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PM Collective - The ART of property management
The ART of property management with Ashleigh Goodchild is a leading platform supporting collaboration not competition through an online community and events throughout the year with one purpose: to create happier property managers. She creates connections for property managers looking to create momentum in their careers and personal life. Join Ashleigh and her guests as they discuss challenges, struggles, mental health, mindset and give advice to property managers and anyone in the industry. To get the support in your property management career, join our PM Collective Facebook and Instagram community.
PM Collective - The ART of property management
8 reasons you should say no to new business with Darren Hunter
Do you know when to say no to new business? Find out how mastering this skill can help maximize your property management income in our insightful interview with Darren Hunter from IGT.
Darren Hunter is a national and international property management trainer, expert and leading industry authority in fees and overcoming fee discounting, as well as productivity and time management.
Authoring two books ‘PM Fee Scripts Secrets’ and ‘Master Your Time Secrets’, Darren Hunter has been training Real Estate Business Owners and Property Managers on a national and international level at seminars, conferences and workshops across Australia, New Zealand and the United States since 2005, with his books now placed into 7 different countries.
We discuss why it's crucial to understand the financials behind taking on additional properties, ensuring you're working with the right clients, and being honest about your team's capabilities.
Together, we tackle the challenges of building a healthy rent roll, including the importance of taking breaks and avoiding properties that are too far away. Darren shares his expertise on identifying characteristics of a C-Class landlord and their potential negative impact on your rent roll. Plus, we dive into the difficult question of why you should take on a property in disrepair, and the risks that come with it.
This episode explore's effective property management strategies and will discuss early intervention when taking over a property from another agent. Darren offers training inspiration from IGT courses and shares his advice on managing extra properties while maintaining a healthy work-life balance.
PM COLLECTIVE - GUIDE AND SHAPE AN ENJOYABLE FUTURE
We believe in making industry-leading education and support accessible to everyone. Our community is packed with free resources, expert insights, and innovative training designed to help business owners, property managers, and BDMs thrive.
This podcast is kindly sponsored by The Efficiency Co.
We are a dedicated consultancy, training, and support partner for innovative real estate organisations.
Specialising in agency operations, team development and technology integration, we provide the insight, support, and training to maximise your performance.
Our toolbox includes 1:1 Coaching for industry pros, 1:1 Personal Strategy Sessions, Team Engagement Workshops and Bespoke Agency Consultation
Welcome to the PM Collective, a dynamic hub designed to empower business owners, property managers and BDMs to excel in their careers Through access to intimate conversations, cutting edge of video training, mental health support and unparalleled motivation. our community is the ultimate destination for individuals seeking to elevate their professional lives to new heights. So sit back, relax and enjoy our next conversation on our weekly podcast, The Art of Property Management. Today we have a special guest, which a lot of you would probably already know and I actually am quite proud to be on the other end of this podcast, because I know that this person is the one that is usually interviewing people and I am privileged to interview him and that is Darren Hunter from IGT. Welcome, Darren.
Speaker 2:Hi, ashley, really good to be here and absolutely blown away at how good your PM Collective podcast is and how it is really helping property managers, i would say just around Australia, but probably spreading into New Zealand and America and probably other countries that you don't even know about. It is leaking in and it is doing some good.
Speaker 1:Thank you, it is getting there. It is something you have been doing it for a hell of a lot longer than I have been, but it is enjoyable and I think it has always given you a job purpose, and I think that is what you and I are about. I am going to let you do an intro, which I know you don't need an intro, but you probably don't get to do this all the time, so I am going to let you have one. Can you, for the weirdos that are listening that haven't heard of you before, can you please intro yourself and let us know who you are, where you have been and where you are now?
Speaker 2:All right. So, darren Hunter, i am actually a full time property management trainer and consultant and have been doing this now since 2005. What does that make it About 18 years? I am sorry, i just dated your podcast, sorry about that. And before that I was a property manager, senior property manager, property inspector, doing all PCRs routines, vinyl inspections full time for 500 properties. Also been a state property manager as well, where I managed 18 officers over South Australian Northern Territory original areas with 28 property managers. That was a lot of fun.
Speaker 2:My job, what I do, i love what I do. I am really passionate. I have nightmares that if I ever had to do anything different, i am scared about that because I love what I do and it has taken me all across the planet. I have been able to speak in many places five countries now. So I guess over that time I have specialised in a lot of things like nuts and bolts, conflict management, communication, but also like in time management Just about to release a book actually called Master Your Time Secrets and fees. So I am probably, maybe probably, more known as the FIGI and teaching people how to overcome those common fee objections like but the other agent is cheaper or if you can match your management fee with the other agent down the road and all the way to respond to that so you can walk away with your full fees. So that is in a very, very brief nutshell.
Speaker 1:And I was one of those people a while ago where I said to you, darren, you can't do that, you can't do this, and I am on the other side doing it. And it is such a mindset game, isn't it? It is nothing more than that.
Speaker 2:Well, we call it the big butts. You know, ashley, you probably had a big butt back then, and other people have a big butt and different sized big butts, but it is butt Darren. I can't do it because and so I do see myself as a mindset trainer I am always challenging people, particularly around getting better fees, and it is the only the mindset that stops you. once you get that sorted, it is all good.
Speaker 1:Yeah, absolutely. Now. Today's topic is one that I am excited to hear from you about, and that is eight reasons to say no to business, and I will admit I am probably someone that needs a little bit of help in this area. I will be very vulnerable right now.
