PM Collective - The ART of property management
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PM Collective - The ART of property management
Secrets to Achieving 0% Rent Arrears with Expert Strategies
What if you could achieve zero rent arrears in your property portfolio? Our latest episode is packed with expert insights on this ambitious goal. We’re joined by Giselle from M-Motion in Queensland, Sam from Rent Choice in WA, and Skye from Taylored Property Management in Adelaide. These seasoned professionals discuss the effectiveness of tenant education at different stages and stress the crucial role of early communication and prompt intervention. Giselle sheds light on the importance of consistent follow-ups to maintain a clean tenant ledger, while Sam emphasizes how combining automation with personal touches can streamline arrears management.
We uncover practical strategies that can transform your rent collection process. Learn how direct debit systems and automated platforms like PropertyTree and PropertyMe can simplify your workload. Skye shares her hands-on experiences from South Australia, highlighting the challenges of legislative variations and the necessity of timely phone calls to resolve payment issues. Our conversation dives into the nitty-gritty of handling dishonored payments and issuing breach notices, offering you a robust framework to adapt to your local regulations.
Enhancing tenant education is key to long-term success in property management. We explore how detailed checklists during sign-up appointments and personalized communication can make all the difference. Beyond automation, personal follow-ups remain indispensable in maintaining clear and effective communication with tenants. By the end of this episode, you’ll have actionable tips to celebrate milestones and strive towards zero rent arrears in your property management practice.
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All right, welcome to today's group podcast. It's the second one that we have done on our weekly podcast show, and I like doing the group podcast because it's really good just to get a few different opinions from people, specifically with topics like this one, which is zero rent arrears. And the reason what prompted me to actually reach out to find people that had done zero rent arrears was because I've never been able to achieve it and I am very curious if there is any secrets and tips and tricks that the people that have achieved it before can share with us. And we were just sort of talking offline a little bit about it, about, you know, the fact that it's not possible to maybe do it 24-7. And it also depends on the numbers of your portfolio. So just sort of disclaiming that that there are a couple of factors, but still a really cool personal or business KPI to achieve. So today our guests we have got the lovely Giselle Wooder from Emotion over in Queensland, we have got Sam from Rent Choice in WA and we've got Skye from Tailored Property Management in Atherton. So welcome guys, hello, hello.
Speaker 1:All right, now you guys have all had the zero rent. Heria's extremely jealous. I'm going to have a. Well, actually I've got a few questions, so I'll ask the question and then we'll sort of go around the table. So my first question is and this is a very selfish question, because I am here to learn myself is do you believe that it comes from educating tenants at the very start or does it come from educating tenants during their tenancy? So I'll start with Skye on this one. What's your thoughts on that question?
Speaker 2:both. So I definitely am very clear in the beginning at the handover of the keys, that it's about encouraging communication we all know life happens and not to be afraid to tell me if life's happening so I can pre-warn the landlord. And then during the tenancy, it's about not letting it go on for too long, I believe, Like as soon as it's there I'm onto it and I don't let go of it until we get it resolved, or I get a response or I find out what's happening. Capturing it in those early days of arrears I think sets a really clear expectation around what we will tolerate.
Speaker 1:And I think, gisela, you would be a little bit like that as well, a bit of a dog at a bone, with arrears is uh. What's your thoughts on the arrears process? Are we really strict at the start, or is it something that we sort of educate as we go along?
Speaker 3:it's, it's a combination of both. For me as well is at the start I'm very, very you know. I always say to my tenants I can be your worst, you know, your best friend or your worst enemy, it depends what you want to pick. But I try to explain one thing that many tenants have realized they don't understand the results and the effect of being late on their own ledger. And I explain that.
Speaker 3:I sent arrears on day one for the simple reason that I want their ledger to be perfect. I want them to be able to have the best opportunity if they have to change property, if they have to reapply, if the owners sell, whatever that might be. I said I want you to present the best possible ledger to the next, because that's what property managers look. I don't want to have a tenant that is applying, that has got trouble, that has been always in a rear. And some tenants they told me nobody has ever told me that I get a warning only on day seven. They get a warning from me on day one and constantly.
