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Spring 2013
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bright ideas
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Editor’s Note
New Beginnings
The Property Management Journal Available exclusively to subscribers
Celebrating 25 years
Management
2
Debbie Palmer Managing Editor editorial@leased1.com.au Jess Greig-Canty General Manager jess@leased1.com.au
Creative Design Chris Jardine Senior Creative Director, Print & Online chris@leased1.com.au Toni Bernal Creative Director, Social Media & Online toni@leased1.com.au
Sales and Marketing Mallika Naik National Sales and Marketing Manager mallika@leased1.com.au Mobile 0420 273 505
Administration & Subscriptions admin@leased1.com.au
Website www.leased1.com.au
Editorial submissions The publisher welcomes editorial submissions from active individuals and organisations either within or ancillary to the real estate profession. The publisher reserves the right to edit, modify, reject or contribute to the content of material provided. All submissions should be directed to: editorial@leased1.com.au
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The Property Management Journal Available exclusively to subscribers
The Magazine for Real Estate Professionals
Spring 2013
georg chmiel on his
50
first year at lj hooker
mystery
bright ideas
shopping the competition
property management tips
improving property value with
help to educate property investors about depreciation the collaboration challenge 20 non-facebook ways to market your personal brand culture by design 7 principles of rent roll financing
feng shui
in
short supply how will your stock levels change in the next 12 months?
014 will be the year that I celebrate a quarter of a century in my career of property management. As I take a moment to reflect back, I am grateful for the challenging times that I have had to overcome, as well as the many good times. But nothing stands out more when I look down memory lane as to how vastly different property management has become. Everything has changed in 25 years. The dynamics of the tenant and landlord, technology we have access to, increased expectations of our service and how we deliver our services, access to systems and training, legislation, compliance, how we conduct listing presentations, how we conduct inspections, how we source new business and how we market and advertise to attract clients and customers. I cannot think of another career path that has the complexities and diversities of the role of a property manager. Property management is my chosen career and it has been very rewarding to me. I feel like I am more passionate and motivated about the industry than ever before to give back, connect and inspire each of you to be great property managers. But it is time for new beginnings… a time to start a new chapter for the next 25 years ahead. I am excited to share that to work towards a better work/life/3 x children balance that I have partnered with and sold the ownership of the Property Management Journal to Redhouse Media Group Holdings who are now publishing The Property Management Journal incorporated with Leased1 magazine. It was quite an emotional decision when it is the industry’s leading magazine that I have owned for almost a decade. I am grateful for the opportunity to remain as the Managing Editor of the publication as property management truly is my passion. Redhouse Media Group has great goals and aspirations for the publication and I will be involved in the future direction of the magazine and online activities. I believe it is a huge growth opportunity for the publication and I am very fortunate to be part of the production team. I am also thankful for the opportunity to reach the readership of Leased1. New beginnings should happen with everyone and within every business. It is a process of reflecting on what you want out of your career and life, and working towards achieving it. Challenging times present an opportunity for positive growth; to step up to the next level; to learn new lessons and to grow stronger as a business, leader, team member or person. The goods times are on their way and you need to be prepared now. To operate a business or to be part of a team that is successful requires careful planning, learning and training, smart business marketing ideas, embracing technology and putting your ideas into action and making it happen. As the Editor of the NEW magazine Leased1 The Property Management Journal it is my sole focus to seek out new ideas, innovative concepts, cutting edge technologies, smart processes, leadership tips and so much more to assist every reader to prosper and be the best they can. For this issue of the magazine I would like to share a small snippet of my 50 property management tips that I have learnt over my 25 year career in property management. Thank you to the Real Estate Institute of Qld for recognising my passion with my early industry awards. Thank you to EBM Insurance Brokers, BMT Tax Depreciation, Ntd/Veda Applied Intelligence and MGA Insurance Brokers who continue to be loyal supporters since the inception of the publication. A big thank you to every single contributor who take the time to be part of Australia’s leading industry Journal and thank you to my readers. Happy reading… always be learning
successfully combining online and offline
advertising
is your property management business flying economy, business or
first?
Debbie Palmer – Managing Editor Email: editorial@leased1.com.au
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Contributors Debbie Palmer
Aaron Clancy
Amy Sanderson
Ben Angel
Bradley Beer
Carol Riley
Chris Goodway
Dr Denise Meyerson
Glenn Twiddle
Ian Grace
Jo Anne-Oliveri
Michelle Williams
Nicole L. Betts
Paul Matthews
Simon Cox
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Would you like to be a contributor? Send your submission/s to editorial@ leased1.com.au Terri Scheer
Trish Rogers 6|
con 32
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The Property Management Journal
tents The Property Management Journal
04 | Editor’s Notes by Debbie Palmer 08 | 50 Bright ideas – property management tips by Debbie Palmer 12 | Help to educate property investors about depreciation by Bradley Beer 16 | The collaboration challenge by Dr Denise Meyerson 18 | Best practice – trust accounting by Carol Riley 22 | 20 non-facebook ways to market your personal brand by Ben Angel 24 | 7 Principles of Rent Roll Financing by Chris Goodway 26 | Protection or complacency by Terri Scheer 28 | Why business coaching succeeds by Simon Cox 30 | It’s not always what you do it’s all about how you do it by Amy Sanderson
08
32 | Culture by design by Jo-Anne Oliveri 34 | Do you get your good ideas in the shower? by Trish Rogers 36 | Optimising your team and your business through stress management by Nicole L. Betts 38 | Brand out from the crowd by Aaron Clancy 40 | Effectively managing rent arrears by Michelle Williams 42 | Were you secret shopped at your open house? by Glenn Twiddle 44 | Virtual outsourcing... what does it have to offer? by Paul Matthews 46 | Getting sales and property management to work together effectively by Ian Grace 50 | Getting the foundation right by The Rent Roll Broker
28 The Property Management Journal
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PROPERTY MANAGEMENT TIPS
50
Bright ideas
property management tips
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The Property Management Journal
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If you become aware of a slip and fall or tenant injury at the property you must notify your PI Insurer immediately. Failure to do so could void your insurance cover. Even if a tenant comes in and mentions they hurt themselves at the property and they have not threatened legal action. Do you have a maintenance register where you keep all tradespeople agreements, their licences and insurance? This can easily be saved in an A-Z folder. It is also important to make a task reminder of the date their insurance expires to obtain a copy of the renewal. Often tradespeople can be slow with their paperwork, and it is important that every tradesperson is insured before entering a property to conduct the work. Creating a to-do-list! Do you know someone who just turns up to work and actions what is given to them? It is important to end and start your day with a list of priorities. List the big things in RED and fit the little things around your big things… And don’t forget to be realistic. The challenge with many property managers is they think there is more time in the day than there actually is. Plan, prioritise and be organised and you will feel more in control. When submitting quotes to an owner it is your duty of care to follow the owner up until you obtain a response. It is not enough to just send the quote and wait for the owner to one day get back to you. You may like to set up an allocated area/folder for quotes sent to owners. Effectively utilise the telephone as it can become an interruption that causes you to constantly lose your focus. Establish set times in your busy day to not take any calls and focus on your paperwork and tasks that need to be completed. If a professional indemnity claim is made against your office the questions asked by the Courts will be… Did you do what is considered reasonable, were the actions industry standard and do you have evidence for your actions? As a property manager you have to be in constant alert mode. What can go wrong? Who can sue you and why? What are the consequences of your actions or inactions? You must always start with the end in mind and have detailed systems and records to prove your actions.
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Peak performance periods – get the best out of yourself. Do you know someone who finds it hard to get going in the mornings or slows down in the afternoons? Each of us is very different and unique. We have different times of the day where we achieve our peak performance. Know your best times of the day and schedule the big things in to do. Plan your day. Do you know someone who always has their day planned or controlled by someone else? It is important to prioritise what is important. Focus on one task at a time and do the hardest task first. Determine the repetitive tasks such as arrears and maintenance and allocate dedicated times of the day to action. If you don’t plan your day someone else will… their requests or actions will control you. When organising large repairs at a property ensure that you have adequate funds to pay for the work in your trust account. If you don’t, send a letter to the owner requesting additional funds. You don’t want to end up in a situation where you are left with the account. Especially at final vacate time.
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I have heard that some property management departments are processing arrears only twice a week. It is your duty of care to monitor arrears and issue notices promptly every day. Failure to issue notices promptly can cause the owner financial loss if the tenant does not pay.
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Are you managing troublesome properties or difficult landlords? Take a moment to reflect on the properties you manage. We often spend 80% of our time managing 20% of our properties. Eliminate what is causing the 80% and you will have that free time to focus on building your rent roll with quality properties. Do you know your bottomline? How much on average it costs you to manage a property per year? It is often a trend for many departments to spend the majority of their time managing the low-end rental properties. @ 8% $200 pw = $16 income Vs $450 pw = $36 income. Which property would you like to manage?
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Do you have a property and landlord selection criteria during the new management process? What standards do you have? What presentation criteria must they meet? If you don’t have one you may want to brainstorm this at your next meeting. Do you have a detailed company profile to educate the landlord from the outset? This should not only include the services that you perform, but focus on the obligations and expectations of the landlords. Include a property presentation checklist for the landlord and budgeting tips, as well as what your agency will do if things go wrong. Be cautious what you write on your management agreement as it is a legal document that can be referred to in court. You may like to consider writing regular inspections instead of 2, 3 or 4 per year. If a previous PM has completed the agreement stating 4 and you are only doing 2 now you could be exposed to risk. It is important that an owner is given the opportunity to read the management agreement before signing, including the special terms and conditions. If the owner is not given this opportunity the agreement maybe void. Do you have a system to manage vacant properties? When there is not a tenant in the property we can often forget about them. You need to ensure that the lawns are being cared for, there are no damp smells in the property from carpet cleaning and most importantly, if there is a pool at the property to ensure that the electricity remains connected. Do you have enough time? It is time to take control. Sometimes managing your time can be impossible if you don’t have enough time. What is your weekly workload? For example: 140 properties X 3 inspections = 420 inspections / 46 working weeks = 9 inspections per week. You can also calculate average times for final vacates, tenancy renewals, sign ups, etc. Can you outsource to contractors? Some say the future of property management will be managing the tenant/landlord only and tasks will be performed by contractors.
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PROPERTY MANAGEMENT TIPS
20
Closed door – do not disturb. Do you sometimes feel like you are constantly interrupted by other team members when you are trying to focus on working and getting through your things to be done list? When you know you have a busy time ahead of you close your door or put up a do not disturb sign. Let everyone know that it is important not to interrupt you and ask them to send requests to you by email. And don’t forget to give the same respect to other co-workers if they are busy. If an insurance claim is made against your office under your professional indemnity insurance never admit fault, hand over documents or speak to anyone without the authorisation of your insurer. Do you need to boost your office morale? It starts with you. You need to be a great leader to have a great team. It is a full time job and mindset. A few simple changes can create dynamic, winning and fun environments for your team. But you must decide to make things better. There is always a choice about the way you do your work, even if there is not a choice about the work itself. Take a proactive approach to property management. Conduct an audit on your rent roll to identify properties that need upgrading. New carpet, painting of walls, fresh upgrade to the gardens or external painting. It is the poorly presented properties that often attract the less desirable tenants. Not all business is good business. When taking on a new management do you take the time to conduct a property search to confirm the owners? It is your duty of care and legislated in some States to verify the actual owners. You should attach this report to the management agreement. When processing a tenant application always ensure that you conduct a tenant database check first before telephoning the references. There is no point processing references if they have been listed on a
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The Property Management Journal
tenant database for a serious breach or debt outstanding. For a tenancy agreement to be legally binding a tenant must be given the opportunity to read the document. It is not enough to highlight the front page and then say “Sign on the dotted line.” When completing a tenancy agreement term avoid listing 6 months or 12 months. You should state 26 weeks or 52 weeks and ensure that the term is exactly a week to avoid disputes at the end of the tenancy when you have to ask for 1 weeks’ rent plus 2 days. Think outside the box. You do not have to enter into 6 or 12 month tenancies. You can make it 7 months or 10 months, etc. This works well if you are renting a property with a pool. You do not want the end of the term to be in a winter months, making it harder to rent the property. At the commencement of the tenancy take the time to photocopy all keys and remotes issued to the tenant. Ensure that the tenant signs and dates the document and then file the document so you can refer to it at the end of the tenancy. Has every property you manage had a fair market rent review in the last 12 months? It is your duty of care to maximise the owner’s rental return, which includes regular rent increases. An owner could have a claim against your office for lost rent if there has not been a recent rent review. This also includes the properties on periodic/continuing agreements that can often be forgotten. When negotiating a tenancy renewal it is important to always take instructions from the owner prior to contacting the tenant. When conducting routine inspections it is important to be honest and upfront if the property requires upgrading. Some property managers take it as a personal reflection if the property is getting a little worn and tired. The owner must be educated that they will have to upgrade, renovate and repair the property regularly. How do you rate the morale in your office? The morale of your team can have a direct impact on whether clients choose to do business with you or not. You can measure the morale of your office on the face and in the voice of the receptionist.
