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The 5 folders, Bonds, Stephen Jackson

Stephen Jackson is one of Australia’s most successful property managers. Stephen’s agency, Jackson and Rowe is one of the largest and most profitable managers of rental property in Sydney’s northern suburbs.

In the last two issues of Hot Topics, we have introduced readers to Stephen’s highly successful 5 Folders approach to property management. Stephen devised the 5 Folders approach because as he says, “it enables us to make better decisions, have better conversations, get resolutions quicker, and makes people happier.”

The 5 Folders approach is not just a way of organising paperwork. Rather, it’s a decision tree. As Stephen explains, “It’s a way of thinking so that property managers can make good decisions because it’s the good decisions that reduce their work.”

Implementing the 5 Folders approach is not as simple as purchasing five different coloured folders and allocating different aspects of your business to each folder.

For The 5 Folders to work, Stephen thinks that all aspects of property management need to be integrated, in a portfolio style operation. Stephen says, “We’re property managers, our titles are property managers, but in reality we manage people and, in that sense, we manage clients. Clients don’t like to be subdivided up and their issues are never subdivided.”

The Third Folder of the 5 Folders is: Bonds

Unlike many people, Stephen relishes disputes about bonds. He says, “The purpose of the bond folder is to solve a dispute. Bonds are about dealing with the owner’s emotions and getting a resolution that owners are happy with. It is not anything else.” Stephen believes, “You can go to the Tribunal, fight for $1,000 and get $990 and the owner is unhappy. You can go to the Tribunal or you can not go to the Tribunal, the owner agrees on a figure and the owner is happy. It is not about the money; it is about how the owner feels you fought for him or her.” Contrary to what we might think, Stephen has found that running a bond claim or dispute is actually a process of working with the owner’s emotions. Stephen says agents need to, “have a series of conversations with an owner”. He believes that when you know that there is a dispute, understand that probably about 70 times out of 100 the dispute will be resolved during that process and you won’t ever end up in the Tribunal.

Stephen says that, “If a tenant makes a claim we would call the tenant in, let the owner know that we’re calling the tenant in and see if we can negotiate something. If we still can’t negotiate to something that’s satisfactory with the owner, we’ll often ask the tenant to put in writing what their reasons are and we’ll pass that on to the owner." Over the years, Stephen has found that this approach is incredibly effective. The tenant becomes the focus, rather than the agent, because the tenant has written down their concerns. He says that this approach, “allows the owner to get all of his or her emotion out. An owner may ring and say, ‘How dare he say this, this, this, and this and this?’ With this approach, rather than voicing what the tenant has said, the agent can move into managing the emotions of the owner.”

The agent can say, “Mr or Mrs Landlord, I understand. When I read that letter I was angry too. If you say so I will go and fight this tenant tooth and nail. That’s the argument the tenant’s going to be using in the Tribunal. The Tribunal has a tendency to listen to some of these arguments, but know that if you give me the word, I will keep fighting until you call me off.”

Stephen remembers one client, Vicki, who was always stressed and worried and beset with problems. A problem arose with one of Vicki’s tenants, so what Stephen did was to get the tenant to write down his concerns and then passed the letter onto Vicki. Vicki contacted him and she was deeply upset so Stephen sympathised with her and listened and validated her feelings and assured her that he would go into bat for her.

But Stephen says that Vicki said, "Stephen, I know that you’d fight for me but it’s not worth it. Don’t worry about it; we’ll get past this. You just find a good tenant and we’ll put all this behind us. I really appreciate your support in this.’ I never went to Tribunal; I wouldn’t have won if I had.” Managing bond disputes is all about managing relationships.

The Five Folders

The first folder is Vacating, which looks after all the activity that is generated once a tenant gives notice through to the tenant vacating. It’s turnover, dealing with tenants moving out and the new tenants going in and it’s the biggest part of property management and the area that agents have the least control.

The second folder is Applications . This is also part of turnover and involves all the activity around finding and securing the next tenant. Stephen says, “It is not a profit-making area - it is a cost area, it is a pain, it is where all your issues are, it is where your owners become most volatile. It is a nightmare and you need to control that, you need to reduce it. Turnover is your biggest issue that you have to worry about.”

The third folder is Bonds, and this looks after all the activity from when the tenant vacates and hands back keys through to the finalisation of the bond and the processing of the monies.

The fourth folder is Maintenance, and this involves all the work that needs to be done to a property and all the invoicing and the payments.

The fifth folder is Arrears, and this really encompasses misbehaviour of tenants, so it involves arrears, it involves strata complaints or notices where the owners decided to give the tenant notice to move out.

Stephen Jackson's 5 folders is part of Real Estate Academy's Hot Topics Property Management Audio Program.

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The 5 folders, Bonds, Stephen Jackson