Speaker 3:And I always tell them because on Property May it goes from their account to the trust, from the trust to the to property me. I said I want your payment to leave your bank two days before, always. If you want one week, that's your prerogative, doesn't matter, but not later than two days. And I teach them to read the attachment, that is a physical receipt with a pay-to-date, because many don't open it, and I explained very clearly. I said that's a very, very important document to you because that will show you when is your due date. You don't have any excuses. So if you end up being late, I said you're going to pay a price that could be way worse than what you think if you are in a position that the landlord decides to sell and you have to apply for anything else, especially in this market yeah, love that.
Speaker 1:Um, sam, I'm gonna ask you a different question because I know that your office works on a lot of automation and you know you guys are really highly skilled in that. I think sometimes, and maybe what I could be failing at is potentially relying on the automation too much at the start, with, you know, just those automatic SMSs that are triggered and emails and things like that. What's your thoughts around automation and potentially using that for rent arrears to our detriment?
Speaker 4:Yeah, I think I mean especially here I feel that automation has massively helped and I think it's really important to do, because you're always out and about doing things and it's not always possible to pick up on the areas. So I think the automation helps and I don't think I'd be able to do my job properly if I didn't have the automation. I do rely on that a lot. I think the content of the automation is very important. So it's making sure that tenants are aware and again, it's educating them in those automated emails that what the potential consequences are of them, you know, being late with their rent, you know. It's just making sure that they're aware.
Speaker 4:Like going back to what Sky and Giselda said in regards to just educating them, I do the same in the automated systems. But I must admit the automated systems here do help massively, but I don't rely on them 100%. I still do pick up the phone. As soon as I get a notice from our accounts that someone's late, I will pick up the phone or I'll send an email to that tenant to let them know that we're aware of it and this, you know, this is what you need to do, kind of thing. So yeah, I think automation is 100% needed in those circumstances.
Speaker 1:Yeah, yeah, perfect. Now I am going to, sam, stay with you for a minute. I would love to just actually hear each person's process. Like what days you know that automation happens? What day do you actually breach? Now, just again, a bit of a disclaimer every state's different, every agency's different. This is more just to share what you guys do and what works for you, and I'll also share mine. We'll see whether it's as tight as what you guys are, but it's purely not. You know not how do I disclaim this, not suggesting that anyone has to follow these, but just sharing our experience of how we do it in our office and how it works well for us, and obviously always follow your legislation, your insurance, um, your businesses, uh, processes as well, um, but yeah, sam, if you can give us some insight with what the automation looks like, what day you sort of tend to preach obviously majority, because it's not maybe I'm consistent for everyone.
Speaker 4:Yeah, what that looks like okay, I mean to start with, I guess, I don't know, I'm assuming that everybody is the same, but but I shouldn't assume. But we always make sure all of our tenants are on direct debit. So that's the first thing that we do, like I don't, I don't bend on that. Even if tenants are requesting to pay manually, I just say no, it's direct debit, that's how it says in your lease agreement and I try and stick to that, unless there's a really good reason why they can't pay by direct debit. Um, but I would say probably 98 of my tenants are all on direct debit, which makes it a lot easier, um, so it kind of starts there.
Speaker 4:Um, if a tenant does um, we get an email from our accounts if they dishonor, which is normally two days later from when they try to pull it. So if we get that dishonored notification from accounts, we then send the tenants an email just basically saying hey, your direct debit's dishonored. We're going to try and pull it the next business day. Please ensure that there's enough money in your account. And I also send them a separate email saying saying look, this is the process for direct debits.
Speaker 4:I do give them one pass. So if they dishonor once, I do give them a pass because sometimes they've put a digit wrong in their direct debit or something like that. So I do give them one pass, but then I do state in the email that I send separately if it does happen again, unfortunately you'll be breached. You know without notice. And I do state in the email that I send separately if it does happen again, unfortunately you'll be breached. You know without notice. And I do go into a bit of detail about what the breach means, because a lot of tenants don't really know what a breach is. But I basically go into a bit of detail about what a breach is and how it can impact your chances of renting in the future. And then if it dishonors again, obviously then I'll breach um and then I follow the process for the book for the breach notice from there and we obviously log all our breaches and everything from there.
Speaker 1:So yeah and then, just yeah and then just a mixture of phone calls and sms's in between.
Speaker 4:Yeah the automation still happens. Um, some tenants that are regular dishonoured. I'll always pick up the phone to them and have a conversation, but normally on the second pull it always normally goes through. To be honest, it's very rare that it happens again after that.
Speaker 1:So yeah, what direct debit system do you use?
Speaker 4:What do you mean?
Speaker 1:Like does that work from your trust software?