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By the tone of the property manager on the telephone to the landlord… or the team member handling a tenant enquiry. Over the coming issues I will share lots of tips on how to boost your team’s morale. Can you plan your day in property management? The answer is definitely yes. Take the time to work out your tasks that need to be performed during the week and set up a perfect day calendar. Appointments, taking calls, actioning emails, routine inspections, prospective tenant inspections, tenant sign ups, paperwork, filing, new managements, prospecting, rent arrears, insurance claims, outstanding accounts, rent reviews, maintenance, final vacates, bond refunds, EOM, tenancy renewals and LUNCH! The secret… allocate 1 hour extra a day with nothing scheduled for the unexpected. Property management can be extremely challenging. You not only have to keep yourself ‘happy’, but you need to keep your clients, customers, landlords, tenants, team members, boss, partner, kids and pets ‘happy’. Take a moment to think about what attitude you are waking up with of a morning? What is affecting your attitude? Do you start out the day happy… and then by lunchtime you want to throw a brick at someone or throw the computer out the door? You have the power to choose your attitude and how you feel. Work in a clutter free environment. A tidy desk = A tidy mind! Do you know someone that is disorganised? You cannot see the table top for files, scribble notes on pieces of paper and the back of envelopes, yesterday’s coffee cup growing on the desk, post it notes all over the computer and the bin overflowing. Take a moment today to do some desk styling. Clear it out and clean it up.
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There is nothing more important than morale. It overrides any customer service program, sales technique and IT system. A high morale office will have a team enthusiastic, confident and proud, which in turn creates motivation to succeed and be productive.
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Do you take personal responsibility? Choosing your attitude is like working out your muscles at the GYM. You need to practices and commit to changing the way you think… Avoid the little voice that says ‘get angry’, ‘be short with them’ or ‘stop hassling me’. Don’t let circumstances control you. Ultimately… you control how you feel. What would you say to a landlord to convince them to spend money on repairs? Focus on the consequences in your communication… I am concerned… and then highlight the risk of slip and falls or tenant injury that could arise. Don’t get personal. State that it is the law to maintain the property. Let them know that it affects the value of the property and the quality of tenants it can attract. It is important from the outset of the management process to educate the landlord that they need to budget for repairs and improvements.
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What you say is what you create and attract. If you say and focus on the fact that you are too busy and don’t have enough time, or all tenants are difficult or I don’t like property management – that will happen.
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Choose to improve – make the decision now. To achieve different results you must do something different. Do you know someone who is stubborn and set in their old ways? Successful people eliminate excuses and distractions. Success comes from small disciplined steps repeated daily. Sometimes it can be a process of unlearning rather than learning. Are you prepared to do something different today? How to manage the grumpy ones… who sit in the corner and want to eat worms… We spend half of our life at work or thinking about work. So it is important that your work life is a good one. Remember moods are contagious. Be the team player that lifts the office spirits. If someone is grumpy it is often that they don’t feel valued or heard. So take the time to notice them, appreciate them and compliment them. You look great today… I just want you to know that… I really appreciate the help you have given me or… You did a great job with…
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What causes low morale? The way the team member’s are treated and their environment. If you give your team the minimum in terms of equipment, training, communications, support and opportunities they will give back the minimum. If the leader is not engaged in the team then this can lead to a lack of understanding in the role and increase gossiping and tension. Take time out – Stop the excuses. Do you know someone who is always using time as an excuse for not getting the job done? Sometimes it is not a lack of time, but utilising the time we have more effectively. Why can successful people achieve and get twice the results in the same time allocation? If you are always working against the clock you will be working in a state of stress, which will greatly affect your productivity. Identify the areas that are consuming your time and work out how you can do it better. Educate your landlords and tenants. If you want your landlords and tenants to work with you during the management process you need to be clear from the outset on their obligations, rights and responsibilities. Take the extra time at the listing and sign up process to address all of the issues that can streamline the management process and avoid unnecessary difficult situations arising. This includes new tradespeople. What are your expectations and their obligations? Embrace new technology and work smarter. Do you know some who does not fully utilise technology? What is your internal computer speed like? Have you taken the time to learn the advanced features of your trust program to save you time? Do you use SMS for tenant arrears? Are you utilising electronic filing? What apps are you using? Dedicate a small amount of time each week to learning something new about the features and benefits of your technology. It is Murphy’s law! The conversation message you forgot to record will be the one that bites you on the butt. In property management it is about having evidence for everything. When you make or take a call get into the habit of opening the tenant or landlord’s card so you can summarise the conversation directly to your computer as you go. Notes will also allow you to easily access information and you will know what has been said and what action has been taken at any time.
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Utilise travel time as every second in property management counts. Do you know someone that is terrible in returning telephone calls? We all lead extremely busy days and trying to respond to every telephone call and email seems like a full-time role on its own. Travelling in the car is a great time to catch up on calls if you have a speaker system. You can also utilise your waiting time at the property. Your inbox has become the new modern day telephone. Instead of ringing every couple of minutes, a message often pops up on your computer or some also have an incoming bell alert. Your inbox is no different to a telephone ringing – it can distract you from what you are focusing on. Take the time to turn off you email inbox pop-up. Dedicate times of the day to action your emails and telephone calls. You will then feel less like a rag doll that has been pulled from left to right all day. Avoid the paper shuffle. Touch it no more than twice. Do it… or Delegate it… or Diarise it…. or Dump it. Often we spend too much time organising, reorganising and trying to work out where we were up to instead of doing it. Work towards a place for everything and everything in its place.
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by Debbie Palmer Author, Speaker, Trainer, Consultant, Coach & Systems Creator. Debbie Palmer is the founder of The PPM Group, a company that encourages and supports business development opportunities within property management departments through the development of procedural systems and training. She is the author of the PPMsystem® (Australia’s most comprehensive procedural system), A Successful Guide to Property Management Manual, Standard Letters Made Easy Manual and Scripts & Dialogues – What to say to have them think your way Manual. To find out more about the system, manuals and training visit www.ppmsystem.com. The Property Management Journal
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PROPERTY DEPRECIATION
Help
to educate property investors about depreciation Property managers can assist their landlords to realise the full potential of their investment property by providing them with information about property depreciation. By further educating property owners you will be adding value to your service and assisting your investor clients to create wealth. Providing this high level of service will also help you to retain your existing client base and help you to obtain new potential investor clients. Property tax depreciation and capital allowances As a building gets older and items within it deteriorate, they depreciate in value. The Australian Tax Office (ATO) allows property investors to claim deductions relating to the wear and tear on the building and its fixtures and fittings. Such deductions can be 18 July 1985 claimed by any owner of an income producing property; residential properties. 15/16 Septincluding 1987 In short, depreciation reduces the amount of tax investors pay. Each property will depreciate at a unique4.0% rate depending on its age, use and 2.5% Residential construction cost. Maximising a depreciation claim on any building requires a distinctive combination of construction costing skills and experience, combined with an intimate Structural 2.5% are recognised by knowledge of the Income Tax Assessment Act 1997. Quantity Surveyors Improvements the ATO under TR 97/25 as appropriately qualified to estimate the construction costs of a building for tax purposes. 2.5% 2.5% 4.0% Non-Residential The ATO allows the two previous tax returns to be amended for property investors who have not been claiming depreciation deductions. Traveller 2.5% 4.0%and Tax 4.0% a Capital 2.5% Allowance Specialist Quantity Surveyors can put together Accommodation Depreciation Schedule which will calculate the depreciation deductions available per financial year for the life of the property, 40 years. The deductions 4.0%identified in a 2.5% or 4.0% 2.5% Manufacturing Capital Allowance and Tax Depreciation Schedule are made up of two main elements. These are: 26/27 Feb 1992 21/22 Aug 1984 20 July • Capital Works Allowance (Division 43)1982 and 21 Aug 1979 • Plant and Equipment Depreciation (Division 40)
Plant & Equipment Allowance (Division 40)
Effective life determines allowance available
Capital Works Allowance (Division 43)
Available on properties constructed post 1982 (nonresidential) and 1985 (residential)
BMT Capital Allowance and Tax Depreciation Report
Capital works allowance The capital works allowance relates to deductions available for the structural components (foundations, walls and ceilings) of a building. Fixed assets such as tiles, toilets, built-in cupboards and windows are also included, with this deduction commonly referred to as the ‘building write-off’. 12 |
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Investment property owners are able to claim the capital works allowance for their property at a rate between 2.5% and 4%. This will depend on the date the construction of the building commenced and the property’s historical cost or estimated cost from a specialist Quantity Surveyor. The following graph shows how the capital works allowance rate changes depending on the property type and when a property was built. 18 July 1985 15/16 Sept 1987
Residential
4.0%
2.5%
allowance, where 2.5% of the construction cost can be claimed per year for 40 years. Construction costs generally increase over Structural 2.5% time meaning the capital works allowance on newer buildings will Improvements be higher. The owners of properties, which are not brand new can still 2.5% 2.5% 4.0% Non-Residential Older Property claim the leftover capital works allowance for the balance of the 40 (Year of Construction: Older Property 1972) years. For example, if an investment property five years old the Purchase Price Depreciation Year Depreciation Year is Depreciation Year Depreciation Year Traveller (Year of Construction: 1972) 2.5% 4.0% 4.0% 2.5% Accommodation 1 left 2 works 3 4 owner willPrice have Depreciation 35 years capital to claim. Purchase YearofDepreciation Year deductions Depreciation Year Depreciation Year $450,000 works allowance $5,127 1 3 4 The capital portion$4,250 is2 governed by$3,875 the date that $3,160 2.5% 4.0% 2.5% 4.0% Manufacturing $450,000 of the property $5,127 $4,250 $3,875 $3,160 construction commenced. If a residential building commenced construction before the 26/27 Feb 1992 21/22 Aug 1984 20 July 1982 18th July 1985, there is noOlder capital works-allowance available. Property with some renovation 21 Aug 1979 (Year of Construction: 1972) Investors who own properties that were built this date will Older Property - withbefore some renovation Purchase Price Depreciation Year Depreciation Year Depreciation Year Depreciation Year of Construction: 1972) still be able to make a claim on (Year the fixtures and fittings within Plant and equipment depreciation 1 2 3 4 Purchase Price Depreciation Year Depreciation Year Depreciation Year Depreciation Year Plant and equipment depreciation refers to the deduction Effective life determines the property and include any recent renovations, even if the Plant & Equipment Allowance $450,000 $6,852 $5,720 $4,953 $3,860 1 2 3 4 allowance available (Division 40) renovation was carried out by a previous owner. available for fixtures and fittings contained within an investment BMT Capital Allowance and $450,000 $5,720 $4,953 $3,860 The tables below $6,852 show the difference in deductions for property. Plant and equipment assets depreciate at a faster rate Tax Depreciation Report Available on properties Works Allowance capital works allowance compared to the structural Capital component of the building. The ATO constructed post 1982 (non-depreciation of fixtures and fittings and Recent Property (Division 43) residential) and 1985 (residential) between similar new and older (Year properties. assigns an effective life to each plant and equipment item. The of Construction: Recent Property 2003) Purchase Price Depreciation Year Depreciation Year Depreciation Year Depreciation Year depreciation available is calculated for each item based on this (Year of Construction: 2003) 1 2 3 4 Renovate depreciate Purchase Priceand Depreciation Year Depreciation Year Depreciation Year Depreciation Year effective life. $450,000 investors $9,560 $8,475 $6,252 1purchase older 2properties in$7,395 3 4 As countless order to Some of the plant and equipment items commonly found $450,000 $9,560 $6,252 renovate and generate greater rent,$8,475 it is important$7,395 to be aware that within a property include: budgeting for renovations can be costly. Therefore, investors should Brand New Property be educated in the benefits of depreciation potential on new items. (Year of Construction: 2013) • hot water service • ovens • vinyl Brand New Property • ceiling fans
• floating timber floors • furniture
• dishwashers
• rangehoods
• clothes dryer
• carpet
• smoke alarms
• freestanding spa
• blinds
• air conditioners
• curtains
• exhaust fans
• light shades
• security systems
• washing machines • microwaves
• cooktops
Depreciation differences: old vs. new properties The owners of both new and older properties are able to claim depreciation deductions. Depreciation on the structure of a building is governed by the date that construction began. This may mean that a property owner may not qualify to claim the capital works allowance. However, the owner of an older property not eligible for capital works deductions will still be able to claim plant and equipment deductions, as all eligible assets are valued at the time of settlement regardless of their age. New properties have newer fixtures and fittings, so the starting value of those items will naturally be higher resulting in higher depreciation deductions. The same applies to the capital works
Purchase Price
Depreciation Year
Depreciation Year Depreciation Year (Year of Construction: 2013)
Depreciation Year
Maximising depreciation on 2new items 3 Year Depreciation 1 4 Purchase Price Depreciation Year Depreciation Year Depreciation Year Which new floor $15,824 covering should you install to$12,113 increase your $10,981 $450,000 $14,017 1 2 3 4 depreciation potential; carpet, floating or $10,981 $450,000 $15,824 $14,017timber floorboards $12,113 tiles? The depreciation available on these items differs due to their varying effective lives. If you spend $2,000 on floor coverings, for example: Item
Effective Life
Depreciation 1st Year
Carpet Item
10 yearsLife Effective
$400 (Maximum) Depreciation 1st Year
Floating Timber Floorboards Carpet
15 years 10
$267 $400 (Maximum)
TilesFloorboards Floating Timber
40 years 15
$50 $267
Tiles
40 years
$50
Considering ornamental light fittings or down lights? If you spend $2,000 on lighting, for example: Item
Effective Life
Depreciation 1st Year
Ornamental Light Fittings Item
5 years Life Effective
$800 (Maximum) Depreciation 1st Year
Down Light LightsFittings Ornamental
40 years 5 years
$50 $800 (Maximum)
Down Lights
40 years
$50
As the examples above show, when you are planning on installing new assets into an investment property, considering their depreciation potential is certainly worthwhile. Depending on the size of the property and the extent of the renovations, the deductions obtained from the new items may improve your deductions each financial year by thousands of dollars. The Property Management Journal
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Deprecia
Deprecia5
$2,4 5
$2,4
Deprecia
Deprecia5
$3,2 5
$3,2
Deprecia
Deprecia5
$5,6 5
$5,6
Deprecia
Deprecia5
$10,5
$10,
PROPERTY DEPRECIATION Structural construction work completed as part of a renovation (such as a new roof, walls or ceiling) can also attract a claim. If a residential property has had any qualifying works carried out after the 18th of July 1985, the owner will be eligible to claim the capital works allowance along with plant and equipment deductions on any new structures and assets. When a Capital Allowance and Tax Depreciation Schedule is completed by a specialist Quantity Surveyor, it should always take into consideration the renovations carried out by previous owners. There may be depreciation deductions for the owner to claim relating to these previous works. A thorough site inspection should be undertaken on the property to identify these previous renovation works. Further council and other searches can also expose previous renovations carried out on the property. If your clients are planning a renovation it is important that they speak to a Quantity Surveyor ďŹ rst. Property investors may be entitled to claim depreciation both before and after renovations. A Quantity Surveyor can create a Tax Depreciation Schedule prior to renovations taking place. This allows the investor to take full advantage of deductions they are entitled to on the old items being removed. Obtaining a BMT Tax Depreciation Schedule prior to commencing a renovation can save your client thousands at tax time. www.bmtqs.com.au.
