Most rent rolls have a portion of properties that cause grief for your property managers and pain for your profit margin. When most property managers simply sign up for just about every new property that comes their way, in this article, we challenge you to take a closer look at what you take on.
Most rent rolls have a 10-20% burnout factor to them
One of the most powerful business strategies we can give you is to ensure that every new property is profitable and good for business.
When we do not have new business benchmarks in place, over time we develop 10-20% of our rent roll that becomes unprofitable, difficult to manage and usually the greatest factor that encourages our property managers to resign.
So how do we avoid this type of business in the first place? Here are 8 quick tips to ensure all new business is good for business!
Eight Powerful New Business Benchmark Strategies
1- Rent Level- ensure all new properties are above the rent level that would be considered ‘low end’. Low end or lower-socio type properties have a greater burnout element- work out what rent level generally indicates this, and do not take on properties below it.
2- Minimum Income- work out what is the minimum income per year per property that you need. Hint- work out what it is now by dividing your last 12 months of total fee income by your total property numbers- whatever this figure is, ensure all future yearly income per property exceeds this figure.
3- Distance- properties more than 30 minutes drive from your office cost more to manage. Either charge more for these properties in fees or choose not to take them on.
4- Location- what suburbs or areas are trouble for you? If it is difficult to find a good tenant in these areas or suburbs, choose not to take them on!
5- Property Quality- this one is easy! If the property is clearly poorly maintained unless you are convinced the landlord is going to fix it up, choose not to take it on!
6- Property Type- are there certain types of properties that just bring trouble for you? Are they former government housing properties, or three-storey flats. What brings nothing but trouble, and avoid this type of property!
7- C-Class Landlord- if the landlord shows signs of being over-demanding, unreasonable, has indifferent expectations, and simply spells trouble, don’t take it on! Listen to your gut feel on this one! They are like a packet of cigarettes and will take years off your life- (or your property manager’s) so avoid them where you can!
8- No Furniture Policy- unless you manage high-end apartments or student accommodation, do you need a furniture in rental properties? There are many complications that can arise by supplying furniture, and I can think of no real benefit but plenty of hassles!
Bonus Leader Tip
Action- train these keys with your team and sit down and write up your own policy specific to your marketplace and dynamics. Rent rolls are worth it, but only when grown properly, and taking care of what you identify as a new business- all the best!