Good to Great in Property Management

About Real iQ

David FaulknerDirector

Candice BurgessHead of

Recruitment

Rachel ShepherdH.R. Consultant

John CrockerPrincipal

Mike McGarryRent Roll Broker

Avelyn Holcroft-LewerOffice Manager

Why is this relevant?

$

TIME

Apr 15 Oct 15 Apr 16 Oct 16 Apr 17 Oct 17

Revenue

Cost

“In business, you are either growing or you are going

backwards”

The Race To The Bottom

Basic EconomicsP

rice

$

Quantity

Equilibrium

Supply

Demand

2008

2017

Cost of Doing Business

• Wages

• Rent• Cars

• Insurance

• Power

• Computers• Software

• Marketing• Phones

• PI Insurance

• Human Resources

• ACC

• Accountants• Legal expenses

• Auditors

• Bank fees

• Health and Safety• Rates

• Office supplies• IT charges

• Subscriptions

• Training

Over 50% of Property Management businesses have less than 200

managements

Statistics from Real iQ Great Property Management Survey October 2016

MORE PROPERTIES MANAGED BY FEWER COMPANIES

Tara's Property Management

Portfolio Summary

PORTFOLIO 1 PORTFOLIO 2 PORTFOLIO 3 #1 PER ANNUM#2 PER ANNUM

#3 PER ANNUM

DIFF 3 V 2 DIFF 3 V 1

Management Fees Collected $16,076.42 $20,751.12 $26,059.78 $192,917.09 $249,013.43 $312,717.36 $63,703.93 $ 119,800.28

Maintenance Fees Collected $803.82 $1,037.56 $1,302.99 $9,645.85 $12,450.67 $15,635.87 $3,185.20 $ 5,990.01

Letting Fees Collected $1,929.17 $2,490.13 $3,127.17 $23,150.05 $29,881.61 $37,526.08 $7,644.47 $ 14,376.03

Inspection Fees Collected $1338.75 $1482.19 $1625.63 $16,065.00 $17,786.25 $19,507.50 $1,721.25 $ 3,442.50

Other Fees Collected $300.00 $300.00 $300.00 $3,600.00 $3,600.00 $3,600.00 $- $ 0.00

Total Fees Collected $20,448.17 $26,061.00 $32,415.57 $245,377.99 $312,731.96 $388,986.81 $76,254.85 $ 143,608.82

Average Management Fee Per Property

$135.10 $157.50 $180.34 $1,621.15 $1,890.05 $2,164.13 $274.09 $ 542.98

Average Management Fee (% / Property)

6.50% 7.50% 8.50% 6.50% 7.50% 8.50% 1.0% 2.0%

Number of Owners 85 85 85 85 85 85 - -

Number of Managed Properties 119 132 145 119 132 145 13 26

Average Number of Properties / Owner 1.40 1.55 1.70 1.40 1.55 1.70 0.15 0.30

Average Rent (Weekly) $480.00 $485.00 $490.00 $480.00 $485.00 $490.00 $5.00 $ 10.00

Total Rent Received $247,329.60 $276,681.59 $306,585.65 $2,967,955.20 $3,320,179.05 $3,679,027.80 $358,848.75 $ 711,072.60