Speaker 4:Yeah, so they just we just get them to sign a direct debit form, we import them into PropertyTree, their direct debit, and it just automatically pulls every fortnight.
Speaker 1:Yeah, there you go, okay Because. I would have thought that, like I guess it declined. I feel like that would have been. That would annoy me and I would be worried that there'd be too much work with direct debits for the declines um, I do get.
Speaker 4:Well, I've got 600, just under 600 properties and I probably, on a regular basis, get no more than five dishonor daily, but then we just yeah, which obviously is going to happen, you're never going to get. Sometimes I get none but, um, like I say, normally it's under five and then I just chase them up from there.
Speaker 1:Yeah yeah, okay, not too bad. Um, thank you for sharing Sky over to you. What does your process for rent arrears look like?
Speaker 2:Sure, I would love to have tenants on direct debit, but in SA we can't enforce a particular way of paying. But for me it's the automations in the emails. The templates are set up in PropertyMe and there is a range of different emails that I will send out based on whether I've been able to get the tenant on the phone or not. So day two it's a whoops did you forget to pay your rent? Type of email, and usually it's resolved at that point because they have just forgotten. Then the next day I'm picking up the phone.
Speaker 2:So I think, certainly in the experience I've had working with other agencies and managing other property managers, there's always a bit of a reluctance to pick up the phone and have that conversation because no one wants to talk about money. But if I'm a tenant and I'm, you know, potentially having some money juggling situations, it's really easy to ignore an email and a text. Phone calls are a little bit harder to ignore. So they generally do find, I think, quite work well, quite effectively, and then, based on whether I've been able to get them on the phone, the messages will change based on how they're interacting with me. But yeah, it's day 14 for a breach here in SA. So we're following that process quite along the way before we can actually issue that breach notice.
Speaker 1:You can't issue a breach to day 14?.
Speaker 2:Technically it's day 15, but yeah, they've got to be 14 days in arrears.
Speaker 3:Wow.
Speaker 4:Wow.
Speaker 2:Oh gosh, that's a fact. That's why we've got to like stop it before it gets to that point, right? We've really got to be quite on it early, um, because they can get quite far away behind before we can actually take any action so do people not use that to their advantage and just go?
Speaker 1:oh well, you can't do anything till day 14, and then?
Speaker 2:yeah, I definitely have tenants who've played that game and so you issue the notice. For example, they've still got seven days to remedy the breach, so they can be three weeks behind, and then they pay it all on week three and you continue that cycle for the whole tenancy.
Speaker 1:I love hearing how different states legislation, and I've mentioned this before. It's so important for us to know how each state works, because we've got so many interstate clients that own properties everywhere and I can imagine it's quite confusing for the investor when they just assume oh, the way Sky does it for my tenants is this way. Why can't you do it that way, ash? And it's sort of like making sure they understand the process, because, gosh, what a different process completely. Yeah, okay, fabulous. So pick up the phone straight up is probably the other thing that we can take away. Yeah.
Speaker 2:I don't want to slap the breach notice, it's too much paperwork. But, similar to what the other ladies have said, the messages will change and we'll educate the tenants on that process. Okay, we're now at day 10. This is what it looks like if we have to get to the breach process because they don't know what will happen, so educating them along the way as well.
Speaker 1:Yeah, amazing. And Gisela over to you. I just imagine you would just be like phone, phone, phone, annoy, annoy annoy to pay the rent.
Speaker 3:Well, you have to. Sometimes to do that I mean in Queensland as well you need at least two ways to pay the rent. So we can't do it, request or demand to have it one way or another and they can pay whatever we. We can't refuse, obviously, cash pay and we have. We don't get any cash pay.
Speaker 3:But uh, for me, I do fun enough my receiving in the morning when I'm still in bed and uh, I do get uh stuck on the tn code. You know, property me has got the tn code and I use that as a reference for all the tenants. So I force them that's the only thing that I force them to use the tn code as a reference in every payment. That makes it all in blue when, when they're in blue, that's like a click, click, click, click, click. Very quick, very fast. So he allows the receipt in a very, very quick way. So in the morning I'm like in five minutes, receipt it all. Check the arrears emails immediately, as the lady was saying. Hey, you know, this is how much you are in arrear In Queensland it's on day eight when you send the breach, the formal breach.