Speaker 1:I do take on business that I maybe shouldn't, and the reasons why sometimes I take on business that I shouldn't might be because I have a fear that if that client goes somewhere else, then his whole network will go somewhere else, or I feel like, oh, we can handle it. You know there's reasons like that, and sometimes I have had my team roll their eyes at me to say, ash, why would you do it? and I say to my team stop being property snobs. You know like it's good experience for you and I take full responsibility that I need to learn from this. I mean, it's only the very small percentage where I probably should say no, but I definitely need a little bit of mentoring in this department. So I'm going to let you kick it off with the eight reasons to say no and I'll let you start off with the first one.
Speaker 2:Well, let's just get into it first, because that's the solution. We've got to talk about the problem first. The problem is Ashleigh. Have you seen that there is a large turnover of property managers in the industry? Have you noticed?
Speaker 1:Not in my office, but in the industry.
Speaker 2:And not in your office, and congratulations on your stability. That says a lot about I know that you really do care for your team, which is fantastic, but regretfully, a lot of red-raw bosses aren't like that and there's a massive turnover in the industry. There are problems, particularly when you see Melbourne. I get people messaging me Darren, the salaries in Melbourne have gone crazy in 18, 90, $100,000 for a property manager. I'm moving there and I said wait, there's a reason for that. boss is a desperate. It's not that they're generous, they're desperate. There's a massive turnover, particularly in Victoria legislation issues, vcat issues, problems. It's very aggressive not saying it's not aggressive anywhere else, but there's a massive problem.
Speaker 2:One of the biggest issues and causes of property managers leaving the industry is always burnout, and I've just written my book Master Your Time Secrets and I just want to invite people. you can get it now. It's about to be printed, but you can get it right now. order right now. Just go to masteryourtimessecretscom. The book is free, just pay shipping. but it's all about understanding and how to reduce your stress, how to reduce your burnout, and one of the big issues that causes burnout is well, i'm going to put it this way, there's two reasons, mainly The two D's of when a property manager resigns, two D's that they say to a boss. the two D's are difficult owners and dickheads. And these eight reasons for not taking on new businesses is very much not taking on those toxic properties to start with. Now in my book I do deal with how to detoxify your rent roll and get rid of these bad owners. If they're on board they probably are, how to move them out with growth. But this is all about the eight key reasons that when you look at a property, it's either going to help the rent roll or it's going to hurt it. Take on too many properties that hurt it, you've got a ball and chain factor which just burns out and pushes you and other people out of the business. increasing the turnover of property managers causes all sorts of problems. You want it to stop. So there's some really good reasons why you want to listen to these eight reasons to say no to new business.
Speaker 2:And so the first one is we're in it for money, all right, and I know, ashley, you'd be in it for love and probably wouldn't care if you didn't get paid, but I'm only joking. You're in it for dollars too. We've all got bills to pay. But the end of the day we've got to focus on the property we're taking on isn't going to pay the bills And I certainly teach. you need to be taking on a minimum three grand a year. So that's management fees, leasing fees, other fees in a typical year what would be the minimum? I say to aim for at least 3,000. Now, this isn't a fee lesson, but let's say your minimum might be two and a half.
Speaker 2:So work out when you look at a property. you know the rent. what's the management fee going to be? You can't count GST. What's the management fee going to be? Is the tenant likely to have, like a tenant leaving every two years? Well then you can account for at least half the leasing fee and you've got your. you've got your PCR fee. You commonly charge it. of course, in WA You would have, you know, four routine inspections. If you're doing four routine inspections a year, you've got your monthly admin fee and all of that, so you can get a fixed and go in the next 12 months I should be able to earn X dollars minimum on that property And so you need to work out what your dollar benchmark is. So if you're looking at a property and it doesn't meet that, why are you taking it on board? There's only so many properties a property manager can carry in a portfolio in a bucket, if you want to call it.
Speaker 1:Can I stop on this one? I'm only bringing it up because others might bring it up as well. So I absolutely agree. Like I know what my figure is and what it needs to be, but I just did. Actually that was really bad. I just used the word, but That's all right, it's cool.
Speaker 2:And look, please understand, i'm controversial and I poke people with my words to bring out the big, but So it's cool.
Speaker 1:Okay, i just I didn't actually. That wasn't actually me doing it on purpose. It was me actually doing that by accident. But what if the owner has like 10 properties and it's like you want to take all 10 properties but it falls a little bit below? you know, you sort of want to take it And as a coach, would you say to me in that situation Ash, stay true, or is there anything else I should consider in that, or are there any reasons why you might fluctuate a little bit?
Speaker 2:I guess my feelings are you want to earn as much as you can out of that bucket, which is a maximum amount of properties that property manager can carry, because they can't. you know. let's just say you're going to take 10 properties on, give them a wonderful discount, but that's 10% capacity of that bucket. You can't earn anything more out of that. So if we're going to take on the workload because we want the roofs in the front doors, but now we're earning seven properties worth of income, you've now lowered the earning capacity of your bucket because there's only so much that property manager can carry.
Speaker 2:So I'm just saying to people be really, really careful. Are you in it for the workload? Are you in it for racing to capacity of your portfolio workload as soon as you can? before you go right, i have to go and get another bucket which is going to cost me a property manager, desk costs, internet costs, insurance costs, blah, blah, blah. There's a cost involved to which portfolio You want to maximize the income out of those, for example, 100 properties of that property manager managers, maximum income, not billing it as quick as you can with workplace, does that make sense? So it's trying to get to me. it's a maximum amount of earning power that you can get out of that particular portfolio that that property manager can manage.
