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As the sales market softens and property transaction volumes decline, it’s an agency’s rent roll that will help them get through. Offering steady and reliable cash flows, a strong rent roll can play an important role in funding business costs when sales revenue is down.
For agency principals that have been around for some time, this won’t come as a surprise. In fact, a softer sales period forms part of a typical market cycle. As a result, many will already have a rent roll strategy in place to navigate the sales downturn. However, these short-term solutions to optimise performance won’t mask the longer-term structural challenges that principals are facing around property management.
Increasing staffing costs are squeezing property management margins, and the challenges around staff attraction and retention, compliance obligations are rising and customer expectations are at a record high. Navigating these challenges can be difficult. But the solution lies in longer-term strategies that identify the opportunities amongst the barriers. With an array of solutions available, agencies that innovate early will benefit, gaining valuable experiences and learnings along the way.
Strong rent rolls drive strong sales leads
Most agencies rightly place a greater emphasis on sales because that’s where the big profit opportunities are. As a result, rent rolls often take the back seat and it isn’t until we hit the downturn that alternative and more creative solutions are considered.
What some fail to understand is that a strong rent roll is where the untapped opportunity is. Rental properties can eventually turn into sales when the owner decides to sell the property whether it’s to free up cash, invest in a different property, or simply want to move on from the rental business.
With interest costs rising sharply, many property investors are currently considering their investment options, making now a great time to provide market appraisals to your clients. However, the facts unfortunately show the majority of agencies lose more sales from their rent roll than they gain. Yes, your rent roll is working for your competitors.
As a real estate agent, it’s important to keep track of rental properties that may be ripe for sale in the future. This means staying informed about the local market, keeping in touch with property owners and being aware of any signs that a property owner may consider selling.
If you don’t, competitors who are keeping a closer eye on the market may secure the sale before you even realise that the property is up for grabs. In fact, it’s not unusual for five out of six sales from an agency’s rent roll to go to competitors when managed incorrectly. Getting your rent roll in shape helps you deliver a great service to your owners, who may become sellers at some point. They will be more likely to choose you if your agency has delivered a high-quality property management service for them.
Rent roll performance checks
The first step to growing a rent roll is understanding how it’s currently performing. You can’t fix something if you don’t understand what the problem is.
Agencies looking to get on the front foot must consider where their property management business is excelling and where improvement or fine-tuning may be required. This equips agencies with insights to make informed decisions about their rent roll, just as a caddy provides a golfer with insights and advice about their club selection, shot, and tactics. Four key areas to consider include:
- Profitability review: An analysis of the profitability of your property management business (monthly fee income, fee structure, end-of-year financials, staff remuneration) to assess how the rent roll can operate more profitably.
- Rent roll growth: An overview of what portfolio growth strategies are in place and how the business is set up for future growth. This includes a customer service audit and recommendations on how to generate leads within the business.
- File audit: Auditing tenancy agreements, tenancy applications, bonds held, condition reports, routine inspection reports, management agreements, keys held, renewals of tenancy and more.
- Systems and processes: Reviewing workflow, tech tools and processes in place for leasing, vacates, bill payments, trust accounting, landlord statements, payments, invoices, maintenance, supplier management, rent arrears, compliance, keys sign-in/out and property inspections.
Taking the first step to better understand your rent roll performance will help to improve internal operations, performance, profits, and productivity. But we know this can be time-intensive. That’s why :Different is now offering Rent Roll Performance Checks to all agencies across Australia. We’ll do the work of tracking all of the above so you have a clearer view of your rent roll and can apply strategies to improve and grow. We are committed to helping agencies achieve their goals by providing them with the insights, advice, and support they need to thrive in a changing market.
If you’d like to learn more about :Different’s Rent Roll Performance Checks, get in touch here.
Tony Blamey is the chief revenue officer at :Different.
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