WAGE COST AT 30% $ 6,134.45 $ 7,818.30 $ 9,724.67 $ 73,613.40 $ 93,819.59 $ 116,696.04 $ 22,876.46 $ 43,082.65

Two Aspects of Property Management

BUSINESS DEVELOPMENT

BUSINESS RETENTION

Life Time Value 4 YearsUnits

ManagedYear 1 Year 2 Year 3 Year 4 TOTAL

1 $2,080.00 $2,184.00 $2,293.20 $2,407.86 $8,965.06

2 $4,160.00 $4,368.00 $4,586.40 $4,815.72 $17,930.12

3 $6,240.00 $6,552.00 $6,879.60 $7,223.58 $26,895.18

4 $8,320.00 $8,736.00 $9,172.80 $9,631.44 $35,860.24

5 $10,400.00 $10,920.00 $11,466.00 $12,039.30 $44,825.30

Life Time Value 6 YearsUnits

ManageYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 TOTAL

1 $2,080.00 $2,184.00 $2,293.20 $2,407.86 $2,528.25 $2,654.67 $14,147.98

2 $4,160.00 $4,368.00 $4,586.40 $4,815.72 $5,056.51 $5,309.33 $28,295.96

3 $6,240.00 $6,552.00 $6,879.60 $7,223.58 $7,584.76 $7,964.00 $42,443.94

4 $8,320.00 $8,736.00 $9,172.80 $9,631.44 $10,113.01 $10,618.66 $56,591.91

5 $10,400.00 $10,920.00 $11,466.00 $12,039.30 $12,641.27 $13,273.33 $70,739.89

The Difference

UNITS 6 YEAR 4 YEAR DIFFERENCE %

1 $14,147.98 $8,965.06 $5,182.92 57.8%

2 $28,295.96 $17,930.12 $10,365.84 57.8%

3 $42,443.94 $26,895.18 $15,548.76 57.8%

4 $56,591.91 $35,860.24 $20,731.67 57.8%

5 $70,739.89 $44,825.30 $25,914.59 57.8%

The Difference Between 15% and 25%

APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR TOTAL

Properties 500 500 500 500 500 500 500 500 500 500 500 500 500

Won 10 10 10 10 10 10 10 10 10 10 10 10 120

Lost -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -120

Net Gain 0 0 0 0 0 0 0 0 0 0 0 0 0

Life Time Value 4 years

Life Time Value 6 years

APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR TOTALProperties 500 503 506 509 512 515 518 521 524 527 530 533 536Won 10 10 10 10 10 10 10 10 10 10 10 10 120Lost -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -84 Net Gain 3 3 3 3 3 3 3 3 3 3 3 3 36

#1 Understand Your Worth

What would your hourly rate be?• 70 properties per member of staff

• 2,080 hours worked per year

• 30 hours per property per year

ANNUM MONTHLY

• $74 per hour: $2,210 $184.17

• $65 per hour: $1,950 $162.50

• $56 per hour: $1,690 $140.84

• $48 per hour: $1,430 $119.17

• $39 per hour: $1,170 $97.50

• $30 per hour: $910 $75.83

#2 Invest in Your Team

Training Budget

Revenue $ %

Management fee $500,000

Letting fee $75,000

Total Revenue $575,000

(Expenses)

Marketing $23,000 4.00%

Training $2,000 0.34%

NZ Residential Property

Management Level 4

#3 Constant Education of Clients

Knowledge is Power

Training your team

Newsletters

Video Blogs

Investor Evenings

Investor Webinars

Budgeting for landlords

Booklets for tenants

Webinars for Clients

#4 The Emotional Bank Account

What do you see?

Build the Relationship

1 hour a week calling landlords = 2.2% of your time

Emotional Bank Account

Withdraw Deposit

2% of your time

#5 Think Win Win

Win Lose = Lose

Lose Win = Lose

Lose Lose = Lose

Win Win = Win

Principled Negotiation

•Separate the People from the Problem

• Focus on interests, not positions

• Invent options for mutual gain

• Insist on using objective criteria

•Know your BATNA

•Best Alternative to a Negotiated Agreement

Best Alternative to a Negotiated Agreement

Property Manager

• I’m prepared to lose the management

• I’m not prepared to lose the business

• What is this worth to me

• I’m prepared to pay $500

• I’m prepared to manage the property for free for three months

Landlord

• Threaten to leave and go elsewhere

• I don’t want to leave really as I may get nothing and it is a hassle

• I just what to hear an acknowledgment they got it wrong

• So far they have not let me down

#6 Pre-emptive Service

• Why don’t we educate tenants on house hunting?

• Why does a tenant have to view a house to apply?

• Why can’t we pre-approve tenants?

• Why can’t they be inducted before they view a property?

• Why can’t the tenant pay for their own credit check before applying?

• Why can’t we sign them up on spot and email the contract to them?

• Why don’t we call tenants one week after they have moved into the property?

Ask Why?

Gross Yield v Net Yield

Gross Yield

Revenue / Cost of Sale

X

100

=

Gross Yield as %

Net Yield

Revenue – OPEX / Cost of Sale

X100=

Net Yield as %

The Cost of Being a Landlord

• Rental at $525 per week $26,250

• PM Fees @ 8% ($2,100)

• Body Corporate ($1,800)

• Rates ($2,300)

• Advertising ($150)

• Repairs ($1,500)

• Meth & Smoke alarms ($300)

• PROFIT $18,100

• Purchase Price $575,000

• Net Rent/Purchase Price * 100 = _______%

• ANZ Term Deposit = 3.25% = $18,687.50

Income and Expenses

Rent at $525 pw

$26,250

PM Fee at 8%

($2,100)

Rates ($2,300)

BodyCorporate

($1,800)

Repairs ($1,500)

Mortgage payments

($34,086)

Meth Testing

($200)

Smoke Alarms

($99)

TOTAL EXPENSES

($42,085)

PROFIT(LOSS)

($15,835)

Landlord Consultants

• Provide Cashflow projections for them• Recommendations around Capital Expenditure• Annual assessment on portfolio• Budgeting for Repairs and Maintenance• Buyers agent to buy more investment properties• VIP events for top dollar clients

Social Media Workshop$295 plus GST

20% Discount: Use code RETGFriday 21st April Adina Apartment Hotel

http://bit.ly/2jhYC9q

Thank You