Speaker 1:Yeah, okay, so, yeah. So I mean, ultimately, like, i think my mind knows that And I guess for me it probably would depend on where I am in my growth. So, for example, i've just hired a new team member who's on the growth portfolio, so she's got a very low number. So part of me sort of wants to build that up and then worry about because in like I mean I'm not saying that, it's like it would be stupidly low, but it would have made you wouldn't reach that that minimum that I probably should. We might be a little bit short, but in my mind I'm thinking, oh, i'd probably take it on And then in 12 months do a check of the whole portfolio and then clean it up a little bit. Whether that's right or wrong I'm just talking about I think there's no right or wrong here.
Speaker 2:I guess there was a really good quote I saw from Tom Panos recently And he said it's not about turnover, it's about leftover. It's not about simply getting the business on board and breaking even a little bit more. That's turnover, because we've all got bills to pay And it really, on average, for every dollar that is earned in the income, 80% is taken up in expenses. That's turnover. So it's not about focusing on the turnover, it's about focusing on the leftover. So if it's going to cost you, it's probably about $16 to $1700 a year. now It costs in Perth or any staffed agency to manage one property And so if you're earning $1800 in total for income, you're going to go. Woohoo, we got a brief in the front door. Now you're only earning $100.
Speaker 2:And if that's a typical owner see, that's just my angle that I'm taking. It's all about leftover and profitability as opposed to turnover.
Speaker 1:Yeah, absolutely. I know I have done this exercise with six other business owners in Perth, so the portfolios range between 500 and 1,000 doors And it was an average actually was an average of 1,200 to 1,500, with 1,500 per property being probably the right amount, so you can use that as a little bit of a base. I did that exercise about 12 months ago.
Speaker 2:And I did that exercise in Perth twice about three years ago. It came out at $1,500. I guess I added those extra numbers on it because of inflation. That's happened since then.
Speaker 1:Yeah, it's good And, like I said, the only reason why I bring up sort of my thoughts as well is just because there'll be some other people that also have that same thought. So if you're thinking that you are not alone, Yeah, yeah, no, no problem, That's fine.
Speaker 2:Well, number two so this one's a lot more easier. That's probably a little bit complicated, knowing your numbers. But the next one is really easy rent level. So what's the minimum rent? before you say no, and there are certain suburbs in Perth or Adelaide or Sydney or whatever, that if you go below a certain rent threshold you're going into lower socio And that means the more lower you go into that type of housing and that demographic, the higher the social problems, the higher the chance that that lower rent is not even going to get paid, the more touch time and dealing with issues on the tenancy and all of those sort of things. So it increases your workload but lowers your income. And so there really needs to be a cutoff point.
Speaker 2:And I just recommend here it does doubt how very neatly into the first point about what's the minimum fee income you want to earn. Because that rent level does determine how much it's going to be, because traditionally we're a percentage based management fee and letting fee or leasing fee and lease renewal fees. All of that tend to be based on a week's currency, so that can greatly affect how much income you're bringing in. So, for example, in Perth, there's suburbs like Armadale where a lot of property managers may refuse to go. Or in Adelaide, it's the Northern suburbs, elizabeth, or you know. And so what is that rent level threshold before you should say no because it doesn't fit into number one with the fee commission.
Speaker 1:And so on that. So yes, you can work out what that minimum would be based on the financials. And would it be the wrong tactic to look at your current portfolio? So if I was to look at my current portfolio and say that my average rent on Adelaide office is $480 per week, so from now on I'm not going to do anything less than that because I want to keep my average high, would that be a way that you can look?
Speaker 2:at that. You can certainly look at that, or you may look at okay, i'm going to bring two quality property. Every two quality properties that I bring in at $480 a week or more, i will cut loose one property that's at 450 or 440, and your average, your average rent, will go up. Yeah, and every time that average rent goes up, guess what else goes up? Your rent roll value goes up. It all connects into the big machine of making sure our average management fee is on the way up, because we haven't all got full management fees right. We've done those little discounts here and there and we want to move that up. We want to move our average rent up. We want to move our average income per property per month up. There's all these numbers here that we want to be moving up and they all turn into leftover profitability and not just turnover.
Speaker 1:And this is a very, very good reminder for those businesses that are having issues hiring new staff. This is actually probably what I would recommend one of the best exercises to do, because you can actually grow your portfolio and the numbers in your portfolio without actually growing your team. So if you are struggling with finding someone. Maybe have a look at how you can create a better quality portfolio where you're managing less properties, all the same properties, but with the higher revenue.
Speaker 2:Yeah, i actually call it detoxing the rent roll. It is a chapter in my new book Master Your Time Secrets. Just go to masteryourtimesecretscom for that book And I apologize if I've mentioned it before. I just thought I'd forgotten to mention that the URL. Let's move on.
Speaker 2:So now, distance Okay. So distance is drive time. Okay, how far away from the office? And every now and then you get, oh, but, darren, i've got a property manager that leaves 40 minutes drive away or an hour's drive away. It's okay for me to put properties there, and I'm thinking are you counting on that property manager to be around forever? Maybe if it was near your house, maybe, but anyway, here's my point, ashley, who's your favorite property manager? Actually, that's a bad question. So you're asking that because I keep telling you Name me a property manager in your office.
