Landlords and the 2% Rule

David FaulknerDirectorJohn Crocker and Associates29th September 2015

Johncrocker.nz Ltd Licensed under the REAA 2008

About the presenterDavid Faulkner• 11 years experience• Been a Property Manager• Former chair of REINZ Sector

Group• Now Director of John Crocker

and Associates• Live in Wellington

What this webinar is about• Focusing on the benefits of a positive

relationship• Result of this is fewer losses• Internal growth• Word of mouth referral• Extending the life time value

Why do we lose them?

Sell40%

Reoc-cupied20%We ended

5%

OTHER35%

How Many do you Lose a Year?

Between 15% and 20% per year

What Do Landlords Think when the Property

Manager Calls?

How much is this going to cost?

How do Property Managers feel about calling their

owners?

It does not have to be this way

What is your Property to Landlord Ratio?

Between 1.3 and 1.4 Properties per

Landlord Client

Staff to Property Ratio• Most common system used is

portfolio based• Seeing an increase in POD system• Approximately 80 to 90 properties

per member of staff• Property managers manage on

average approximately 130

Approximately each Property Manager will have 100 Landlord Clients to look

after

How often shall we call a landlord client with something positive?

1 Call every 3 Months4 Positive Calls a Year

How long does a positive call take?

Approximately 5 minutes

4 calls to 100 landlords

= 400 calls per year

How Many Workdays• 365 days in the year• Take away weekends• Four weeks annual leave• Statutory Holidays

229 Working Days Per Year

400 Phone calls

229 Working days

2 calls per day

How many working minutes in the day?

480 minutes

2 Calls per day = 10 minutes

480 working minutes per day

100%

2%

Are your landlords worth 2% of your time?

YES

Why don’t we do it?

FEAR!

What are Afraid of?• Being asked a difficult question• Prompting them to sack you or sell• Scared of looking stupid• They may remember a bad

experience• Create more work• Or they may take over the

management

10 Reasons to Call1. Inspection2. New tenant made first payment3. New landlord, first statement4. Annual rent review5. Client function

10 Reasons to Call6. Follow up on repairs7. Changes in Legislation8. Year End Statement to Accountant9. Annual planning for investors10. Do you want buy more?

What is a Life Time Value?• $400 per week at 8%• $20,800 in rent per year• $1,664• Life span of 5 years• $8,320 + 2 letting fees $9,120• Rent increases and ancillary fees• TOTAL LTV = $10,000

What happens if we extend by 2 years?

1. Life time value extends by approximately $14,000 and $15,000

2. Other benefit they may buy more

3. Aim to get property to landlord ratio to 2:1

Your Pie Chart Should Look Like This

Sell60%

Reoc-cupied25%

Other15%

If you do this for 12 months the end result will be

1. You will grow your rent roll

2. You will lose less properties

3. Your investors will buy more

4. You will get more referrals

Thank you

4th November: Auckland

11th November: Wellington

18th November:Christchurch

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Questions?

www.johncrocker.nz