Purchase Price Purchase Price $450,000
Older Property By Bradley Beer Bradley Beer (B. Con. Mgt) is a Director of BMT Tax (Year of Construction: 1972) Depreciation, Property Depreciation & Construction Older Property Depreciation Year Depreciation Year Depreciation Year Depreciation Year Depreciation Year Cost Consultants. To contact Bradley email: bradley. (Year 2of Construction:31972) 1 4 5 beer@bmtqs.com.au Older Depreciation Year Depreciation YearProperty Depreciation Year Depreciation Year Depreciation Year $5,127 $4,250 $3,875 $3,160 $2,487 (Year DEPRECIATION DIFFERENCES 1 2of Construction: 3 1972) 4 5
Purchase Price $450,000
Depreciation Year $5,127 1
Depreciation Year Depreciation Year Older Property $4,250 $3,875 2 (Year of Construction:31972)
Depreciation Year $3,160 4
Depreciation Year $2,487 5
$450,000 Purchase Price
$5,127 Year Depreciation $4,250 $3,875 Year Depreciation $3,160 Year Depreciation Older PropertyYear - withDepreciation some renovation
$2,487 Year Depreciation
1
$450,000 Purchase Price
4 (Year 2of Construction:3 1972) Older Property - withDepreciation some renovation $5,127 Year $4,250 Year $3,875 $3,160 Year Depreciation Depreciation Year Depreciation (Year of Construction: 1972) 1 2 3 4 Older PropertyYear - withDepreciation some renovation Depreciation Year Depreciation Year Depreciation Year $6,852 $5,720 $4,953 $3,860 (Year of Construction: 1972)
$2,487 Year Depreciation
Purchase Price $450,000
1 2 3 4 Depreciation Year Depreciation Year Depreciation Year Depreciation Year renovation $3,860 $6,852 Older Property $5,720 - with some $4,953 1 4 (Year 2of Construction:31972)
5 Depreciation Year $3,215 5 Depreciation Year $3,215 5
$450,000 Purchase Price
$6,852 Year Depreciation
Purchase Price $450,000
Recent $5,720 Depreciation Year
$3,860 Year Depreciation
$3,215 Year Depreciation
2 3 Depreciation Year Depreciation Year Recent Property $8,475 $7,395 2 (Year of Construction:32003)
4 Depreciation Year $3,860 4 Depreciation Year $6,252 4 Depreciation Year $6,252 4
5 Depreciation Year $3,215 5 Depreciation Year $5,607 5 Depreciation Year $5,607 5
$6,252 Year Depreciation
$5,607 Year Depreciation
1 4 Depreciation Year Depreciation Year $9,560 $6,252 1 4 Purchase Price Depreciation Year Depreciation Year $450,000 $15,824 $10,981 1 2 3 4 All examples based on theYear diminishing value method Purchase Price Depreciation Year are Depreciation Depreciation Yearof depreciation Depreciation Year Brand New Property $450,000 $15,824 $14,017 $12,113 $10,981 1 4 (Year 2of Construction:32013) The Property Management Journal
5 Depreciation Year $5,607 5 Depreciation Year $10,342 5 Depreciation Year $10,342 5
$450,000 Purchase Price
$10,342 Year Depreciation
Purchase Price $450,000 Purchase Price $450,000 Purchase Price $450,000 $450,000 Purchase Price
1 Depreciation Year $6,852 1 Depreciation Year $9,560 1 Depreciation Year $9,560 1 $9,560 Year Depreciation
Purchase Price $450,000
14 |
5
$15,824 Year Depreciation
Property $4,953 Year Depreciation (Year of Construction: 2003) 2 3 Recent Depreciation Year Property Depreciation Year $5,720 $4,953 (Year of Construction: 2003) 2 3 Recent Property Depreciation Year Depreciation Year $8,475 $7,395 (Year of Construction: 2003)
BrandYear NewDepreciation Property $8,475 $7,395 Year Depreciation
(Year of Construction: 2013) 2 3 Brand NewDepreciation Property Depreciation Year Year $8,475 $7,395 (Year of Construction: 2013) 2 3 BrandYear NewDepreciation Property Year Depreciation $14,017 $12,113 (Year of Construction: 2013)
$14,017 Year Depreciation
$12,113 Year Depreciation
$10,981 Year Depreciation
BRAINSTORMING
The
C
ollaboration hallenge
Many people think that innovation comes from the hard work of one individual, someone who quietly works alone and then one day surprises the world by announcing their great findings.
T
his is not what actually happens. Most great ideas come from the collective efforts of a team of people working closely together, bouncing ideas in such a way that at the end of the day no one seems to actually remember who came up with the idea in the first place. Often, one person is given credit for the idea. This is how our society and culture function; we like to attribute success to one person. In reality, innovation stems from the collective efforts of a high-functioning team of individuals. They are more interested in solving the problem for the collective good than in taking the credit for having an idea. The notion of collaboration is easy to define, but it is not always so easy to put into practice. In other words, we like to talk about the concept and we agree that collaboration is valuable; but when it comes to practising it, people can get caught up in the same patterns of behaviour. If you have worked on a group project, you might be able to relate to this. So if collaboration can generate a greater number of useful ideas, how do we get our groups doing this successfully? Let us examine one way in which collaboration works more effectively, the brainstorming technique. In the 1950s, Alex Osborn created the notion of brainstorming as a way to generate solutions. The group gets together specifically
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to solve the stated problem. Group participants come up with as many creative ideas as they can. Evaluation is held back at this stage as ideas are generated. When an exhausted list is created and captured on the whiteboard, the leader then asks the participants to use some type of system to rate the ideas. This is where sticky notes or little red dots are used. Generally, the ideas that carry the popular vote are carried forward. The thinking error is, “If the majority of people believe the idea is a good one, it must be correct”. Many people enjoy being a part of this type of group brainstorming session, making it a popular choice for team leaders and consultants. Research, on the other hand, indicates that this type of problem solving actually produces very poor results; it does not work for everyone. However, we seem to continue to use this process because people enjoy it and feel the experience is positive. Yale University studied the brainstorming technique and found a better way to use this well-liked process. Instead of working together throughout the entire process, each person works individually for the first part of the session. Research finds that when people work as individuals there are fewer ideas, but the quality of the ideas is higher. By removing the distractions caused by other team members, including the ideas that are
not on topic, people are able to work at a higher level. This method also allows for the introverts or less vocal team members to think and create ideas. Since they usually make up almost 50% of the population, this process captures untapped potential. Osborn’s idea of brainstorming still works here, it is just done individually. The individual creates as many ideas as possible and then uses a process to analyse the ideas, thinking about feasibility and effectiveness. The precursor for success is still the ability of the team to accurately define the problem. Albert Einstein was supposedly asked what he would do if he had one hour to save the world. He responded by saying, “I would spend the first 55 minutes analysing and understanding the problem, and the next five minutes generating ideas”. So before you begin any brainstorming or collaborating activity, no matter what method you use, make sure you have the right problem stated in the beginning. 5 PRACTICAL STEPS TO CREATING A CULTURE OF INNOVATION IN YOUR TEAM Innovation is widely regarded as an important differentiator to distinguish business competitors from each other. A culture of innovation sets one organisation apart in terms of their ability to adapt and respond
in a nimble way to the frighteningly fast changes in their environment, and in terms of the speed with which they leap ahead of the pack with new and fresh ideas, products and services. Sounds impressive – yes, let’s get ahead and beat the rest... That is the general response we receive when we bring up the notion of innovation to top executive teams. The key question remains: how do we become more innovative? How do we transform our existing conformist culture to being one that buzzes with innovation ‘hotspots’ where fresh thinking is brought to all challenges and problems? It all sounds so easy in theory. Where do we begin and how do we ensure that the changes stick? 1. Acknowledge that this is a culture transformation process It is simply not sufficient to introduce some ad-hoc interventions. Yes, having a lunch and learn session with an innovation theme is a great idea, but in isolation it is simply forgotten within a few weeks. Yes, having an innovation team is also an excellent idea, but if it does not have the full backing of the executive team and there is no overarching strategy, it will have no teeth. Step one is to have a strategy in place that takes into account all areas of the business and is realistic in terms of the time frames and budget needed for the transformation. The strategy needs to clearly incorporate what needs to change in the existing mindset of the business so that innovation can become part and parcel of the way we do things around here. As with any change process, there are human feelings that are going to surface as people move through the changes. Strong emotions emerge as emotional triggers are touched and the innovation strategy needs to take into account all the resisters and assisters who will be part of the process. Organisations who have always been policy driven, with rules and regulations because of risk aversion, find the switch to being innovative, very challenging. Team members are used to following strict guidelines and procedures, and suddenly determining that they now need to be free thinking and creative can cause huge resistance. All your usual change management tools need to come into play right now! 2. Select specific innovation champions to carry out the strategy As with any change process, you need a team that will guide the organisation and will have responsibility for delivering
results. Select the team based on their ability to manage change well and also to communicate these changes effectively. They are responsible for the design, delivery and monitoring of the plan for innovation. They have project milestones and monitor and report on whether these are being met. They create the promotional and marketing material needed to get the project under way and are responsible for all special events associated with the project. 3. Take a cold hard look at the existing status quo It is no good simply assuming that if we make people more creative and innovative,
• Creative problem solving as developed and used by the Creative Problem Solving Institute. Following this process that is based on divergent and convergent thinking enables the team to come to conclusions where there is buy-in and consensus. • Brainstorming! This is hands-on, minds-on thinking that creates an environment where there is 100% participation and where play enables ideas to emerge and be shared. Part of the training could also include identification of employees’ natural innovation styles. This will assist with the formation of teams that are drivers and are made up of different styles so that collectively all styles are represented.
Many people enjoy being a part of this type of group brainstorming session, making a popular choice for team leaders the organisation itself will magically transform into this vibrant, buzzy place with ideas overflowing at every moment. The reality is that we need to think systemically and begin to uncover where in the system are there blockages that prevent this change from taking place. What are the barriers in the way that we conduct business that could pose a threat to the introduction of innovative thinking? Are we asking team members to move ideas through several layers before they are accepted? Can anyone put forward an idea without it being laughed down or placed in some unused suggestion box? Are we in a very risk-averse environment where the business will collapse under the strain of new ideas that go totally against legal requirements? Have we expected people to conform to rules and regulations for so long that they are afraid to try out anything different? Once we know where these barriers are, part of our strategy will revolve around how to remove them to ensure that innovative thinking becomes the norm. The new ground rules will then be in place and the new paradigm becomes the new normal. 4. Introduce training on the key innovation and creative problem solving tools It is also not sufficient to acknowledge that innovation is a key business driver. How do managers and team members become more innovative if they do not have a toolkit of techniques and skills that enable them to problem solve creatively? It is essential that the organisation is trained up to use thinking skills that lead to innovation. The best tools are:
5. Track changes and gather success stories The good old saying that what gets measured gets done applies in this instance. Once the project success criteria have been set, there is ongoing monitoring to check progress. Barometers are in place to show how far the organisation is from achieving the measurements and what still needs to be done. Success stories are collated and become part of the communications that are delivered about progress. Setbacks are noted and lessons learnt. Ultimately the end goal is a culture where innovation thrives and where the organisation has adapted well to the change in paradigm. Dr Denise Meyerson partners with leading organisations to ensure that they derive full benefit from all training to drive productivity improvements. She is committed to getting the best performance out of team members and to transforming dysfunctional teams into becoming highly motivated and results-oriented. As Managing Director of Management Consultancy International, Denise consults to seriously innovative organisations such as IAG, Telstra, Qantas and Suncorp to energise their teams and develop a positive team culture. What organisations value in her services is her ability to use the appropriate learning methodology to drive change and to develop managers into leaders. She is particularly passionate about the women in Management program that she developed to build a strong cohort of women who are confident in taking the next step in their career development. The Property Management Journal
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BEST PRACTICE
Best practice
trust accounting
Words to strike fear into the heart of many real estate agents – the auditors are coming!