Speaker 2:Casey, casey, all right. So I say to Casey because, let's say, she's a little bit stressed and she needs a little bit of time out and stuff like that. Casey, i tell you what. Let's just give you a break, and what we're going to do is we're going to give you two hours a day off. What we want you to do take your chair, take it out to the car park or take you down to that wonderful little cafe. You got there in Angelo Street. You know you've got a few good cafes around The secret garden. Let's go down to the secret garden and sit there. You can have a cup of coffee, no problem. You're allowed to take and make phone calls, no worries, for two hours a day. you've got to sit in that beautiful place, smell the roses, enjoy the air and just relax for two hours a day. Monday, tuesday, wednesday, thursday, friday. Each week It's a distress. How is she going to be? You see that, two hours a day.
Speaker 1:I don't know if she's going to be more stressed or less stressed.
Speaker 2:Well, if she's going to get more stressed that's the point I'm making Why is she going to get more stressed?
Speaker 1:Because she's wasting time.
Speaker 2:She's wasting time. But a lot of property managers don't have a problem sitting in a car for two hours a day. And so I remember a number of years ago, with a rent roll I was managing, we had a property manager, we did a time and motion study and we had anything in the metro area we'll do. And so from Adelaide North to Adelaide South, from tippy top to tippy bottom, was two hours drive and anything in between. And so we did a time and motion study and she was stressed and 26% of her time was sitting on a chair in a car.
Speaker 2:So travel to a property is downtime, it's dead task time. We can't effectively be managing tasks and effectively managing when you're sitting on a chair, and so we've got to be very careful around the distances that we're driving to property. So what I do as a guide here don't take on anything anything more than 30 minutes drive. And then it's well, darren, i've got an owner that's got a property in Geraldton or Albany or just crazy distances, and I hear it. I've been with property managers in Adelaide that have got properties four hours drive away and I'm thinking, oh, my goodness, you're doing triple fees. Oh no, it's actually less friends We're doing? it's just mindless is that they're just taking on anything with the roof from the front door, without distances taken into account. Now, one or two long distance properties 30 minutes driver now maybe okay, start adding those on. It's like a property manager sitting in your car park or in a garden for two hours a day and doing nothing. It's going to cause problems.
Speaker 1:It's. This is the reason why I needed to have this do his podcast today. So I struggled with that because we do all over Perth and we are the property managers, are geographically based. But that word again. I had a client that said, can you do a property in this area? And I'm like, oh, it's just one suburb along. And that has happened three times. And now I'm managing some properties three suburbs away than where I originally wanted, so those boundaries have shifted because it's it's me just going, oh, it's, it's only five minutes away from that other property, but it's consistently pushing that boundary which is my fault and not just sticking to the suburbs. And even if that new manager comes in, it's only a couple of minutes away. I'm sorry, we don't manage that area And gosh, i find that difficult.
Speaker 2:Yeah, that's cool. And just to be aware that every minute of travel time is dead task time They can't effectively doing. They can take phone calls and stuff, but it's dead time sitting on a chair. Okay, so moving on location.
Speaker 2:So, for example, there were certain in region areas, regional towns are certain streets that property managers fear to tread, and in cities there's suburbs where property managers shouldn't go because it's just a lot of problems. Generally you're lower socio, low demographic suburbs and so forth. And there's in lower demographic areas there's worse suburbs and others as well. And I remember in in Adelaide with a rent while we were managing there were certain suburbs we just blacklisted We had a list of about six or seven that we just not going to manage property in those suburbs because there's too many problems. And here is another thing too in those areas of a good tenant doesn't want to rent in those areas, why do you want to manage it? And that's a good question to any one of these things. When you're looking at a property and considering, is this going to help my rent role? it's going to hurt it. If a good tenant doesn't want to live there, why do you want to take it? Is it just you want turnover, you just want workload where you can smash yourself silly, or let's just take care on the sort of choices that we're making at the new business end. And look this list here. You're probably going to say no to one in 10 or one in 15. It's no big deal, you know, but it's making sure that we only have a healthy rent role where property managers are happy to dwell in And it's not going to become an environment unfit for human habitation, like the atmosphere on Mars, where they're just going to get poisoned And not realizing that there is poisonous water in the drinking water. You know it's. It's, yeah, that's what toxic rent roles can do.
Speaker 2:All right, so the next one is so we said location, so in regional areas it's streets. Dennis used to tell me there was four streets in narrow, where he was a BDM. All had a queue in front And so he wasn't allowed to touch the four streets with a queue And that was his role And I think once he did actually get a property and the property managers are so angry at him we don't manage property in those streets, for good reason. Okay, next one's property type. So actually driving down the and I'm sorry, i'll just keep on coming back to Perth. but driving down the Quenana Highway right And leaving South Perth, and I look on driving south, i look on the left and there's a big block of flats And you know, and is these sort of properties here, flats and units? What type of tenant is that dwelling or that type going to attract? And if that type of tenant that it typically attracts isn't going to be good, why do we need to take it on now? It's probably not going to fit the amount of fee commission that we want And it's probably not going to fit the rent rate level And it might be in a bad location as well. But we're talking about flats, we're talking about units. Or we're talking about a property that was once owned by government housing, where only a low associate economic tenant may want to rent it, or a low end tenant that we're going to have social problems with, okay, or impact with. So, but having said that, in South Perth is also beautiful, apartment blocks And apartments are only going to attract a certain type of tenant, but that type of tenant's going to be cool. So the property type what's the type of property we're not going to take on? So for me it was units and flats. In South Australia we had ex-government housing called semis. They're built like a brick crack house, they're bomb proof practically, and they only attract a certain type of demographic generally, and so we blacklisted those or anything that was ex-government housing that aren't typically attract lower socio. So that were our rules. No rules might be different.
