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How to be pain free and profitable in property management

with Rose Kelly Real Estate Dynamics

In Australia, rental properties make up around 30 per cent of the market but property management tends to be seen as a sideline business. Rose Kelly from Real Estate Dynamics believes this is a mistake and she explains how you can turn your property management division into a profitable powerhouse.

Rose says, “Pain is nature's warning sign. There are signs there and they're not picked up and then one day it really hurts.”

The four property pain points

One - high client turn

In property management, Rose says, “There are always people coming and going, clients coming and going all the time, but some businesses experience way too much. I'm not going to say what the metric should be, but if I had a business where it was more than 10 per cent, I'd start to get nervous. I've seen it as high as 23 per cent on an 1,100 rent roll in a year. That's serious and it would hurt, and it did hurt. It may present in the form of low growth, slow growth, or negative growth, depending on what's happening in the BDM space.”

Two - high staff turn

She continues, “Again, I'm not going to say what the metric should be because it varies across the size of the business, but I've seen it as high as 50 per cent over two years and I've seen it as low as 98 per cent retention, that means 2 per cent loss in two years. That's what I call a sticky business. The staff want to stay.” Clearly high staff turnover is an indication that something is amiss.

Three - low profitability

Four - emotional and energy pain for the principal or leader

The burden of worrying about the business bears a cost and makes energy low and stress levels high. Rose says, “It presents in a range of ways including, ‘I'm not sleeping at night’, or, ‘I'm over this’, or, ‘Sometimes I want to sell my rent roll, but really I don't’."

How to turn a business around

Rose believes owners must take a global view and integrate property and sales and break the business into four quadrants in terms of the human resource management. She says, “The people who are the most stressed in this business are working in multiple quadrants. They're the least efficient, they're the least productive. Generally that's where we see the turn because they're stressed. They become disengaged, they don't deliver on customer service, and you end up with client turn.”

Rose explains, “The first quadrant is management and leadership. It's not negotiable.” Businesses that are experiencing difficulties are often under-resourced and managed by someone with little to no management or true leadership skills which becomes a business problem.

She continues, “The second quadrant is what I call the business development revenue production part - it's the sales part and it includes growth and leasing. The third quadrant is operations, which includes all of the service delivery part of property management - entries, exits, routines, maintenance, landlord-tenant relationships. I guess the part of property management that most people think of is the traditional managing the property, managing the tenancy, except that we've separated away leasing. The fourth part which is critical is administration.”

The critical factor is leadership

From her many years of working with property management divisions, Rose has determined, “The one thing that has been lacking more than anything is leadership.” A leader is not necessarily the person with the longest tenure, who's managed the greatest number of properties, or who's caused the least pain. She says, “A great leader is somebody who really understands people and is very focused on individual differences and understands the core elements in managing people.”

Rose thinks a great leader is someone who is both customer-obsessed and who really understands what the goals of the business are about. She says great leaders, “…connect with the vision and they're able to bring that connection right down to the grassroots, and engage the excitement level of the people in the grassroots towards the vision.” Once you have that, you have a pain-free profitable growing attraction business.

Once the leadership is in place, the project then is to lay out the path to improve performance and productivity. Rose of course, has a plan.

Rose also believes that property managers should know about these sites as they provide services typically found by property managers:

  •, Hire a tradie website

A customer feedback site. Check to see if any of your properties are on there.

The eight identifiers that impact on performance and productivity

One - capacity

How people and their roles are structured.

Two - standards

Be very clear on the expectation. What are you actually trying to achieve in very clear terms?

Three - measurement

They need to be compared to the standard.

Four - feedback

Rose says, “I can tell you now that what employees in this country and across the world crave, crave, not want, crave more than anything else is feedback on their performance, and it's the thing they get the least of. If you want to engage and have a high-performing team, start giving feedback. The best way to manage feedback is to have a set of standards to measure people's performance against those standards, and then meet with them for about 20 to 30 minutes a week and discuss with them their progress. It sounds quite logical. The businesses who have embraced this and who perform in this way have turned their business around. They have very high engagement, they have high performance, and it makes an enormous difference.”

Five - conditions

The motor vehicles, computers, technology, connection to the NBN, all of those things have to be spot on to create the right workplace.

Six - motivation

Engagement comes from doing the first five well.

seven - knowledge

Eight - skills  



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