W
hether a regularly scheduled annual audit by your agency’s own auditor or a surprise audit from your State’s regulating body – here are some simple steps that agencies can follow to ease the stress of audit time. Licensing, Training & Risk Management Each State in Australia currently has different requirements for licensing, although a National Occupational Licensing System (NOLS) is currently being reviewed. For now, you should refer to your State’s legislation for details and refer to the following as a general guide. 18 |
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• Most States require the licensee to have their name and other details displayed at their registered office, and at branch offices the name of the licensee or Branch Manager for that office. • The licensee’s individual licence and where applicable the Corporations licence are generally required to be on display. • Ensure all employees are properly licensed in your State – either as a fully licensed real estate agent or as an agents representative or similar, and where applicable that the State’s body has been notified, and a register of employees kept.
• Employees must be properly supervised. • Employees must receive adequate training, and in some States require annual CPD training. It is advisable to maintain a register of all training provided. • Each agency should maintain a Policy & Procedure manual, and all employees should know and understand it. • Every agency is required to have a Privacy Policy. The Privacy Policy should be available on your agency’s website if you have one, and in most States should be on display at every open for inspection.
Trust Account Many agencies operate a separate Sales Trust account, while others may use their Rental Trust account for Sales transactions. Legislation differs slightly from State to State. The following checklist covers the general basics that apply. • Your State’s regulating body may require notification that you have opened (or closed) a Trust Account. Also check that the wording of your Trust Account name complies with requirements, e.g. you may need to include the words Trust Account. • You must appoint an approved auditor, and in most State’s notify your State’s regulating body. • Each State has specified audit periods and dates that audit reports must be lodged. Ensure you are aware of your State’s requirements and have your audit booked well in advance. • Make sure that both your manual receipts and those created by your Trust Accounting software comply with the legislation in your particular State. Although each State differs, as a general rule the basics for receipts include:• receipt number; • name of your agency’s business including ABN/ACN; • the words ‘trust account receipt’; • date of the receipt and, if different, date the money was received • amount received • form in which money was received e.g. cash/cheque/EFT; • name of the person from whom the money was received • name of the client for whom the money was received and a reference e.g. property or file code • purpose for which the money was received • name of the person who made out the receipt. Monthly Checklist It is advisable each month to check some of the fundamental items that an auditor would review. Receipting • A receipt in the required format must be issued immediately, rentals and • All monies relating to sales, whether they are purchaser deposits, rent, bond or vendors pre-paid advertising, must be banked into a Trust Account before the close of business the following day.
Payments • Properly completed, signed, valid authorities must be held. • Monies can only be drawn where authorised. This includes having a correctly completed, signed and current authority on file, written authorisation for marketing and any other expenses, proof of settlement, etc. Make sure your clients are sent an invoice or bill for costs incurred, and that a settlement or end of month statement is provided. • All payment should be made by dual authority. Never allow one individual to hold two passwords to banking software for electronic transfer of files. The licensee should be one signatory to all Trust Account cheques issued.
Reporting • End of Month Reports must be produced and kept for review. Much can be learnt from the End of Month reports – don’t simply sign the report, comforted by seeing that the numbers on the reports add up! Check that the reports supporting the final Bank Reconciliation are all produced, and that the balances on those reports match to the Bank Reconciliation. Check that all the reports required under your State’s legislation have been produced. Although each State differs, as a general rule the basics for documents required for End of Month include:– copies of all receipts; – copies of all trust deposit records; – a separate trust ledger account for each client (or property) with separate entries for each transaction recorded as soon as The Property Management Journal
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BEST PRACTICE practicable after the transaction; – the trust ledger account for each client (or property) must include the client’s name, address and sufficient details for identification; – a trust account receipts cash book recording all receipts; – a trust account payments cash book recording all payments ; – records of all trust money payments e.g. paper copy records of all cheques issued and all EFT transactions; – a trust account transfer journal; – trust account reconciliation statements; – a register of controlled money, if any is received. • End of Month Reports and duplicate receipts may be retained in “soft” copy in some States. Where this is possible, it can save a mountain of printed paper and subsequent storage problems. Licensing, Training & Risk Management Licensee/branch managers individual and corporate details displayed at each office Employee register maintained Employees are properly licensed or representatives Employees are properly supervised Employees receive adequate training and a training register is maintained Policy & Procedure Manual is maintained and employees know and understand it Privacy Policy is available on website and at every OFI Trust Account State body notified of opening/closing trust account Approved auditor appointed and State body notified Audit date booked and diarised Manual and computer receipts contain required fields, wording and numbering Monthly Checklist Receipts issued immediately Monies receipted and banked into the Trust Account within required time frame Correctly completed, signed current Authorities held on file Authorisation held for monies drawn Dual authorisation for files Reporting Required End of Month Reports produced
• In some States, the final Bank Reconciliation must be signed by the licensee within a specified time period. Files • Keep a register of all rental or sales files, and if possible, where the files are located or who has control of the file. Files should be locked away every night where possible for privacy. • Files should be meticulously maintained and contain all the information required. • Each File should have a checklist of required documents and procedures. Again, although each State has different requirements, your checklist would include the following (NB: - your checklist should be extensive and cover as many items as necessary. This is a short guide only):– Properly completed, signed, valid Authority; – Comparable market evidence to support estimate provided; – Signed marketing/advertising program/schedule; – Copies of all advertising to demonstrate accuracy; – Contract and supporting documents required in your State; – Copies of correspondence; – Confirm proper disclosures have been made; – Confirm warning notices have been provided; Audit reports Once your audit is complete, don’t just breathe a sigh of relief and file away that report! Audit reports can contain information vital to your business, including control gaps and areas of potential risk. • Read your auditor’s annual report to note any exceptions that are being reported. If any exceptions are reported, review your internal processes, procedures and checklists to ensure that where possible they are modified to prevent future exceptions. Your auditors may also provide suggestions for how you can improve your operations.
Hard or soft copies of all End of Month Reports kept Final monthly Bank Reconciliation signed by the licensee Files File register kept Files maintained File checklist completed for each file Audit Completed within the required time frame Copy of the report lodged with your State body Audit report reviewed and actions taken 20 |
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Carol Riley is the Director of Alandal Property Consulting. Until recently Carol was employed as the National Trust Accounting & Administration Manager with an ASX listed Company. Her team serviced more than 40 offices nationally, 16 trust accounts, in excess of 25,000 properties under management and receipts/payments in excess of $500 million per annum. To contact Carol email carol.riley@alandal.com.au
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SOCIAL MEDIA
20
non-facebook ways to market your personal brand
Was your mother right when she told you not to put all your eggs in one basket?
W
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hat would happen to your business if Facebook closed down tomorrow? Would your personal brand disappear with it? Your personal brand is “self-expression amplified to influence and command attention”. Yes, Facebook is one distribution channel for you to communicate your brand. But what about others? Share yourself around. (Something I’m sure your mother told you not to do!) Take advantage of the channels out there and make them work for you by taking your message further than Facebook alone could ever do. Here are 20 non-Facebook ways to market your personal brand and message.
Photographs: Think of yourself as a media personality and invest in a set of professional photos for your marketing needs. Your brand should never be represented by a happy snap taken by your 10 year-old kid with an iPhone.
Appearance: Whether you like it or not, you are being judged. Your wardrobe, hair and makeup are on show, so make sure they are sending the right message. You are your brand.
Blog posts: Write and post at least one blog post a week to keep content fresh and relevant. These posts should up-sell into your various product and service offerings and build the need to engage you further.
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Website: Your website should be streamlined, professional and up to date. Outdated or messy sites suggest that you are outdated and messy too. Your home page should only have one core call to action… and that should be to opt-in to find out more, get a free report or guide. As soon as you visit your site, your eyes should be drawn to this call to action IMMEDIATELY.
Twitter: Perfect your tweets and hashtags on a daily basis. Keep the conversation focused and alive. Automate what you can and then engage with others proactively as they engage with you and vice versa. YouTube: Record video segments and promote them online to maximise your views. Educate, inform and excite people with your content. Promote your video via email, Facebook, Youtube sponsored posts and Twitter. Don’t let it sit there whatever you do. Tell the world about it. Newspaper: Contact your local newspaper for editorials or offer to write regular feature articles relevant to the newspapers readership base. LinkedIn: Connect with influential contacts and stay up-to-date with what is going on in your industry. Contribute to the discussion.
Write A Book (again!): Whether you opt for a paperback or E-book version, a book is a great way to promote your personal brand. Choose subject matter worthy of your name and understand what it TRULY takes to promote it and make money. Radio: Talk radio shows and express your opinion, whether it is popular or not. Try to arrange radio interviews to tie in with other promotions happening around you.
professional magazine is a great way to have your brand noticed. Referrals: Ask the fans you have to spread the word for you. If they love your brand and what you do, they will be happy to refer people to you. Word of mouth is powerful. Sponsorships or Community Events: Connect with your local community through sponsorship of a sporting, fundraising or other local event.
TV: Contact national television shows for interviews and guest appearances. The media often seek people to comment, so keep an eye on sites like SourceBottle and HARO. And, if you’re up for a COMPLETE media and publicity strategy, check out this here >Webcasts or Podcasts: Create video or audio presentations and stream them online to engage your audience.
Charity Work: Source a worthwhile charity, one that you truly believe in, to promote and assist wherever and whenever you can.
Seminars or Public Speaking: You are an expert in your field so develop a range of topics that you’re comfortable speaking on and approach event organisers with an offer to speak.
Workshops: Attend or lead workshops so you can share your knowledge and show off your brand by demonstrating your expertise and skills in a live environment.
Online Articles: Write, write, write! Place your articles online and on your top industry blogs to be noticed. Magazines: Whether a one-off feature or a regular column, writing for a
Networking events: Make sure you are being seen in all the right places and by all the right people. Make authentic connections that will last you for years.
OK, now we have identified new marketing methods, but before you swing into action, make sure you have clarified your core message. You won’t leverage the power of these platforms unless your message is consistent and in line with your brand.
Think about the message from your audience’s perspective; what are you trying to get across to them? Is your personal brand aspirational, informational or purely self-focused? The answer will give you a better idea about what methods might bring you the best response. Facebook is a fantastic platform for sharing your brand message, but it’s not the only one out there. Move out of your comfort zone and share your brand – you never know who you might meet. And, if you’re ready to establish your ascension marketing model quickly, profit immediately from national media coverage, build a profitable personal brand and bring in new clients right away, read about my ‘30 Day Business Turnaround’ Program. With campaigns that are easy to execute... and instantly actionable without a lot of work, your daily activity strategy will get you immediate results within just a few days. By Ben Angel Ben is the founder of BenAngel.com.au, the top personal branding/influence/ marketing blog with a fan base of more than 35,000 internationally and growing. For Ben’s tips and insights, sign up for his free newsletter and receive a free copy of his provocative book, Sleeping Your Way to The Top in Business. To contact Ben email: info@benangel.com.au
Need Your Property Tax Depreciation Schedule FAST? The Depreciation.com Tax Depreciation Schedule, is an ATO compliant schedule, covering depreciation over the lifetime of an investment property. Our report highlights all self assessed items of plant and equipment and any capital allowance costs that can be depreciated. We guarantee a quality Tax Depreciation Report, delivered to you within 2 business days at an affordable, xed price. Phone today or visit us online to get started
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RENT ROLL FINANCING
7
Principles of Rent Roll Financing
As a national rent roll broker, one of the most common calls our office receives is that from agents frustrated at the difficulty of securing finance for the acquisition of a rent roll portfolio.
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I
n a risk averse and ‘do-more-with-less’ economic climate, financing by the big four banks have made lending criteria tighter. So we have identified seven best practice principles to position your business to acquire financing and to make it a saleable asset. 1) CASH-FLOW IS KING You must be able to demonstrate that you are a solid banking client. Remember that your lender will be assessing you in your ability to operate your business efficiently and with profitability. To that end, cash-flow is king, so keep your business plan and money matters in consistently good order. 2) BUSINESS PLAN Your business plan should be both realistic and optimistic. It will quantify your historic growth to legitimise your future goals. It seems a fiscal irony, but you must be able to demonstrate your ability to develop the business without a merger or acquisition. This will stand you apart from the crowd and make you a more attractive prospect for financing. 3) MONEY MATTERS When it comes time to provide financial statements, do not offer to create your own spreadsheet. Instead have your accountant prepare your Profit and Loss and Balance Sheet for the last two to three years. If you have also held funds in an offset or line of credit account, you must be prepared to provide evidentiary support with bank statements as well. 4) SEPARATE THE BOOKS When starting out in the industry, many agency principals operate a single book of accounts for the end-to-end business.