Speaker 2:All right, next one We're up to number five. That was five. Now number six. This is a really easy one, really easy one that I'm sure most property managers are caught with. But if it's low quality in repair, why do you want to take it on Now? it could be the owners just bought it and it's in disrepairing. He's gonna spend $30,000. Happy days, it's gonna change right. But if it's in disrepair and it has been in disrepair for a long time it's likely to stay in disrepair, no matter what promises are given. And again it comes down to is a good tenant gonna wanna live there or not?
Speaker 1:And, on this note, this is where, if you're doing the new management appraisal and you could probably test the waters to see whether it's the owner that's the issue or whether they're willing to do the repairs or not But by going in and doing an appraisal and saying, listen, would you be prepared to paint the property and redo the flaws? and then seeing what their response is would probably. Would that be right, and that would tell you whether this is going to be only we wanna work with or not. Because if you said, oh, absolutely, i've put aside this much money, i'm happy to do what you recommend, tick, that's no worries, but if the owner goes well, surely you could find someone who'd rented, as is it's a rental crisis.
Speaker 2:Well then, you'd be like, hmm, maybe not, yeah, yeah, yeah for sure. But a property does tend to the owner's had it for a while. It's like a person's children tells them about the parents, right. A person's pets and the pets behavior tells them about the parents right. The house tells you about the owner's mindset, because the house represents what they want and what their values are. And if they don't value keeping the property in a good state of repair because they wanna screw every cent out of it as they cannot put anything back, the house will show that or the property will show that. And also there's a big mistake out there of taking property site unseen.
Speaker 2:And I'll just give you my greatest mistake here. I had an owner who were managing the property. They called me up one day hey, darren, i've got a second property that you don't know about. I want you to manage it. And I was managing this person's other property for a couple of years and it was okay. It wasn't brilliant, it was just a bread and butter rental. You know, mid road did the job And I said all right, that's fine. And she said look, i've got a difficult tenant at the moment. He's not paying his rent. Can you go and sort it? Okay, no worries, i can sort it out for you. Did the managing agreement by tax? you know the thermal facts. You know back in those days. You remember those days, ashley.
Speaker 1:And just.
Speaker 2:I know I was just. I'm pushing my luck here by saying that.
Speaker 2:And anyway so and of course, i've got my management agreement. I've got the right to manage it. Okay, you serve the letter on the tenant. Go out there. You know that they got to pay the rent. Go and do an initial routine inspection, because there's no ongoing inspection or PCR on it. And I just stood out the front and I went oh crap, what have I done? This place is a dump. It is terrible. And when I did my routine inspection it was bar none the worst property I've ever seen. And now I was managing it And I called up the owner and I actually said I want to withdraw management.
Speaker 2:This is not right. And the tenants refusing to pay the rent because you can practically you know you've got free skylights coming through the ceiling, with sunlight through the cracks, and the tenants saying, until this is repaired and that I've got hot water and that's repaired and I've got a light that works in this bedroom, i'm not paying rent. I'm thinking I can't compete with this. You know Tenants right, and I learned my lesson don't take a property without looking at it first.
Speaker 1:So, okay, i'm glad this has come up because a question I ran a BDM club for six months And I had one of the BDMs asked me this question and it actually had a come up, so I'll ask you. She said to me, if you're taking a new management transfer from another real estate agent she was talking about giving notice to the existing tenants you can get in there and do an appraisal and all of that. And I said to her you know I don't think in my you know, 20 odd years I have ever gone in and appraised and physically checked the property when it was a handover from another agent And you know you're talking about not taking properties. On that you haven't seen What would be your response to that situation or to that question.
Speaker 2:About going in there and meeting the tenant.
Speaker 1:Yeah, like I knew that wasn't the case. Hand over the situation, Well.
Speaker 2:I'm going to leave this actually, because I know I've got eight reasons, but I've got a couple more added on, all right, and that's all about not taking other people's monkeys on, all right, and we're going to talk about that. So it's okay, we can leave that comment for them, absolutely. But because you know, after you've done a number of years there's probably an extra couple of things you probably want to add on to the eight things. So it's really I've got 10, but you know, the last two are sort of my opinion.
Speaker 1:Eight for Lucky. Numbers, i think that's all right, Okay so okay.
Speaker 2:The next one we just talked about property quality. Okay, it's going to be a reasonable to good state of repair. All right. And look, at the end of the day, the legislation is so tough now, 20 years ago, we've probably got away with it. But you know why should we manage properties in a poor state of repair? You know there's so many issues and problems and hassles that comes with it, and we just want to do the right thing according to the Resdynch Retentencies Act. So all right.
Speaker 2:Next one is C-class landlords, and one of my favorite sayings is you know, c-class landlords are like a packet of cigarettes and they'll take years off your life. And there's seven characteristics of a C-class landlord that I just rattled off And I could spend an hour talking about these, but we're going to take a few seconds. Number one over-demanding and unreasonable. They just you call them up with good news, Mr Owner, we've spent weeks and weeks and weeks finding a quality tenant from. We've actually got a good tenant moving in and they just said about bloody time. And they just peel over your parade, they dump on you emotionally, they can control you, they bully you, they can cause all sorts of problems. Characteristic number two is they like to take up lots of your time and send you five page love letter emails And you just get off the phone to a normal owner and it's like five minutes but this guy's an hour and he just done my head in And it's just waiting through a swamp And it's very, very difficult Taking up too much of your time with frivolous requests. And I've just driven past and the tenant didn't mow that lawn Last weekend, or the rubbish collection from the council was two days ago and they're really been, is still out, and just stuff like this, just frivolous stuff.
