Property managers must lift their game to grow businesses

Monday 22 October 2007

Only 22.9% of landlords presently use a property manager – and property managers need to take a hard look at how they are running their businesses if they want a bigger slice of this pie.

By Andrea Milner

With homeownership rates running at around 62% in New Zealand, there is plenty of scope for the property management market to grow. Yet Australian Bob Walter, a ‘health check consultant’ to property management companies, says property managers often have no business plan and don’t track their profits – they may have big rent rolls but run at a loss.

At the recent REINZ property managers’ conference Walter said that property managers should only manage well-presented properties going for market rent – and with a landlord prepared to maintain the property. Walter also prefers landlords to carry landlord insurance.

Landlords are demanding more customer service, says Walter, and property managers need to survey their clients about what they think of their service; write and publish customer service standards; and not use a ‘one-size-fits-all’ approach to service and fees.

Melbourne-based managing director of Wentworth Property Management Tony Warren, who grew his business from 450 to 16,000 managements in two-and-a-half years, agrees that differentiating their services, and their product and its benefits, is the key if property managers want to charge more for them.

“Not all property investors are the same – so why have a one-size-fits-all approach with fees?” Warren says. He suggests there are different categories of investors, and that they can be charged differently.

Developers, who buy to demolish or renovate, don’t want to spend money on a property; so “get Tribunal and document management fees – you’re going to need them,” Warren says.

Professional investors, he says, are bottom line driven; they have programmed maintenance; make unemotional decisions over tenants’ needs; and want to know a ‘total cost’. For this category Warren suggests offering an ‘all-inclusive’ fee including landlord protection insurance – “if you can point out the savings”.

First time investors are cautious and fee conscious, Warren says, and suggests property managers tell them everything that can go wrong – emphasising the need for ‘full’ fees.

Property managers have to be able to show landlords how they find them the best tenant and lock them down, guarantee the payment, and minimise costs, Warren advises.

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