As the business develops, this is not a sustainable way to operate, and if you have not already done so, separate your chart of accounts between the rental and sales departments. Failing to do so will mean losses are hidden from sight and growth areas cannot be quantified. In other words, your property management should be viewed and measured as an independent department, with its own budgets and finances. It will have its own goals for growth, conduct independent financial reviews, and be listed separately in the financial reports of the company books. This doesn’t mean simply identifying the breakdown between management and letting fees, but the proportion of expenses like rent, vehicle, phone, IT costs, printing and stationery, and of course salary and wages. For example, if the receptionist is spending 30% of their time on property management duties, then add that 30% to the value of salaries for the property management division. The ability to demonstrate profitable growth in each division will make you a more attractive prospect for lending criteria. 5) SUPERCHARGE PROFITABILITY Before you can grow your business through acquisition, you must first make your own property management department as profitable as possible. While you may have myriad of income streams, only a small number are considered of value to lenders. You primary focus should be on the property management fee. Low fees will make it difficult to secure financing and worse yet, make your own rent roll unattractive to prospective buyers. To ease the change of fee increases with your landlords, consider removing monthly
administrative fees that do not add up to very much over a year, in lieu of a 1.1% rise in the management fee. 6) REDUCE BORROWING In the 6 to 12 months leading up to the planned expansion of your rent roll, reduce any borrowings you may already have secured against your existing portfolio. If you have positive cash flow and equity in a line of credit, you could draw some of those funds to pay down your existing loan against the rent roll. As property is secured at a lower interest rate to your business loan, it could also save you the cost of interest payable. Banks will typically look at lending up to 80% on the value of investment property, and at a cheaper interest rate than compared to the 60% lent against the value of a rent roll at a higher interest rate. 7) RATIO OF BORROWINGS When looking to purchase another rent roll, limit yourself, if possible, to about 50% of the net value of your existing rent roll. By retaining a little equity, there is less chance of getting caught out when interest rates go up, or should you lose properties through your sales department. A good agency will operate an offset account or line of credit so that a percentage of professional sales fees are set aside to absorb a loss in equity from the rent roll. More importantly, an agency with a high loan-to-asset value ratio will quickly find itself on the wrong side of the lender should the rent roll move into negative equity. You should never let your business get you to this stage, because the next step is receivership. Although you might have a good relationship with your landlords, any signs of trouble with your agency and they will start to leave in droves. So it is best to be open with your bank well in advance of any problems, and ensure you negotiate to market the portfolio before it is beyond your control. By Chris Goodway The Rent Roll Broker is a Business Broker specialising exclusively in the sale of rent roll portfolios and real estate agency practices in Australia. Chris Goodway is the CEO, with 35 years’ experience in Real Estate. Chris Goodway commenced his real estate career in 1973. He has been specialising in selling rent rolls and agency practices around the country since 2007. To contact Chris email: chrisgoodway@me.com The Property Management Journal
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RISK MANAGEMENT
Protection or complacency Loss of rental income is the most common risk for Australian landlords. Tenants who abscond or default on their rental payments pose one of the greatest financial risks to landlords, according to Australia’s leading landlord insurance provider, Terri Scheer Insurance.
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igures from Terri Scheer Insurance show that almost half of all claims paid to its policy holders in 2012 (45%) were for loss of rental income. Of these claims, 47% resulted from tenants defaulting on their rental payments and leaving the property after the landlord commenced proceedings with their local residential authority. Another 40% of claims for lost rent resulted from tenants absconding without notifying their landlord/agent or meeting their outstanding rental obligations. Terri Scheer Insurance Manager, Ms Carolyn Majda, warned landlords/agents
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to not be complacent when it came to protecting their rental income. “Loss of rent is our most common claim type,” Ms Majda said. “This can result from malicious or accidental damage to a property that needs to be repaired or cleaned before new tenants can move in, the death of a sole tenant, failure to give vacant possession or a court awarding a tenant a release from legal obligations due to hardship. “However, the majority of our policy holders who made claims for loss of rent (87%) had tenants who took off midway
through their tenancy and either defaulted on their rental payments or absconded. “These situations can take a particularly long time to resolve and leave a large gap in rental income. “Tribunal proceedings can span several weeks after a tenant defaults on their payments and before they leave the property, or a landlord/agent may not realise that their tenant has gone for quite some time. “Claims for lost rent can therefore amount to many thousands of dollars and leave landlords significantly out of pocket. “Tenants may also damage the property and leave behind belongings that need to
be disposed of, which can result in further costs for the landlord. “Yet many landlords aren’t aware that loss of rental income is a serious risk that they may face while owning an investment property.” According to the Australian Landlord Panel 2012, only 36% of landlords consider protecting their rental income to be essential. The same study also found that landlords consider the biggest risks of owning a rental property to be damage by a tenant, rental vacancy, loss in property value, mortgage repayment issues, increased rental costs and natural disasters.
Maintaining a positive relationship with your tenant is also important Ms Majda said there were several preventative measures that landlords/agents could take to help protect their rental income. “While it can be difficult to determine why tenants break their lease and take off, tough economic conditions may be contributing to the issue at the moment,” Ms Majda said. “Tailored landlord insurance policies are specifically designed to cover loss of rental income in certain situations and can ease a landlord’s concerns about receiving regular
rental payments when a covered event happens at the property. “Uninsured landlords really need to think about how they would manage financially if their rental income halted for several weeks. “Landlords/agents can also help to reduce the chances of this happening by conducting property inspections every three to four months. “Regular inspections can enable you to identify whether or not the tenant has vacated, whether they appear to be packing up their belongings or whether there is any damage to the property that will need to be repaired in between tenancies. “Monitoring arrears should also be a priority. “The sooner a landlord/agent is alerted to the fact that their tenant hasn’t paid their rent, the sooner they will be able to find out why, act on the issue and mitigate their loss. “If a tenant defaults on their rental payments, certain notices must be issued to the tenant in specified timeframes. By keeping a close eye on arrears, you will be able to issue the notices immediately. “Maintaining a positive relationship with the tenant is also important, as it may encourage them to uphold their rental agreement, or advise you well in advance if they are planning on vacating the property. “This includes responding promptly to their requests for maintenance.
“Presenting the property in a good condition may also help to attract quality tenants in the first place.” Terri Scheer founded Terri Scheer Insurance in 1995 after designing Australia’s first insurance policy specifically for landlords. Since then our flagship product, the Landlord Preferred Policy, has received widespread acclaim from real estate and insurance identities. Terri Scheer’s vision and commitment to raising industry standards has steered the company’s expansion from South Australia to offices throughout Australia. In May 2007 Terri Scheer Insurance became a wholly owned subsidiary of Vero Insurance, part of the Suncorp Group, one of Australia’s largest providers of car insurance and home insurance. All Terri Scheer policies are underwritten by AAI Limited ABN 48 005 297 807 trading as Vero Insurance. Vero Insurance can trace its origins in Australia back to 1833. We are proud to maintain membership with the Australian and New Zealand Institute of Insurance and Finance, the Financial Ombudsman Service and the Real Estate Institute of South Australia. Terri Scheer Insurance is respected by the real estate industry for its innovation and boldness. With strong foundations based on courage and integrity, our staff and clients enjoy an environment built on family values and personal growth.
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COACHING Have you ever gone to a seminar or conference and walked away pumped, full of clarity and energy and ready to take action, but alas, one month later all the great ideas and plans remain on the notebook you walked out with. The ideas were great, the enthusiasm was there and the drive was in place, so what happened?
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Why business coaching
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nter your personal Business Coach! Every successful person on the planet has had a coach at some time in their life. Whether you are an elite athlete or a striving business owner, one common thread exists – a coach can get you there faster. What does a Business Coach bring to you and your Rent Roll? 1. Helps you see the business from the outside. A Business Coach will get you working on the business, not in the business. 2. Builds confidence and self-belief that every problem in your business has a solution. 3. Helps build growth opportunities by taking you down paths that once were unnatural to your business thoughts. 4. Creates the Zen you need in business between your work life and personal life demands. 5. Gives you the raw true facts of your business from an outsider looking into the bubble. This can include operational processes through to personnel performance. Remember you may not like what you hear, but that’s OK. Your coach should be upfront and candid about you, your leadership skills, how the business is currently performing and why it is failing. 6. Guides you through the transition periods of your Rent Roll from acquisition to organic growth. 7. Assist with setting realistic goals that YOU believe are achievable. This is the key to success because the Coach will then keep you accountable for your plans and goals. 8. Become the sounding board you don’t have in your business. The Coach will take out the emotion, the bias and personal glorification that some seek in business and tell you honestly how it is and how it should be.
What should you be looking for from a Business Coach for your Rent Roll? 1. Professional and Trustworthy: Let’s face it, you are going to more than likely divulge sensitive data about your business, and if you can’t trust them, don’t hire them! 2. Knowledgeable: They have to know their stuff from top to bottom. Every business owner has different needs from a Coach, so you need to be an all-rounder. A Rent Roll Coach, is not going to teach you how to run a Rent Roll, they are going to teach you how to run one BETTER and more profitably. Every business has already got the inner makings to be great, but it is the skill of the Coach that will take those inner makings and turn them into success. 3. Supportive and Respective: Your Coach should know when to take you forward and know when to step back and respect the position and hurdles in front of the business. The fact is that after your coaching session ends, you still have to do the hard work set in front of you by the Coach. Ultimately, as a business owner you will make the choice if you want to follow through with the tasks you and your Coach set, but if it is not done you are making it easy for the Coach to pinpoint your failures in a business. 4. Motivation: Let’s be honest, if you are thinking about a Coach in your business, then you are looking for a person who will motivate you for change and higher performance. Motivation breeds success, success comes from motivation and you need both to validate the support you are looking for from the Coach. How do you measure a successful relationship with your Coach? The relationship with your Coach can be measured in a number of ways. The first way is how open you are to change. The task of a Coach is to not force change on to you, but get you to believe that the idea is worth a shot, and most importantly, it was your idea anyway! Before change can be made, the Coach has to first get you to recognise that change is needed, because the Coach can generally see it from a mile away. Remember they are the expert on this and their knowledge on this should outweigh yours to succeed.
The second way to measure a successful relationship with a Coach is to drive the agenda in a committed way. Once the relationship is established, don’t turn up assuming that your Rent Roll Coach will have the coaching sessions structured for you. With your input to the session, you can then gauge responses to the matters raised and see if your Coach is grasping the challenges you are facing and if the responses are reasonable to consider. The third way is results. Both the business owner and Coach should formulate together what is expected, with a commitment to understanding and growing, and when things don’t work, both can be honest with each other’s input and advice. Together you will both solve the complex challenges faced in Rent Roll growth. The partnership Many coaching services will start in their own way, but I believe that for a successful relationship to develop and grow you should consider having a startup meeting first then move into the continuing service. The startup meeting is a bit like the ‘showdown at OK corral’. You both will size each other up, throw a few curly questions at each other and gauge the reaction and solutions offered by both. What you must remember is this – whilst you are interviewing your potential Coach, they are also interviewing you and your business, to see if they can offer something to your successes. Not all Coaches will fit your business, so the partnership must be built firmly on trust and belief. After the startup meeting has been dealt with, you both can now get down to setting up a continued service schedule for both. This may include onsite visits, teleconferencing or just the good old phone call. Flexibility is important, but should not be a distraction to success. After all, the more you work with your Coach, the more results should appear.
you to the success you are striving for. After all, as a Coach we bring back the belief that anything is possible, and there is no shame in seeking support from a Coach to get you there. Good luck! by Simon Cox Simon Cox is a highly respected Rent Roll Business Coach, Trainer and Consultant with Real Estate Dynamics. Simon comes from an incredibly successful property management and management career path with years of ‘hands on’ practical and technical industry knowledge and experience. As a result of his skills, strategies, implementation and dedication, Simon accomplished achievements throughout his career that many in the field dream of; including being awarded the prestigious ‘REIQ Property Manager of the Year’ and ‘REIA Finalist for Property Manager of the Year for Australia’, as well as numerous other industry awards and accolades. To contact Simon email simoncox@realestatedynamics.com.au
Taking a leap of faith There is no question that a strong partnership with a Coach creates success, but for many the hesitancy in moving forward is almost always costs. I will often say that many of you in Rent Rolls have experienced that hesitancy before – when you started your business! It was that leap of faith in the first place that got you started and it will be a Coach that will take The Property Management Journal
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TIME MANAGEMENT
It’s not always what you do it’s all about
how you do it
Have you ever wondered where all your time goes? I certainly have. Why can I manage 300 properties one day and then struggle with 180 when I start my new job the following week – true story!!!