Speaker 2:The next one is. Number three is whatever the rent is, the market rent that a good tenant will pay. Well, they want more, which means now we're not gonna attract good tenants because good tenants are market savvy And so above market rents, unreasonable rents, above market, not talking a little bit a lot. So it's just gonna stay vacant or it's only gonna attract the type of tenants we wouldn't want anyway, which is the people that say they'll pay double rent but in fact we'll pay nothing. So the next one is whatever your fees are, well, they can't help themselves, but they just gotta have a discount. Because you're an agent, your fees are negotiable. We must have a discount And they just spend a lot of time focusing on fees, are very fee focused and have a real problem around that, particularly with your WA property management. Go, wa property management, fee paradise, okay.
Speaker 2:Next one is the next characteristic is they just won't put little to no money into the property for repairs. So, no luck. Keep The property, like any investment, needs to have money put into it to keep it to a standard. They don't believe that It's all about all the money coming out of it. Gradually the property just gets very worn out, run down and a good tenant doesn't wanna rent there, okay. The next one after that is well, it's just a crap property that tends to attract a crap tenant. And the next characteristic is they just tend to a lot of the time have a low rent property. So with low rent, with a discount, it's just bad all around.
Speaker 2:So there's your seven characteristics of what makes a C-Class landlord And we've really got to. These are the ones that burn out our staff. They're the ones that we wake up at three in the morning. At that we can call it the property manager Wiching hour. At three o'clock, when our eyes open, we're in a cold sweat and our mind is swimming with anxiety. It's usually we're thinking about these owners And I don't know. Ashley, can you relate to that?
Speaker 1:Well, i was just gonna say so I'm not being a very nice person by telling my team that they're character building clients. You know you're all gonna have one or two on your portfolio to keep you on your toes And other things.
Speaker 2:Managers say Feeling is fine.
Speaker 1:No, i mean no, i like gosh. I feel like I should be paying you too for a consultant, you know, for a consultancy fee for an hour, because I'm listening to you and each of these strategies are things that I needed, that little reminder And I'm not saying that I've got a lot of them, but I've definitely got a couple in each section.
Speaker 2:Now as a fee expert and I'm working with rent rolls to maximize fees. When we increase fees, we always have a small loss. When I do the autopsy and let's say we've lost 10 properties, i promise you at least 80 to 70% of those are C-class landlords And the average income for the portfolio per property usually these ones are half. So, though we may have lost 10 properties, we actually lost five properties or six properties of income. Yeah. So it's amazing how a negative effect that C-class landlords have.
Speaker 2:I'm really passionate about detoxifying our rent roll, getting them out, and my book talks about, you know, every two or three quality properties that tick these boxes that we're talking about. Just get rid of one or two And it's called the worst first hit list. So you sit down with the team. You know who's the worst first And this is you know property type, it's distance, it's location, it's quality, it's a C-class landlord And you put a D for distance next to that property.
Speaker 2:That's more than 30 minutes. If it's a low rent level, put LR next to it. If it's a bad property type, put a T there if it doesn't meet the property type. And some of these properties on this list please start getting the alphabet in a lots of lots of letters next to it, because it doesn't meet this criteria five or six times over, or what's the worst first, put it on the list. What's the second worst, put it on the list. Come up with your 20 worst first properties and then, for every three quality properties you bring on board you can strike, you know, get permission to sack number one and then sack number two.
Speaker 1:I like that alphabet mentality. Now, this is completely off the record.
Speaker 1:I'm not off the record because it's a posh it's on the record all those listeners listening, just to wake you up a bit, but just give you a bit of a laugh. It reminds me of someone who said to me when you're dating that you have, like you know, maybe a new boyfriend's name in your phone and every time he pisses you off you take a letter off his name until it's like hangman there's no letters left and you get rid of him and anyway. That reminded me of that technique, which is so completely weird to mention it, but it just reminded me that's how I did business with helpjacks.
Speaker 2:We wrote down all these letters, you know, for all of the criteria that we've been through, and if something's got a long list of letters, it's a bad property. So the worst first 20 properties there and it's a great rent roll growth strategy because you're just motivating. Now have we got two quality properties on board? woohoo, let's go sack Mr, whatever his name is, okay yeah, i'm actually going to do that with my team.
Speaker 1:I think that's actually really good and I think that they, the team, will feel quite empowered by being able to have some you know authority to actually do that, so that they're doing it and then reporting it back to me so that I can see where it's at. So I actually will do that. Can I just quickly interrupt with a quick question and I know you've still got a few more to go but when going through these strategies, is it the like the business owner that sort of decides where all these boundaries are, or would it be the property managers, or is it a team effort, like what would? if you were going into an office? who would you let the business owner or the property managers or both, make that criteria?
Speaker 2:really got to be bosses and property managers. Bosses needs to be on board. They need to listen to. This podcast is the reasons why I think a lot of bosses are getting the message now, when they can't find property managers anymore because I don't want to do the job or the pace too low. These are the things that hurt your property manager. Investment bosses okay. So it is a collaboration with bosses and the team working together.
Speaker 2:The bosses that are just focused on the sales and the property management is not just a byproduct of the sales process, like toxic waste and here my sarcasm coming through there but it's a boss. It's keenly interested in the welfare of the rent, well, welfare of the staff, the welfare of the quality of what's on the portfolio, working together. But we're talking about bringing in quality, then getting rid of crap. So you're going to bring in the quality first. You don't just get rid of the crap without bringing the quality in. And I have this image of a rainwater tank, you know, and it's just a dirty rainwater tank. How are we going to get rid of the dirt? so let's undo the tap at the bottom and let the sludge out, let some sludge out and then clean water on the top, then again sludge out at the bottom clean water on the top and over a period of time we're going to have crystal clear drinking water. So we've got to detoxify the rent robber, getting the poisons out and, one by one, identifying with the with the letters you know deep for distance and T for type and all of that and identifying the crap ones and then replace them with quality. And your property managers are just going to love you.