Speaker 3:I do not let that go in any kind of formal way, because after the second breach for the same reason, then you can issue notice to leave, and my tenants do know that, and so I just make sure, always text messages I like text messages as well. We're saying, guys, what's happened? You know, just let me know how can I help. You know, I found them a little bit more. I tend to have with my tenants and in any formal approach via text message. Is there anything I can help? What's the stat? You know, make them feel a little bit more comfortable. You know, I tell them I lie and I tell them that I can't stop the annoying email that comes from property made that's not me. That goes automatically. I'm sorry, if you don't want to receive it, just have to pay. But normally I follow up always with text messages and normally some are like, oh sorry, I forgot, or you know, I'll sort it out, and they send immediately screenshots. It's pretty good yeah, excellent.
Speaker 1:How lucky are we Sam yeah, no, that's good how long is? It in wa so we can just breach from day one.
Speaker 1:So yeah, wow so our process in our offices. I think we've got our automation set up with um the sms's and emails um on like day three of arrears. Um, I, actually I should know this and I don't. It's terrible, I'm just I I've got the automation set up with whatever property me does um, but I know that the breach goes automatically on day five to the tenants and then that's 14 days allow for a bit of postage, postage, um and then um termination after that. So we um probably don't get on the phone as quickly at the start. I would say that if the tenant hasn't responded to the automation and responded with a copy of their receipt, then we probably would. But that could also be a reason why we've maybe delayed that arrears process a little bit.
Speaker 1:Um, definitely that education at the start. Like we're always saying to tenants make sure you know you need that. They understand that the um it's when we receive the rent, not when you pay the rent, because you know they go like I paid the rent. It's like takes three days to reach us. So there's a big education there. But they still don't seem to really get it or maybe they just don't listen to you at the start. But I'll actually come back and I'll summarise it in a minute, sort of what I've learnt from what's working for you guys and I think is super helpful. But before I do that, I just want to ask one last question, and that was do any of you use the zero rent arrears for marketing purposes? Like, how does it? Does it affect, um, when you're signing up new business? Do you use it to your advantage? Does anyone take advantage of it?
Speaker 2:yep, I certainly do right um, so it's definitely a selling point in my pre-listing email that 100 of my tenants are paying rent on time. Um, but in a more informal setting. Um, certainly, it's perhaps unique to my business, given I'm the business owner and property manager, but I just explain in a joking way, like if that rent doesn't get paid, neither do I, like I'm more invested in getting your rent paid than anyone else, because we're both in it for the same outcome. So definitely using that as a key focus, because that's what landlords want, right, they want the rent paid.
Speaker 1:Yeah, I mean, and Sam you probably. I don't know if you do BDM or property management, so you're probably not sure how your team uses it to their advantage.
Speaker 4:Well I mean no, I don't, because I manage an investment portfolio, so I don't really get involved in the BDM stuff, to be honest.
Speaker 1:So no, yeah, and what about you, Gisela? Are you using it to your advantage?
Speaker 3:Well, in general that's exactly like's been said is when you say to people is the same way when people say how much can I get the rent? It's just, you know you get as much as you can get because the more you get, the more I get. You know my commission is in percentage. If you don't get paid, I don't get paid, so it's all. Uh, it's one of the biggest fear of owners not getting paid. But owners, they do know to get insurance, landlord insurance, in the back of it, no matter what. And that's one of my first thing with my owners, regardless, because there is possibility always to have an issue and they know that they are backed up in that. But the mortgage doesn't wait for anybody when they have expenses, when they have repairs, when they have other stuff to do. So definitely it's one of our biggest points of pre-marketing. You know, when we go and talk to new owners, letting them know that our stats are pretty, pretty good.
Speaker 1:Pretty good, yeah, and I would imagine it's quite impressive. I'm sorry I do have one last question Barclays. Is anyone using the Barclays system for, like the debt collector, sms's for rent areas?
Speaker 2:no, no, no, me no so I had a bit of a situation, ash, where our like bond authority released a bond midway through a dispute, so the amount was being disputed and the bond refunded in full to the tenants, um, and so I had looked around because I'm like, what do I do here? There's no right of recourse. The tenants got all the money back, um, and I had sent an email basically threatening because like it was for outstanding water bills, like we had $900 of outstanding water bills. It was pretty black and white that they owed it. So it was kind of worded thanks to chat GPT that look, you can pay it or we're going to go down this path of debt collection.
Speaker 3:What about Tika? You guys don't have Tika there. I don't use it Because, tika, if you blacklist people, you know like that's a pretty powerful one and four invoices unpaid, like this, you will have all the right to put them on.