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he answer is simple, but involves something that few will actually take the time to complete – a time log; every 15 minutes for at least two weeks fill in what you are doing. You will very quickly see where the time goes. 1. Systems and support 2. Technology 3. Geography 4. Type of property 5. Type of client, tenant
1. SYSTEMS AND SUPPORT I discovered that my team were “wandering” around the office for around three hours every day; NO, they said! Picture this, walk into the office, talk to some colleagues, turn your computer on, talk some more, wait for your computer, walk to 30 |
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kitchen for a coffee, talk some more, walk back to the computer, read some emails, print some emails, walk to the printer, talk some more, no paper/toner/paper jam, talk some more, walk back to your desk, make a call, walk to the filing cabinet, walk back to your desk, walk out to reception, talk to enquiry, walk back to desk, walk to bathroom, walk back to desk… see how easy it is to lose the morning! Ideal Week An ideal week certainly assists in overcoming this. What are the big rocks, main activities that you must complete to successfully carry out your job? Everyone factors in time for End of Month and advertising deadlines, but why not arrears? Far out, without the arrears being dealt
with, we have a major issue come EOM. Arrears Why not every Tuesday and Thursday at 10am diarise time to chase your arrears in full. On the alternate days allow slightly less time and deal with anyone that falls into action required due to the number of days they are behind and your legislation. If your arrears are under control you will be less likely to lose managements, and you can use your statistics to show that you really do walk the talk when in listing presentations. Phone calls Phone calls and emails should be answered in the morning, around lunchtime and before you leave; the email might
not be completely dealt with, but the communication process should have been started. Factor this into your ideal week
put your money where your mouth is and you have created another great point of difference – put your money where your mouth is. If you fail to return a phone call within eight business hours offer to manage the property for a period free of charge. Prospective Tenant Database Why would you bother with one of those? Tenants come and go far too quickly! The answer is simple, customer service and relationship building with prospective landlords. Email an inspection list to everyone on your database at certain times of the week. This will reduce phone calls and is quick, easy and cost efficient contact with people = customer service. While you are at it, direct them to your website and increase your website traffic. A prospective landlord client doesn’t trust you and everyone has a database. Try this “Mr prospective landlord client, I have this list of people currently looking for a property similar to yours. With your authorisation down here (management agency agreement) we can go back to the office and arrange times for these people to see your property. Without it, it is illegal for us to disclose the address. Would you like me to start making inspection times?” 2. TECHNOLOGY Review your current trust accounting program and I bet you are not even close to using all the functionality available. Get lessons on how to use what you don’t know. Banking Did you know that you can have tenants pay direct to your bank, and in most cases a file is created, sent to you and you upload it into your trust accounting software and BOOM the receipting is done! Paper Let’s go back to where our morning went; if we weren’t “wandering” to the printer for paper so often, wouldn’t life be easier. Get into the habit of, using your trust accounting software to retain soft copy documents, cut down on wandering, storage, paper cost and speed up delivery
time to the client by using email. Check your legislation as to what you need hard copies for. Inspections Get an iPad! Make it mobile. I have found that the first inspection takes as long as a written one, but you save time by not having to type it up when you get back, and when you go there next time you can upload it and use the data in the original report and just make changes and email to the client – in no time. Also, some trust accounting programs allow you to enter maintenance requests on the mobile device, which is another time saving activity. When you get back, just enter the trades you want and send out the request (once approved of course). 3. GEOGRAPHY The distance between properties and the office can have a massive impact on where your time goes. When arranging inspections ask lots of questions to get the most from each meeting – what is the purpose/goal of the appointment, could it be held in the office? Will all decision makers be present. Set an agenda and timeframe that everyone agrees too.
Get lessons on how to use what you don’t know. When going to the property, arrange inspections in common locations, set time ranges for inspections with existing tenants, advise your tenant that you will be using the office keys in their absence, confirm attendance, prior to the inspection/appointment, arrange group property viewings, or consecutive private inspections, get the tenant’s permission to allow tradespeople to liaise directly with them or to allow access with the agency set of keys. 4. TYPE OF PROPERTY Houses usually take longer than apartments to manage and older properties usually have more repairs than newer properties. Take a look at how the majority of your portfolio is made up, and this may help you work out what fees you should be charging to ensure that you can successfully accommodate the needs of the properties in your portfolio and stay in business.
5. TYPE OF CLIENT AND TENANT The 80/20 Rule; 80% of your time is spent with 20% of your clients. Ask yourself; who are you spending your time with? Is it dollar productive? Is there a more efficient way to communicate? Consider the fees you are charging, the amount of time you are spending on a property and how this relates back to your hourly rate – Are you charging enough? Work out what your average annual contract value is (Annual property management revenue/total number of properties) and do not take on anything below. If you are promising to conduct four routine inspections per year – how much does it cost the business to conduct these inspections? Are we charging enough to be able to accommodate this? Some clients want more, so my response is simple; YES, this is a customer service industry, as long as it is legal and you pay for it. This way I can ensure that we can afford to staff it. Do you know what you are doing each day? To this day I run an ideal week at work (and at home). It is a routine that doesn’t change much. I enter activities into my diary and my task pad to ensure that I stay honest. I have found this is the only way I can stay on top of everything I commit to and get it done within the time parameters committed to. Only one person can control how you manage your day – YOU. By Amy Sanderson Network Performance Manager – Property Investment Management Amy has close to 20 years’ experience in the real estate industry and personal experience ranging from small rent rolls; starting with zero properties under management to over 500 in under four years, through to one of the largest in the country where she was overseeing a team of more than 30 people and close to 3000 properties. Her role at LJ Hooker sees her responsible for the management of close to 130,000 investment properties, rightfully placing LJ Hooker as the Number 1 property management service provider in Australasia. To contact Amy email: asanderson@ljhooker.com The Property Management Journal
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CULTURE
Culture by design
You can design your property management business’ culture. We all know the adage, “If you fail to plan then you plan to fail.” I call this ‘business by default’.
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o many property managers operate their business with little to no planning. The business operates on a day-to-day basis through reactive management – they just let things happen. For many, it is because they don’t understand how to plan what I call ‘business by design’. Business by design means planning every tangible and intangible area of your business so they are working towards achieving your business goals. These areas are culture, brand, service, touchpoints,
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reputation, team and customers. Operating business by design starts with designing your property management business culture. Your business culture says who you are and what, when, where, why and how you do it. This means designing, implementing and proactively managing your business values, beliefs and norms. Values Values hold you and your team accountable. Think hard, because from
these values stem the foundations of every other business area. If you design your core values as mutual respect and trust, then stick this on every team members’ desk – they must be reminded of them every day so their actions show it. Beliefs Beliefs guide you and your team towards achieving business goals. Decide what beliefs you want your business to convey – perhaps the belief that continual training is important to ensure a knowledgeable
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service is delivered. To reinforce this belief, you may hold monthly training sessions so your team’s knowledge remains upto-date, ensuring your service standards remain consistent. Norms Norms are accepted behaviours in your business, such as team members taking coffee breaks whenever they feel like it.
constantly measure, monitor and reevaluate your values, beliefs and norms Most norms happen by default because they have always been and always will be (even if they damage the business in some way). Why? Because you have never designed these norms to ensure they benefit the business. What would happen if you allowed coffee breaks to happen only twice a day at set times – wouldn’t this designed norm immediately increase productivity? Why values, beliefs and norms matter Designing your business’ culture (rather than values, beliefs and norms just happening by default) allows you to address problems before they become crises because you can tell when someone or something does not belong. A clear culture also attracts the right employees and customers to your business because they understand who you are and whether
they align with this identity. Why do you think businesses like Apple have such loyal employee and customer followings? Designing, implementing and proactively managing your property management business’ culture really does put you in control of your business and its success! Just remember, operating a culture by design also requires you to constantly measure, monitor and reevaluate your values, beliefs and norms to ensure they are always working towards achieving your business goals. The best cultures are the ones with solid foundations, but remain open and adaptable to internal and external opportunities that come along. Jo-Anne Oliveri, CIPS, TRC, ireviloution intelligence Managing Director. After 20 years’ real estate experience, Jo-Anne established ireviloution intelligence to lead positive change in the industry. ireviloution provides property management systems (training + resources + processes), consulting, mentoring, workshops, due diligence, prognosis, business plan and rent roll transfer and transition services to principals and their property management teams. This innovative service offers a world-first – online training that measures competency, monitors progress and teaches systems that streamline and simplify all property management processes. To contact Jo-Anne email jo@ireviloution.com.
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LEADERSHIP
Do you get your
good ideas in the shower? 12 Great Leadership Tips For Property Manangers
1
. Remember To Think Where are you when you get your best ideas? The most common answer to this question is “in the shower”. The executive director of the NeuroLeadership Institute in the US, Dr David Rock, is not suggesting we spend more time monopolising the bathroom, but his research reveals people do not do their best thinking at work. In fact, of 6000 people polled, only 10 per cent say that they get their best ideas at the office, and 39 per cent indicate that it was at home. While the shower might be the most nominated single location, in general terms, most people (51 per cent) say they think best in a place that is neither at home nor at work. Source BRW “It could be while they are at the gym, exercising, socialising or driving to and
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from work,” Rock says. The reason these secondary locations help is because when freely conversing with others we can benefit from their points of view. And when happy and relaxed, we are more open-minded. 2. Ask Your People Leaders should walk the floors and ask three questions of an employee every week: 1. What do you think we should be doing; 2. What should we be stopping; 3. What should we keep doing? 3. Don’t Hire Clones If everybody is just like you, how many different opinions are you likely to get around the table? And how will you know whether you are meeting the needs of a your diverse management portfolio?
4. Don’t Shirk The Hard Decisions Being a great leader means that you sometimes have to do things that keep you awake at night. You have to take out and manage the people who are persistent at not being good at it, not liking it or not being serious about it. It can’t all be wonderful. 5. You Gotta Serve Somebody When you are approaching the pinnacle of your career, there are few things better for a leader than to step out of that esteemed role to help someone else. Become a mentor or a trainer or speaker at industry events; join a networking group or an industry body committee. These are great recruitment “grounds” also. 6. Inspire Change “Alter a person’s view of the world and you can change pretty much everything about them.” The fastest and best route to change is to alter how people see the clients and customers. This is the real meaning of ‘vision’ in leadership – what the leaders see and what they help their people to see. How do you as the leader talk about the clients and customers? Is it positive? 7. Show Up Invisible leaders are ineffective. Forty years ago, the idea of being “management by
walking around” was popularised by Bill Hewlett and Dave Packard, the founders of HP, who kept in touch with what was going on by strolling through their offices and talking to people at all levels of the organisation. 8. Look In The Mirror Looking over these leadership tips, consultant Dr Peter Fuda says they will ultimately fail if leaders do not first comprehend how their behaviour affects those around them. All leaders have noble intentions. I’ve never met a leader yet that wakes in the morning with the intention of “doing a bad job.” 9. Don’t be afraid to share the idea you’ve just come up with You need all the feedback, positive and negative, that you can get. Remember, you’ve got to go out and sell this service! 10. Your most important client isn’t always the customer Keeping the tradespeople happy is so crucial to your success! 11. Turn clients into evangelists Ask for testimonials, promote them, have them each month in your newsletters and with your statements. Update them regularly and ensure they have clients’ name and date on them (IMPORTANT
NOTE: always seek clients’ or customers’ written permission first). 12. Be CONFRONTED INVITE CRITICISM! Why do we shun negative feedback? Give your team the MANIAC PLEDGE, which gives employees permission to ask questions and speak their minds. The Pledge reads: MANIAC PLEDGE I am responsible to taking action, getting answers and making decisions. I won’t wait for someone to tell me. If I need to know, I am responsible for asking. I have no right to be offended that I didn’t do this sooner. If I am doing something others should know about it, I am responsible for telling them. By Trish Rogers Real Mastery Consulting With 20 years’ experience working with major groups in all aspects of franchising, Trish Rogers understands the key success factors of a profitable business through a professional, entrepreneurial and strategic approach. Her key expertise areas include fieldwork, marketing, training and technology. Be sure your business is secure for the future, plus maximise its potential through five key success areas. To contact Trish email: clientcare@realmastery.com.au
It’s never a good time for bad tenants. Check applicant details quickly and easily with online access to National Tenancy Database (NTD). NTD provides valuable information and can alert you on: • Residential and commercial checks • Previous rental discrepancies • Bankruptcies or court judgements • Directorship or proprietorship • Identity verification
To find out more about NTD, visit www.veda.com.au/ntd or call 1300 563 826 quoting Veda-NTD.
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STRESS MANAGEMENT
Optimising your team and your business through stress management
Modern day property management is an industry that requires the skill-set of a superhero; organise, communicate, coordinate, mediate, market, inspect, collect, select and more. Be a master of managing client relationships, a champion of communication and a warrior of work orders and maintenance diagnostics. Do all of this with a smile, remaining unruffled by the frenzied pace and often thanklessness that comes with the job.
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t’s not surprising that property managers often feel stressed out, burnt out and under appreciated. The pace and pressure required in these roles demands constant engagement, high performance and high productivity, so it’s not surprising that the property management industry has one of the highest attrition rates and the highest rates of sick and stress leave. The key to optimising your property management team lies in managing energy; learning to oscillate between performance and rest in achieving a sense of equilibrium. According to productivity experts, managing energy is the key to performance, health and happiness. Research shows that happy and healthy employees are happier in their lives and their jobs, more engaged at work, more motivated and more productive. Sounds simple enough; get some rest, relax, disconnect from work, sleep eight hours, eat well, etc. Many people that work in fast paced, demanding careers simply don’t know HOW to relax or HOW to release stress. Living with stress and anxiety has become a normal state of being for them so when they do
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An effective way to manage stress is through managing energy; using breath and movement to calm the body and mind and connect to the present moment.
finish up their work day they either carry these feelings over into their home and leisure time or they continue their habits of constant connectivity, responsibility, engagement and activity throughout their entire day, week and lives. Learning how to manage stress is crucial to health and happiness. Stress can have a negative impact on health in many ways, it not only affects your body, but also your mind and behaviour. High levels of stress can lead to headaches, muscle tension, anxiety, insomnia, irritability, anger, eating disorders, accelerated ageing and depression and it increases health risks such as heart disease, obesity, high blood pressure, asthma and diabetes. An effective way to manage stress is through managing energy; using breath and movement to calm the body and mind and connect to the present moment. It is simple and easy to do but first its necessary to cultivate awareness of self; body, mind and emotions. The best way to do this is practice, practice, practice. Catching yourself in the moment of stress, anxiety, or any number of other emotions, recognising
how you are feeling and then practicing techniques that promote relaxation. It is impossible to be both relaxed and stressed at the same time, so moving into a state of relaxation whenever the feelings of pressure and tension intensify enables people to reprogram, refocus and ultimately release the feeling of stress and anxiety. While employers are great at sending their staff for professional development, to learn new sales or communication techniques and to increase business skills, there has never been a time where there is a greater need for employers and business to support their team members by helping them to develop their emotional and cognitive skills. Helping their team members to learn how to manage stress and achieve a sense of balance in their emotional lives. When people take care of their body and mind and make their wellbeing a priority they are better able to serve others, being happy and healthy is the foundation to success and achieving goals. When people are empowered, healthy and happy they ‘show up’ in the world (and
the workplace!), they give themselves to something bigger than themselves and they are a beacon of motivation and strength to others. Helping team members to manage stress can be achieved effectively through a specialised Stress Management course or a series of workshops that form part of a larger Workplace Wellness Program. Studies show that companies which implement these types of initiatives experience lower attrition rates and higher employee satisfaction. Helping your team to manage their stress by encouraging wellness in the workplace helps to create happy people and happy employees. Team members that want to deliver results and feel energised and motivated to optimise themselves and your business. Nicole L. Betts Founder of Pursuit of Wellness - specialists in Stress Management programs for the Property Management industry. To contact Nicole email nicole@pursuitofwellness.com.au The Property Management Journal
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BRANDING
Brand out from the crowd
Branding quite often equals boring! However, just because it isn’t that exciting doesn’t mean that you shouldn’t have a branding marketing plan under way.