Speaker 2:Every time you get rid of a crappy owner, your property manager to thinking my boss cares, my boss cares about my welfare by willing to be get rid of business, but if the boss says no, they might want to sell one day the. The boss is giving a silent message, i don't care. And it just adds to the nail in the coffin with that property manager to come in. And actually you don't have this too often, but a lot of bosses have nightmares about what I'm about to say. And at four o'clock on a Friday afternoon the property manager comes in and looks at the boss and says hey, you got a minute, i just want to chat. Can we just go into your office and shut the door? and the boss is going, because this is what they've had nightmares about. Is that quality property manager leading?
Speaker 2:and once that conversation starts and they've got death in their eyes you know what death looks like it's I've made a decision. I am already going. You can't bring them back from the dead now. You can try and sit down and go. Oh well, i'll give you more and I'll do this and do that. If you're able to get them to change their mind will probably. Two weeks later they're right back to that same place again. They're gone, and so this is all about preventing them having that unnecessary conversation or extending their lifespan with the agency by putting these things in the place, and that's why it's important to listen to stuff anyway. Number eight the F word. You know what the F word is. Ashley, i'll have a good furniture.
Speaker 1:So that was not the word I was thinking it's furniture.
Speaker 2:So okay, let's just qualify ourselves. If we're not doing Airbnb, all righty. We're not doing short term accommodation, not doing student accommodation and we're not doing holiday accommodation, because those types of accommodation needs furniture. We're talking about properties in the, in the, in the burbs, where we're going to have tenons for 12 months, two years, three years. Furniture is a hindrance and there's so many complications that comes with furniture. So anything more than a dishwasher you know we're going to get in the lounge sweets and beds and crockery, cutlery and all this crazy stuff. It just causes a problem. Oh, my goodness me, when I was managing 28 property managers and you know one group of properties we had in Catherine Northern Territory, these little units with a, with furniture in a microwave. I remember microwaves going missing and I have to, i have to authorize checks to reimburse the owner because the property manager missed it and it just added a whole layer of complications that in residential property management, traditional property management, we really don't need.
Speaker 1:So I hope I qualified myself pretty much there and also furnished properties typically would be more turn over as well, which is more work.
Speaker 2:So yeah, and you know, far out, we've got a person speaking at our conference coming up, the IGT conference on the gold coast, igt 2023. We're bringing in a speaker from New Zealand who won the contract for the America's Cup teams when they're racing in Auckland. She was required to go get them their corporate accommodation and the story is that she's got and the amazing things that you achieve. She won the America's Cup, so she'll be talking on that. But that type of corporate accommodation, all of that we're not talking about that sort of thing. We're talking about average properties in the suburbs that the average traditional rent roll deals with, and I think everyone understands what I'm talking about.
Speaker 2:So, alright, next to an add on this is my experience of a many, many, many years, and when I come across property managers 20 years, 30 years plus they tend to have the same sort of things to that they have rules on because of the 20 years or 30 years behind them, and so the first one is getting into the least, not doing the leasing only, and and this is this is more opinion okay, and this is my opinion, i'm certainly people want to do leasing on these. It's up to them, and if you are going to do leasing on a charge double alright. So if you're normal, letting these two weeks rent will make it four weeks rent alright, and you'll get it okay if you get you double alright. If you're going to do otherwise, there's a couple of reasons that I say to people.
Speaker 2:The understand is that one you're giving away a good 10 alright when you could have them for your rent roll alright. You deserve the good tenant in your full time management and giving them that. But here is the biggest reason why. So Ashley attended gets behind in the rent. What's your first step of action? at what day in the office? when is it first day, second day, third day when you take action?
Speaker 1:I think our automation happens on day one and then our property managers step in with a more you know phone call type thing on day three.
Speaker 2:Okay, day one, day three, but with the self managing owner, he might his first step of implementation or action at day 30. Alright, big difference early intervention, stamping on the cigarette, but while it's still smoldering, put out the fire even before it starts, or wait for the fire up, and then, while the house is on fire and the amount is so, 30 days could be too late, whereas one day, three days, you right on top of it. And so same tenant, different scenario. And so therefore the owner ends up with evicting the tenant. But now not only does he think he had a bad tenant, he thinks he had a bad agent. So now we are bringing him out of there cause he knows he can't be careful. He managed to jump his back, and that's somebody who can't probably actually hold a church and soft and understands how to do a good job when it was his lack of early intervention.
Speaker 2:So that's an example again where leasing leasing onlys can cause a problem. Alrighty, the last thing now is not taking one other people's monkeys, and what I mean by that is is if an owner comes in and my tenant's four months behind in the rent, i want you to go and fix it. Usually there's a lot of work involved. The tenant made you shoot through right away. Now you've got to clean up the property with a fine inspection, all the work to get it And a lot of work for very, very little income, a lot of stress and a lot of issues. So now, what was your question?
Speaker 1:again, if you can just repeat the question And this has definitely happened, actually happened once to me and I learned my lesson where I took over a management from another agent And when I picked up the file and the ledger the tenant was in six months of arrears And yet no one had told me.