Speaker 2:But these tenants in particular had gone and purchased a property, so it would have been a very useful threat for them because they weren't planning on renting again. Yeah, but it worked. So the threat of debt collection on what they actually needed to pay, and I think, certainly what I've seen here in SA. We don't use debt collection services a lot and I think we need to be using them more.
Speaker 1:Yeah, well, I mean Barclays. I've used a little bit so you can, your owners and you would always still have landlord insurance. But Barclays don't quote me on this I think it's like maybe call it 88 a year, something sort of around. That's under 100 a year and what it does is it allows you to send an SMS on Barclays behalf to the tenants and it actually says hey, your rent is in arrears by $1,200. Love from Barclays Debt Collector, like whatever you respond, and they can actually receive that, and the tenant would actually call Barclays Debt Collector and get Barclays, you know, and they would say, yes, your rent is in arrears.
Speaker 1:Soco Realty has instructed us to, has instructed us to follow up on your rent, and so it's actually a system that you can use. And if people aren't aware of Barclays, I do suggest that you actually just find out about how it works. Get them in your office just to have a meeting with the staff. The only thing I will say is that it is a little bit hard when only some owners have it, because you sort of then have to like it's just another system. It's like okay, does this owner have it or not have it? If they've got it, then I can go into that system and send an SMS, so it's a little bit clunky, but if you obviously had it for every property, then that would be pretty cool to be able just to send that.
Speaker 1:Um. Whether or not it's a good relationship tool, I would question, but, um, it's just something worth exploring. Um, nonetheless so, and knowing that there's products out there that can actually help um, so that was really really helpful, all those tips, and I just want summarise for me, like what I sort of got out of it, and hopefully this helps others. I really like, giselle, your words where you said to the tenants like I want your ledger to be perfect. I think that's actually a really it's a real simple way of saying it, but I actually just love those words because that's exactly.
Speaker 3:I want to help you. Yeah, I'm on your side. I don't want them to think that I'm against them because I've been a tenant and I have no reason to to put the tenant on my bad book. If I do understand that we are a team, I always say tenants, owner and property managers are a team. We need to work together to have the best result. As a tenant, pay me in time. Owner will be happy. You ask, you will get, and I'm happy in the middle because I can help you both. So it's a win-win.
Speaker 1:Yeah, no, I think that's a really great way of doing it. I also love when you said to teach them how to read the receipt and the ledger, and I think that's incredibly important and something that I don't actually do, like, because I guess we just assume, like surely you can read a ledger, surely you can read the receipt to see where your rent's paid to. But potentially actually in your sign-up appointment, actually showing them what a receipt looks like and how to see where they're paid to, actually would I think be super, super helpful to do so in Queensland there is a.
Speaker 3:In Queensland there is a checklist and the checklist it says explain paid to date is actually a tick. So I printed the checklist in every pack and I go through every single step with them, tick, tick, tick, tick and they sign at the bottom and I tell them I say the receipt is attached. It's not in the email that you get from PropertyMe, it's the attachment. Open, the damn attachment. Nobody does.
Speaker 1:Yeah, really super, super helpful. Different emails during the process, I think, and also for me, like I've been using the same automation template consistently and that just got me thinking you know what. Maybe I should have a little bit more, less generic, less, a bit more personal and customised for the tenants to educate them, as opposed to just saying your rent's six days, your rent's seven days, your rent's nine days, your rent's 14 days, maybe like a better worded educational email. I think might be super helpful for me. So I like that idea from you guys and that what Sam said.
Speaker 1:You know that the automation definitely helps, but the content in that information is really important for the education and obviously not relying on it, making sure, like Sky said, picking up the phone and having those conversations, because he who shouts the loudest generally wins and if you're the one on the phone chasing that rent, you're going to get the rent or the other person that's chasing money is going to get it.
Speaker 1:So they really really great little tips, reminders, things that I'm actually going to go back and just check our process as well and I hope that that was helpful for the property managers all over Australia. As you can see, we've all got a completely different process, but it sort of still comes down to the same process in a way, despite when we need to send out breaches. So really helpful. Thank you guys. I really appreciate your time coming on and congratulations on having a time in your career where you've had zero rent arrears. I'm very jealous and I can assure you, when I get zero rent arrears I be marketing it and um posting it and tagging you all in so that you know amazing, I'll chat to you guys soon, thank you thank you.