F
rom experience, being consistent with your brand means when people see it they recognise who you are, and as we all know, having a brand that is seen out in the marketplace will result in more points of contact. More points of contact will equal more business. However, don’t expect good branding to be your saving grace. Successful property management companies are built on business owners implementing numerous marketing strategies successfully, and having a consistent brand is the foundation you need to get started. Another way to look at branding is that it’s the core foundation to connecting all your marketing strategies. So what is a brand? Essentially a brand is an idea or image for your product or service that your target market can connect with. This is why it is common to see a business with a logo and a tag line that is often what their marketing is based around… or should be! So what is the big deal then if you just need to have a logo and a tag line? It sounds easy that all you need is a logo and tag line, but it’s much more than that. As explained, a brand needs to connect with your target market. If you can’t provide that connection then you will struggle to
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get that recognition in the marketplace for your company. If you can get that connection, all you need to do now is get consistent with how you present your brand and market your business. Here is a quick list of items you should brand consistently: • Website • Online advertising sites (rental portals, directories, etc.) • Social media • Car signwriting • Uniforms • Business cards • General office stationery • Advertising mediums offline (flyers, billboards, magazines, newspapers, etc.) So will a good brand in the property management industry result in business flooding though the door? Probably not! But don’t be disheartened, because every property management company owner out there knows growth is a result of a collection of good marketing initiatives. In saying that though – consistent branding that grabs your prospective market’s attention will gain you exposure and result in more business. Branding is what will enable us to lay the foundation to now execute our marketing initiatives consistently. The key here is to now
implement marketing initiatives that A) work and B) have a positive return on investment! So what can you do to get started? Take some time to work out what it is you stand for. How do you want your company to be perceived? What are your values, passions and reasons for being in business in the first place? Once you start to answer these questions, you will be able to look to get a brand created for your business that will have impact, consistency, and most importantly, provide the foundation for your marketing initiatives. by Aaron Clancy Aaron Clancy, creator of Viewing Tracker (software to help organise and collate prospective data for letting agents when doing viewings), is passionate about helping property management companies tap into their strengths to grow their rent roll. After building websites for property management companies, and providing consulting and marketing services to the sector, Aaron went on to speak and consult and in 2013 created Viewing Tracker, which is now being used by property management companies both in New Zealand and Australia. To contact Aaron email aaron@superiormarketing.co.nz
MANAGING ARREARS
Effectively managing rent arrears In a perfect world we would love to think every tenant is responsible enough to pay rent on time. Actually, a high percentage of people are reliable. However, things can turn bad very quickly when circumstances change with your tenants, changes such as job loss, new occupants, mental illness or even death of a tenant. You must be prepared for every possible scenario.
S
et the standards and expectations Often property investors and in some cases property managers are too trusting and often ignore minor rent arrears rather than having to deal with confrontation. This generally leads to repeat behaviour and often results in more serious concerns down the track. The expectation should be set from day one in the lease sign-up interview. Let them know that there is no such thing as friendly reminder notices. If no communication is made, late rent will instantly affect their rental history records
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and a formal notice will be issued. You are the one setting the standard and expectations, so if you do nothing, you give permission and set the trend. Never lose track I have seen so many circumstances where investors and property managers completely lose track of the rent payments. Months later they get tired of the late rent and eventually try and fix it. After such a long period, this can be a major challenge. When you try and explain to the tenant how and when they fell into arrears, it usually leads to dispute and the question
of “Why have I not heard anything until now, I have always paid every third Friday�! Sifting through bank statements or ledgers with the tenant trying to help them understand is not a simple process. Action immediately Keep a very close eye on rent collection and always action late rent payment immediately. If there is a reason for the delay and you accept an arrangement, make sure it is in writing and that you still follow through with the appropriate formal notice (Breach or Notice to Vacate). This should have an option to stay if the
tenant adheres to the agreement (unless you have issued three in any 12-month period). Each State has a different set of rules, so make sure you are very clear on what your State Tenancy legislation requires. You may think this is a harsh approach, but if you have ever been through the process of vacant possession you will understand why delays cannot be afforded. The “pink notice” syndrome How many people do you know who wait for the”pink” notice before paying the power bill? Plenty, right? You may even be guilty of it yourself. This is why you should never rely solely on sending standard notices and reminders such as letters, emails and texts without making sure you have a “call to action”. The written correspondence should only reinforce the phone calls,
You must be prepared for every possible scenario. explaining the urgency of the matter. Think about how you would prioritise a bill if you had a pile of them? Which one would you pay first? From experience, it is generally in order of the one that harasses you the most (by phone). I have also come to realise that people who fail to pay rent often fail to check their mail box! You need to be that person who keeps on calling until you get the results. If they stop answering the mobile, try calling work or the next of kin and leave a message that you need to speak with them urgently.
Keep your cool There is a difference between harassment and being completely ignorant. The number one rule is to keep your cool. Stick with the facts, listen and respond with a calm and professional manner. The moment you lose control of your emotions you lose respect and control over the conversation. If the call gets heated let them know you will call back when they have had a chance to calm and consider the situation. Leave it 15 minutes and call back. Explain that you are really concerned about how this situation is going to impact on them long term if they don’t work with you to get back on track. How will they ever rent in the future without a good rental payment history? Empathise and support, but don’t sympathise or apologise, it is not your problem, but you can be a part of the solution if you learn how to negotiate effectively. KPIs For the department managers and principals out there, you should have best practice standards in place for rent arrears. Our office has a minimum standard of rent arrears being under 2% at all times. We reward portfolio managers for zero rent arrears and we meet weekly to discuss the KPIs and any serious rent arrears concerns. Rent arrears should be a daily action without fail, and every person on the list should be contacted and followed up as a matter of priority. ALL correspondence, including calls, should be recorded and documented.
Monitor Remember always that if rent is not being paid, the business has no income from that property. If the business has no income from the property and they are paying someone to manage it, who pays the employee? Principals, I strongly encourage you to have an audit system in place to monitor the action being taken to control arrears. Remember to look at the vacated tenants also! Often this is income lost that is never followed up. Do yourself a favour and print the entire rent arrears list, including vacated tenants, then go to the “collections” section and add up the total rent debts lodged, total them up and calculate the revenue lost. You will then realise it is time to take action on rent arrears policies! Michelle Williams, is one of the most recognised industry leaders. With 16 years’ experience under her belt, Michelle launched her own independent property management business in 2009. Since the inception of @home Property Management Solutions, the business has received multiple State and National Awards, including the PPM National Award for Excellence for three consecutive years. Michelle’s personal career highlights include being named as a finalist in the Telstra Business Women’s Awards in 2012 and Winner of the TCCI Owner Manager Award in 2011. To contact Michelle email: michelle@homepm.com.au
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SECRET SHOPPER
Were you
secret shopped
at your open house? ‘Mystery Shoppers’ Lots of big companies do it! Everyone from McDonald’s, KFC, David Jones, you name it, and now you can even see it on TV shows like Undercover Boss. How would you stack up if your landlord or seller ‘secret shopped’ your business?
A
bout three years ago, I started sending ‘mystery shoppers’ in to see real estate agents at their open houses, and the results were just staggering. Staggeringly bad, not staggeringly good. Most of these were for sales agents, but we did do a few rental inspections as well, and again, the results were not pretty. The mystery shoppers were primarily women aged from 35-45 years old, the very age group that of course could own a property, but many experts agree that the female is the primary decision-maker in the real estate decision-making process. One of the standout horror stories was in fact one of the property management group inspections. The agent was 15 minutes late, and our mystery shopper, plus three groups, were left standing on the footpath in the hot sun waiting, without even knowing if the agent was en route or not coming at all. Just as the group had decided they were going to leave the agent drives up, and sees there’s nowhere to park. He throws the keys out his window to our mystery shopper in fact, says ‘Let yourself in and have a look’ and drives off to find a park. He then rolls up 10 minutes later with a big, fake, cheesy, salesperson’s grin and says, ‘So what do we think?’ This was precisely how the mystery shopper reported this to me, and if I hadn’t have witnessed lots of these sorts of experiences myself in our exercise, I may have thought it was an exaggeration.
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But, no, alas, this is the norm and not the exception. So my challenge to you is, how would you stack up if your landlord or seller decided to play tenant or buyer and secret shop your service? When we did this exercise en masse, we chose the properties at random, and were on the lookout for following up, rapport building, marketing skills, sales skills, negotiation prowess, and generally to test the capabilities of the agents in general. And what we found, well, as I said, it wasn’t pretty. Here are some of the results of 150 ‘secret shopped’ Home Opens – • 109 agents didn’t phone back at all. • 5 followed up on the day of the open home. • 5 agents just didn’t show up (and at 3 of those instances, buyers were left waiting on the footpath with the secret shoppers). • 47 agents made our secret shop ladies feel (and I’m quoting the ladies here) ‘unwelcome, like they did not deserve to be there, uncomfortable, like crap’ (sic). • 128 of the agents didn’t ask for the business in any way. • 4 followed up with a simple thank you sms. • 4 followed up on more than one occasion. • 5 had take home material that was something more than a colourphotocopied, one-page flyer.
shine and show the world why you are the agent of choice in your area Here are some tips for running a brilliant property inspection that I boldly claim... ‘Will Embarrass Your Competition When Your Clients Compare them to You’ If ever they secret shop you keep in mind, these techniques that work in either property management or sales. 1. Follow up. This may seem like common sense, but the reality is only between 10 and 20% of real estate agents even make one piece of follow up activity. I recommends a sms on the day as the guests leave, a phone call that afternoon/night, and a piece of physical mail if possible, like a greeting card during the week at some stage. 2. Be nice. A staggering statistic from my exercise was 47 of the agents studied were flat out ‘rude, arrogant
and made the ladies feel unwelcome’. These reports were using the words of one of the secret shopping volunteers, be nice. 3. Be on Show. Understand that the inspection with the client is your opportunity to shine and show the world why you are the agent of choice in your area. So treat the opportunity with the respect it deserves. Dress one step better than your competition. Have your car sign written professionally and parked out front. Have flags, signs and other goodies to let people know there’s some excitement going on. 4. Blow them away inside. You need to differentiate yourself from the ho-hum of a ‘normal’ open house. So some items like: • iPads with slide shows on them. • Real display boards that have big open house displays that look amazing. • Shoe cover machines to protect carpets. It puts a little plastic cover over shoes, available at REI shops or online. • Give away Chup a Chups to kids (wrapped individually) and get parents’ permission before giving kids lollies. • Bottled water for adults 5. Quality of take home materials. Have marketing materials worthy of the marketing of an asset worth hundreds of thousands of dollars. If you are looking to impress, a black and white, photocopied piece of A4 will not suffice. 6. Have two people present. Have one person taking names and greeting guests while you escort (without
being intrusive), the other guests around the house. Make sure this ‘meeter and greeter’ is personality PLUS. A real, natural rapport builder. No room for grumps in this role, or in yours for that matter. 7. Remember, you represent your client. If future sellers/landlords are also, ‘secret shopping’ you, remember who is paying your fees. Represent your seller/landlord at all times, and treat buyers/tenants, fairly, honestly and professionally, but remember, you are working on behalf of your client, and in their best interests. 8. Follow up. Yes, this was tip number one, but it’s too important to not do. In your follow up, make sure you ask for feedback or a decision in a nonconfrontational way. Maybe even jokingly say, ‘So you want to buy/rent it?’ Readers of Leased1 The Property Management Journal have the chance to win one of 20 copies of Glenn’s Ultimate Open Home CD training course. Email glenn@glenntwiddle.com.au with ‘Open House Comp’ in the subject line to win your copy. By Glenn Twiddle Glenn Twiddle is known as the No B.S. Marketing Trainer who teaches agents to be the #1 agent in their area in three years or less, no matter where you are right now. He coaches #1 agents across the country in Guerilla Marketing, Sales Skills, Marketing Prowess and Out of the Box thinking for dominating your area. To contact Glenn email: glenn@glenntwiddle.com.au The Property Management Journal
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VIRTUAL OUTSOURCING
Virtual outsourcing... what does it have to offer? Simple tips help make daily dealings with virtual assistants an everyday reality. Excitement mounts as you think about putting virtual outsourcing to work for your property management business. A few minutes checking online directories have revealed how easy it is to find virtual assistants (VAs).