Speaker 1:And I guess back then I thought, like that is not something that I thought to even ask, cause it never happened to me, and I thought, you know, surely that's something as a known that you would have told me before I took over the file. So I was so like I know it sounds silly, but you know asking that question of is your tenant rent up to day or is it up to day? But the other BDM that had the question was when taking on a management from another office, you know you're sort of saying how it's important to go into the property to have a look, but when I've taken over management from other offices I actually had never gone in and looked at the property first and got access, because generally what happens is that process it's quite private. You know the new owners called you. They don't want you to say anything. You know you can't go in and get access yet to the property Cause I haven't even told their property manager. It's all a bit of an awkward it's way too intimate.
Speaker 1:So this BDM had asked me how do you manage that? And I just said to her listen, i've never gone in and physically checked a property that was coming from another agent, so I couldn't answer it.
Speaker 2:Yeah, yeah, okay. So I understand your question now. So I guess you know your issue is experience, okay, and not asking the question about that's just experience, right, you learn the lesson. You won't make the same mistake again. With regards to looking at the property, i guess that comes down to experience as well.
Speaker 2:Can you drive past and have a look on Google Earth? have a look at the property that way. Look at street view as well, look at all the factors here that tell you is this going to be something you can deal with And it's going to be okay, and say yes to, and then go and do your inspections. And I get it. You may not be able to look through. You're just going to have to look at all of the signs together and make a decision based on that information.
Speaker 2:It's a bit like you know you're at an open inspection, you meet a tenant and you notice the car that they're driving is, you know, beat up and hasn't been washed in five years, and it's full of rubbish, you know. You then drive past the outside of the property, because they've given you the address on the application And you see that it's just full of rubbish and all of that. You know there's certain signs that added up, can you actually paint you a very accurate picture that once you step into there it's going to you know it's a problem or it's not? You may be able to get a copy of the PCR, the in-going inspection, botups, all of those sort of things to judge. Yeah, should we do this or should we not?
Speaker 1:Yeah, and I think that would probably that's where I think I might give her some recommendations is that when taking on a property from another agent, ask for a copy of the tenant ledger the last route in inspection and the property condition report actually, and maybe even the lease as well, so that you can have a look and also just make sure that all the documents they've got, you know, done properly. Good, and it'll be an easy. Because if the owner says, you know well, if you look at a ledger and it's no good, then that's one thing. But if the owner goes, oh, actually we don't have a lease agreement because it's just being, you know, casual or whatever, then at least by asking those questions those little alarm bells will come up as well. So I might suggest that to her. But funny, like I guess in all my experience I've never actually done that myself, but I've also never really had too many bad experiences either. But I think it's a very, very good tip and something that I should implement.
Speaker 2:Yeah, yeah, that's for sure. I think having a list of questions is a good thing, but your experience is gonna tell you whether you should or shouldn't Gather as much information as you can to make a qualified choice, and you know what you're gonna be stepping into. So I guess one of my horror stories is I took out a property once where a tenant was several months behind and he was a local tattoo artist at the local tattoo parlor And we walked into the tattoo parlor to say his name was Grizz as in Grizzly Bear, grizz And Grizz, we're taking over management of your property. And we had to run out of that place with him screaming abuse, running to go grab a baseball bat, and ran out with the other property manager And I looked at it and I said we should never have taken this on. This is too dangerous. And we handed the management back immediately Yeah, because no one's life.
Speaker 2:And some years later I ended up inheriting a management with that guy in it and doing routine inspections And he always had that ax handle next to the door. Whenever you see someone with a baseball bat or an ax handle parked near a door, they're trying to avoid certain types of people that if you don't get involved in crime, you won't have a problem with.
Speaker 1:So that should be the 11th strategy? Wow, look out for ax and baseball bat at front door.
Speaker 2:Oh, and baseball bats with nails in them and things like that. You know, just, you know, yeah, it's an interesting job. Property management, let's put it that way.
Speaker 1:It is, And as much experience as I have and I've been very lucky to have some really good success these strategies are something that you always need refreshers on, because I haven't had a refresher on this for a few years now And I needed to have a refresher on that, And now I will absolutely be going back to my team and doing those labels. I think is a really good. I think the team will actually really enjoy that, And so, yeah, I feel like this is something definitely sort of every one or two years I don't care how much experience you've got you need to re-look at these, especially when you've got new team. Make sure everyone knows them and everyone's on board with it as well, because property managers, you know, are also responsible for the growth coming in to a business, So they need to know what the rules are. So if one of the existing owners asks about managing another property, they know what the guidelines are. So this isn't everybody problem, not just the BDM and business owner problem.
Speaker 2:Yeah, i'm just gonna invite people. If you want a list of the eight things, the criteria, i've got it on a Word document. You can take that criteria and tailor it for your business. So you've got your own policy about what you'll take on and what you won't. Just email me Darren at IGT as an Inspire Growth Training at IGT mail, not mail as in boy mail mailcom. So, darren at IGT mailcom, email me eight reasons to say no, or PM collective or something like that. That way I know that you're listening to the podcast, i know what you're after and I'll just send out the one page Word doc that you can use nice and easy.
Speaker 1:That's wonderful, and stick that up on your desk and remind yourself every day which is what I'm gonna need to do. Darren, it's an absolute pleasure. I appreciate it so much. Your time. I am very thankful to have that refresher for me, and I know that this podcast is. We don't like to date and time things, but always do keep an eye out for the training that IGT do. They're doing national tours. They do a lot of work in all states around Australia and also, obviously, the world as well. So if you are looking for some inspiration, go check out their stuff and see when they are in your area next. Thank you, darren.
Speaker 2:No worries, thank you Ash.
