Unlock the value in your rent roll

Unlock the value in your rent roll

It’s time to put your rent roll under the microscope and check what’s happening with lease renewals and vacant days on market. As Simon Cox explains, these could be the keys to unlocking potential value.

 

"Clients expect a lot from property managers, but expectations in tough times are twice as high with many landlords feeling the pinch."

 

Many times as a Trainer and Agency Business Consultant I am asked to look at the physical and financial performance of property management rent rolls, and I find ways to get more from your income streams. Now this is not rocket science, it is simply sound management practice. It is about better understanding your income streams, when to push or pull your rent roll to achieve more and understand better where your income comes from. Let’s look at some basic, but fundamental areas of your rent roll and what you can do to increase asset value and more importantly, cash flow.

 

Lease renewals
How often do you look at your management figures and ask, “Why are we not increasing?” Here are some simple tips to get more from your lease renewals.

1. Make sure that rent increases are proportionate to market price. Just don’t increase (or decrease!) on a gut feeling. Use statistical information to arrive at the right price. If you don’t collect this data, then start doing it. Rental data is not freely available like sales data so property managers must start researching, recording and creating reports to increase rents correctly.

2. Look at the last time the rent went up. Most Australian cities and towns have had some form of increase in rent over the last 12 months, so make sure your landord is not thinking you could do better. When they think like this, they also think about dumping you!

3. Charge and check the charge. If your Management Agreement allows you the right to charge a lease renewal fee, then you need to cross check this against your monthly figures and make sure your staff have recovered fees your Agency is entitled to. You spent a lot of time and effort to sell the landlord the fee in the first instance, so you are crazy not to charge it now. And for those wondering if they can charge for it, take a look around your market place. If your competitors are doing it, why are you still on the sidelines and not in the game? If your competitors aren’t doing it, then it doesn’t mean you can’t. Sell the benefits of your negotiation skills, set yourself apart from the others and earn more income!

 

Vacant days on market
There will always be times when properties don’t rent quickly. This is the moment of truth for all landlords. While they are thinking about lost income, they are also thinking about one other important thing – whether you are working the best you can for them. What you need to do as an agent is educate them before they can begin to think like this. This starts at the Management Agreement appointment then progresses through to the listing presentation, the marketing and at every other opportunity you have. Let’s look at utilising the vacant days on market statistics and the value it provides your business.

1. True vacant days on market should be recorded from the time income stops to when it starts again. This is for both the agency and landlord and should be recorded in agency key performance indicators (KPI). Try the exercise for one month and record just how much income your agency missed out on by managing properties which are not earning income. Now whilst this could be painful for some, also think about the loss the landlord is suffering.

 

2. Turn your data into an education tool. By collecting your data monthly, you now can educate your landlords about market trends in your area, and soften the blow the landlord feels when the property is empty. Recently a client of mine tried to rent out an investment property on the Gold Coast and rang me after one week saying it was taking too long. I asked her if the agent had given any report detailing the average vacant days on market and what to expect in the current market and she said, “no”. The next day she spoke with the agent and the data was supplied detailing that on average, it took three weeks to rent out properties in the area. This information was advised too late by the agent and the landlord and agent relationship was off to a rocky start. This could easily have been avoided by passing on critical information so expectations were realistic for the market conditions at the time. Fortunately for the agent, they bucked the market trends and rented the property in two weeks which helped ensure the agency kept the management.

 

3. Monitor and assess why properties are vacant and create strategies to improve turnaround times. If a property manager can’t give an answer to why a property is not renting, then they haven’t done their research or marketing review of the property.

 

Clients expect a lot from property managers, but expectations in tough times are twice as high with many landlords feeling the pinch, so service them with updates, new strategies and let them know you are thinking of ways to rent their home all the time.

 

For more articles like this one checkout Grow Your Rent Roll

By focusing just on these two key financial drivers in your rent roll, you will see a difference in income, service and client expectations – and you might even get a referral!

 

Simon Cox, Trainer and Consultant with Real Estate Dynamics, has an incredibly successful Property Management and Management background loaded with ‘hands-on’ practical and technical industry knowledge and experience. Simon’s expertise will help your Agency to manage the daily challenges and to reach and attain your goals. www.realestatedynamics.com.au

 

via leased-annual.com.au