Y
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ou are ready to deploy the vast, worldwide army that stands ready to provide a complete range of services at competitive costs. As part of getting started, it helps to understand that there are two types of service providers.
is performed by virtual consultants (VCs) who expect to sever ties upon completing their assignments. The distinction can blur; is the writer you hire one project at a time – but for project after project – a virtual assistant or a virtual consultant?
VA Vs VC? Virtually the Same? So far in our articles, I have used ‘VA’ as shorthand for anyone who provides a service from a location remote to your business. But, says Michael J. Russer (www.russer.com), an early proponent of virtual outsourcing, it’s possible to make the following distinction. A virtual assistant, he notes, provides services on an ongoing basis. Project work, by contrast,
The Difference At Work This distinction may seem abstruse at times and irrelevant to others. The difference matters, Russer affirms, because it influences each aspect of how you work with VAs and VCs.
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Finding Knowing whether you seek a VA or VC helps you choose between the methods outlined in ‘Navigating the Globe for
World-class Resources’ (PM Journal Issue, Winter 2012). The controls and optional anonymity of virtual service provider marketplaces such as Guru and eLance are most appropriate when seeking a VC for a one-off project. The associations and communities mentioned in my previous article, as well as search engines, work better when seeking a VA for an ongoing relationship. Selecting The marketplaces pit VCs against each other as they bid for your project. For more straight-forward functions such as transcription or data entry, a cost-driven decision can make sense – as long as experience, work samples and feedback check-out, of course.
To select a VA, you will want to weigh such considerations as communication style, experience and work quality. Fees are part of the equation, but when thinking long-term, paying more for an experienced VA can increase the return on investment. Hiring Provider marketplaces let you review VC responses. You find the most competitive bid and close the deal with a mouse click. If you choose, you may hire anonymously – and remain anonymous through the entire process. With a VA, you’ll discuss terms, working out details such as work standards, compensation and non-disclosure. Some cases may warrant a formal independent contractor’s agreement. Managing With VCs, says Russer, “Management is by objective”. With short-term, welldefined projects, an objective – 100 open for inspection registrations entered into a database, for example – is either met, or it isn’t. Objectives for ongoing, open-ended functions are less clear-cut. To keep a VA on track, Russer advises, it helps to have “a well-defined, written business
process with straightforward and easily measured results, timelines and quality standards”. Just don’t let the lack of a written process stop you from hiring a VA. In fact, this is yet another area where VAs can help. More than once, our firm has engaged VAs who have collaborated with us, using our business model to write and initiate the formal business processes that becomes the framework for the professional relationship. Compensating Once the VC has met the specified objective, you submit payment to the provider marketplace, usually through credit card or bank draft. The marketplace deducts its commission and forwards the balance to wherever the VC happens to be (keeping your identity private, if you choose). A VA may submit a periodic invoice based on an hourly rate, retainer or resultsbased fee. Most employers send a cheque when the VA requests payment in the same currency. Other options include PayPal and sometimes credit cards. Taking the Plunge Michael Russer offers some concluding
thoughts for those ready to make the leap to virtual outsourcing. “Jumping in all at once and outsourcing everything right from the start is a recipe for disaster,” Russer warns. Instead, start with “One support function, and when that appears to be working and stable, outsource another one” To help choose which support function to outsource first, Russer suggests that you think about the three ways a function might cause ‘pain’ (too costly, too time-consuming or no fun). “Consider which of the three is causing you the most distress,” he advises. “This will help you determine what to outsource first.” With the resulting precision and clarity, you’ll be on the path of continued success with virtual outsourcing. Paul Matthews, Professional Services Manager at Bermuda Realty Company Limited, uses virtual outsourcing to help maintain the firm’s position as the island’s largest, most-comprehensive real estate company. To contact Paul: email PMatthews@brcl.bm www.facebook.com/PaulDMatthews1 www.LinkedIn.com/in/PaulDMatthews
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FLOOR PLANS
Getting sales and property management to work together
effectively Each country is different, but where offices have sales and property management together, sadly, they mostly don’t work together cooperatively.
W
hen they do, it can be a veritable goldmine. In a previous article I discussed working with property investors/”landlords” to sell them a new property roughly every two years. The sales department makes the sales and the property management department manages the property afterwards – everyone wins. An office in New Zealand had a great idea to get their teams working together:They put signs all around the office saying “courtesy is catching”. Then, they printed a whole bunch of $20,000 notes and distributed them evenly
throughout the office. Then they announced a fun staff auction event in several weeks’ time, where everyone could bid for a number of products they had acquired from local businesses – everything from white goods, TVs and DVD players to pampering products and meal vouchers for two. The secret was this – every time everyone in the office did something helpful for someone else, particularly in another department, that person had to give them one of their $20,000 notes. So in an instant, guess where everyone’s focus was – not on themselves, but on
They put signs all around the office saying “courtesy is catching”.
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how they could help anyone else. By doing so, they had to get to know each other better and understand each other’s jobs better (some even job swapped). In no time at all the atmosphere was electric and there was a sense of total cooperation throughout the office, and sales and property management were able to work together cohesively and effectively. This is just one simple idea that worked very powerfully and emphasises the point that it is vital to get your internal customer service right first, before looking at your external client service for existing and potential paying clients. A colleague of mine who is currently doing some property management/ systems training in the USA related an event that illustrated the benefits of sales and property management working together. A property on the river in Brisbane, Australia had just sold, with the new owners not taking possession for six months. Working with a US relocation company, she was aware of an executive who needed a residence for two years, budget $2000 per week. Working with sales, she approached the buyer and asked if they would accept $2000 per week for two years and take possession then. They accepted, she got them $2200 per week – everybody happy – and something created out of mutual cooperation. From a sales perspective, another great bonus is that once you are working with your “landlords” (now correctly titled “property investors”) to build their property investment portfolios, you have now built a bank of buyers continued on page 48
Get the flock out of there In an industry punctuated by sameness and a herd mentality, true innovation and a willingness to tread a new path is rare. Choose an innovative brand like Starr Partners for your business. We’re expanding into new areas and seek forward-thinking and energetic franchisees to partner us. Be heard, not part of the herd. Call Douglas Driscoll today on (02) 8824 3133.
starrpartners.com.au
FLOOR PLANS
continued from page 46 that are great for preview VIP open houses on a new property that has just been listed, before the advertising starts proper. Property managers can also make it easier for salespeople to sell to investors by establishing the rental returns a property is likely to achieve. And there are many more examples like that.
I
n my advertising sessions, both faceto-face and webinars, I’m often asked about both of the following points.
FLOOR PLANS When people are looking to buy a new home, floor plans are provided – and here I am talking about actual properties/display homes as opposed to buying off the plan. These floor plans involve potential purchasers, as they get a feeling for where their furniture might fit, and for example, where the study might be located compared to bedrooms or perhaps entertaining areas – how close the children’s rooms might be to the parents’ bedroom (perhaps closer preferred when they are younger so they can be heard, and further away when they are older for everyone’s privacy?). However, an interesting observation is that the moment the property is sold and becomes a “second-hand” or lived in property, the floor plans tend to disappear both in ads selling those properties and those offering them for rent/lease – why? It would seem to make sense to include floor plans to rent those (probably more expensive) properties and get the potential tenants involved – and many progressive offices are doing just that. PHOTOGRAPHY Question:- Should I use a professional photographer? If you have the budget, it would seem to make sense as it should guarantee the quality of the photograph – and photographers are aware of things like shade and light, angle of the sun and time of the day et cetera that will make a difference – as well as correct staging. 48 |
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Floor plans and photography – here’s just a few thoughts However, with the cameras available these days real estate offices can take some excellent photographs themselves, but either way, the content of the photograph is more important than just the photographic quality. All too often I see agents and groups focusing on high quality professional photography that makes their ads very “pretty” – but sadly, if you make bad advertising pretty, all you are left with is “pretty bad advertising”. So, my advice would be to focus on the correct advertising procedure first, then look at the photographic quality. That means writing the ad first, then taking the photographs to match, but all too often agents (that’s both sales and property management) and their photographers are snapping away before the ad has been created. As I teach, photos must match headlines (and then, also, the text in sequence), not the other way round. If the photo doesn’t match the headline, then while the photographic quality may be perfect, the advertising certainly isn’t. Back to the original question about using a professional photographer – you’ll notice that most of the best agents and groups use professional photography
always, to maintain a professional consistency, so there may be a lesson in there for you. If you do decide to engage a professional photographer, just include the cost in your property investor/”landlord” advertising contribution proposal and you will always know that lighting/exposures/ propping and staging are correct. But one more important thing to remember – don’t just let your professional photographers have their heads and take photos as they see fit. Just as is done in an advertising agency, direct them – ensure they know which photograph you need to match your headline and then your body text. Then they can focus on the quality of each photograph, knowing what it is they have to capture and input their own ideas and creativity. I hope that helps, or at the very least stimulates some thoughts or discussion – I’m always happy to answer any questions if I can. To contact Ian email amazing@iangrace.com.au You can follow Ian Grace, otherwise known as ‘International Mr Real Estate Advertising, by visiting www.iangrace.com.
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Getting the foundation right Build a better business
I think we all would have heard the Biblical parable about the man who built his house on the sand, and how the sea came in and washed the house away. Whereas a wise man built his house on the rocks so the sea could not wash it away.
W
ell, I would like to use that example with our business planning. So many salespeople go into agency practice without thinking through the full implications of being in business for themselves, let alone the type of agency they want to develop. Starting with the right foundation (Plan) is going to be critical to helping you succeed in business. Many of our agency principals come from a selling background and therefore have been successful in listing and selling real estate. However, running a real estate practice is so much more than just listing and selling, and there are many agency principals that would confess to being able to make more money operating as a salesperson in another agency rather than working under their own banner. After all, if you can focus on just the listing and selling without the stress of running a business then you have to be more affective. So don’t even consider your own practice unless you are confident that this is the path for you. Then go out and get some business training before you even 50 |
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open the doors, and prepare a business plan outlining what type of agency you are going to develop. Are you going to be a boutique agency, a franchise or member of a group? Are you going to be just in residential sales? Or are you going to try and provide a one-stop shop catering for all facets of the industry? Once you have a plan and made these decisions then you need to look at the financial implications. How much will it cost to set up shop? How am I going to live and support my family and myself while I get established and start making a profit? As an alternative, have you considered buying into an established agency? With the average age of an agency principal in Australia being over 50 years now is a good time to consider approaching some of these principals about equity participation so that you can become part of their succession planning. This is a great alternative for agents who don’t have time to develop their property management portfolios. Bring in an equity partner to develop your rental department.
The agencies I have seen that have been most successful in property management have had the principals’ dedicated input. They are driving the property management department and continually developing over time. So whether you are just starting out, or you’re a seasoned hand, continue to look for ways to improve and develop your agency. Remember, a successful business is developed over time with blood, sweat and tears, so make sure the foundation is going to provide a firm footing along the way. By Chris Goodway The Rent Roll Broker is a Business Broker specialising exclusively in the sale of rent roll portfolios and real estate agency practices in Australia. Chris Goodway is the CEO, with 35 years’ experience in Real Estate. Chris Goodway commenced his real estate career in 1973. He has been specialising on selling rent rolls and agency practices around the country since 2007. To contact Chris email: chrisgoodway@me.com
The Property Management Journal
For Professional Property Managers The Property Management Journal, the leading industry magazine issued 4 times a year with exclusive articles, containing practical, hands on property management information. Now there’s a website to complement with news, general real estate information and special benefits to subscribers, including a weekly newsletter via “The Report”.
leased1.com.au
PROPERTY MANAGEMENT LIVE ON-LINE TRAINING BROADCASTS IN THE COMFORT OF YOUR OWN OFFICE Let Debbie Palmer motivate, inspire, coach, mentor and train your property management team each week SNEAK PEEK OF SOME SESSION TOPICS ➔ How to Double your Profits ➔ What you need to know before Building the Rent Roll ➔ Marketing Tips, Strategies and Ideas ➔ Managing Difficult Clients ➔ How to Secure the Best Tenant ➔ Important Safety Tips for Property Managers ➔ What to say in a Listing Presentation & how to Overcome Objections ➔ The First Class Receptionist ➔ How to have the Lowest Arrears in Town ➔ Scripts to become a Whiz Property Management Negotiator ➔ How to become an Invisible Business Owner ➔ Smart Advertising Tips & Marketing the Rental Property ➔ AND LOTS MORE… “ Debbie has such a passion for property management that it is contagious” “I cannot believe that every week there is so much new content to learn” “ I had been feeling a little flat as a property manager and joining the broadcasts has made me refocus” “Debbie is really motivating & inspiring. She knows her property management stuff” “ It was the best investment for our team”
BECOME AN ANNUAL SUBSCRIBER TODAY FOR LESS THAN $20 PW FOR YOUR ENTIRE TEAM T: 07 5562 0037 E: info@ppmsystem.com W: www.ppmsystem.com