both parties (the current and the new landlord) each a $250 Visa gift card.
Meal delivery service, Hello Fresh understands the Splitting the Spoils concept well.
They know their existing clients are more likely to refer their friends and family if the friends and family receive the benefit (in the case of Hello Fresh, it’s usually a discount voucher off their first meal kit).
Test this referral incentive strategy in your own business to discover how much more effective it is than only rewarding the existing landlord for the referral.
STRATEGY 2 – THE NINE-WORD EMAIL
There’s an old marketing concept, called the nine-word email, that is designed to resurrect any leads that have gone cold.
If you have any potential landlords on your database who have stopped returning your calls or emails, it’s time to deploy the nine-word email.
Clients of mine who introduced this into their follow-up strategy had a positive response rate of almost 15 per cent.
This means that, for every 100 emails sent, 15 prospective landlords replied wanting to talk further about transferring their property.
That’s a pretty good result considering these are prospective landlords who had gone completely cold and were not responding to any other type of follow-up.
WHAT DIDN’T WORK IN 2019?
There was one thing that didn’t work for start-up rent rolls in 2019, and that was letterbox drops.
Although the letterbox drop is the quintessential brand awareness strategy in the real estate space, they just didn’t get fast results.
There’s no doubt that DLs in a mailbox increase brand awareness in your local patch. But, if you’re looking for fast responses, including immediate phone calls and inbound inquiries, letterboxing is not for you.
When you add up the cost of printing, the time it takes to make deliveries and then look at the return on investment, it doesn’t compare to the two strategies outlined above.
As you move into 2020, and you’re setting your rent roll growth goals for the next 12 months, I encourage you to learn from these strategies and use them in your own business.
Here’s to an outstanding year of exponential growth in your rent roll.