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Show me the money by Lee Woodward

A Strategy for Phenomenal Success in Property Management

By Lee Woodward CEO, Real Estate Academy

The world is full of people on salaries who don’t want to be there. They come to work, occupy a desk and go through the motions, but they never seem fully committed to their jobs and the company they work for. This is true for any industry, and real estate (most notably the property management arm) is unfortunately a sector where we see far too much of this happening. I’m sure anyone reading this article would relate in some way, either personally or knowing someone who fits this description.

While my background is in sales, I have never hidden my firm belief that, with the exception of a few cases, property management has played second fiddle to sales for far too long. We are all in the business of helping people meet their real estate goals, so why should sales agents be the only ones able to determine their own remuneration through incentives?

“Prorentals revolutionised the property management sector at a time when no one else seemed to recognise its massive potential as a lucrative business opportunity in its own right.”

A company that turned the whole pay theory for property management staff on its head was Prorentals. In fact, it would be safe to say, Prorentals revolutionised the property management sector at a time when no one else seemed to recognise its massive potential as a lucrative business opportunity in its own right. So exciting and revolutionary is the Prorentals story and the incredible success it achieved, that I knew it was one that had to be shared. So, with the consent of founders James Chalmers and Andrew Reece, the co-creator of Inspect Real Estate, and professional commentary from property management guru, Colin Rodgers, I am writing a book about the Prorentals journey, which will be launched later this year.

In preparation for writing the book, I spent months interviewing Andrew and several of his staff at Prorentals, many who subsequently became successful property management business owners themselves. There were numerous groundbreaking leadership strategies adopted by Andrew and James, and there were also some big mistakes made, which the pair were also happy for me to share in the book to save others from falling into the same traps. But the one strategy that struck me as their primary point of difference was the pay strategy they devised and adopted to remunerate their staff, a strategy that kept people voluntarily ‘super-glued’ to the business.

As the numbers man in the leadership team, Andrew drew upon his accountancy background to formulate a pay strategy that was unique to Prorentals and became their number one method of recruiting and retaining exceptional, committed people and the key driver towards the company’s growth. And yet Andrew had many critics who told him at the time that he was paying his people way too much. But the proof that this wasn’t the case was in the astonishing results his people achieved for the business (and for themselves) as a direct result of being given the opportunity to create their own success.

“We decided to incentivise our people to want to lease their properties quickly. It was a simple strategy and it worked brilliantly.”

“The key word is opportunity,” said Andrew. “To provide an opportunity for people to achieve the outcomes they want to achieve, under the support and guidance of a set of systems and processes that help facilitate that, delivers a clear win/win/win for all stakeholders – the business owner, the staff member and the property owner. Property managers on a fixed wage see a vacant property as a bonus because it’s easy to look after – no repairs to organise, no arrears to chase etc. etc. We decided to incentivise our people to want to lease their properties quickly. It was a strategy that worked brilliantly.”

Andrew’s pay strategy revolved around a simple theory – encourage the behaviour you want rewarded. By ensuring their properties were leased as quickly as possible and to the best possible tenants, every Prorentals property manager handled more properties than most other property managers would at any given point in time. By adopting a stringent tenant selection process they knew they would be managing a tenanted property that was well looked after, the rent would be paid on time, there would be minimal vacancy periods, and the landlord would be happy and likely to refer the company to others. While Andrew and James were paying their staff substantially more than most property managers were paid at the time, they were rewarded with an engaged, motivated and committed team, a growing portfolio and company turnover that was heading in the right direction.

Chris Rolls and Jason Rose, the founders and former owners of Brisbane based property management company, Rental Express used to operate in direct competition to Andrew and James. Despite this however, Andrew was happy to share his pay strategy with them once he had sold the business. “Andrew was the first to use this revolutionary new way of paying property managers and we were swift to copy the strategy, with his full support. While we modified it slightly to suit our geographical area, it was definitely a key part of our business success.”

So what did the pay structure look like? Essentially it was calculated as a percentage of the revenue generated by each property manager’s portfolio. But the real genius in the strategy in terms of selling it to property managers was the fact that Andrew began by asking them how much they wanted to earn per annum. To use an example, if a property manager had a goal to earn $80,000pa they were told they would be required to manage 171 properties with an average rent of $400 per week and an average management fee of 7.5% in order to achieve that goal. “I would then ask them what they would do with that $80,000,” said Andrew. “Were they saving for a deposit on their first home, did they want to take an overseas trip, did they want to buy an investment property themselves – something we actively encouraged. Essentially it was to get them thinking in terms of the opportunities and the lifestyle that money would give them. Understanding that is when it really starts to sink in.” If the same property manager wanted to increase that figure a couple of years down the track, the same reverse-engineered process would be applied. It was a different way of thinking.

Andrew’s pay strategy was so successful that he has built a calculator into the Inspect Real Estate website that allows members to adopt the same formula with ease. “If you want people to care about what they’re doing, in our experience incentivising them really facilitates that,” said Andrew. “It worked so well, I brought the same model into my new business (Inspect Real Estate) and truly believe the reason it continues to power with its growth is because, like Prorentals it revolves around something everyone wants and deserves – opportunity.”

The Prorentals pay strategy for the first time delivered the sales commission incentive model into the property management space. It was (and continues to be) a real breakthrough in the industry.

The Prorentals Story will be launched at the 10th annual Complete Leader Conference in Sydney on October 18 and 19, 2017.

Andrew Reece is the co-creator and owner of leading property management software firm, Inspect Real Estate. In 1998, Andrew changed careers from accountant to co-founder and owner of Prorentals, a business he and his team grew organically from 31 properties under management to nearly 2,000. Andrew has never been afraid to run his own race and understands that investing in and empowering good people is the key to business growth and success. His career is dotted with examples of how his innovative approach to people management has allowed his businesses to grow.

 

 

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