5 Ways Property Managers Lose Landlords

Winning over a new investor or landlord to your rent roll is always a victory. According to research from Macquarie Bank, the consistent, regular income from your property management team underpins the financial success of every real estate agency in Australia. The Macquarie research also shows that the more you focus on efficiency within your property management teams, the more profitable your agency is likely to be overall.

I am fortunate to have two investment properties. Both are managed by agencies that have excellent reputations in their local markets and where the teams work very hard to take care of both tenants and landlords. But at the back end, they are managed in completely different ways.

One is very technology-enabled. The other is old school. Some recent events highlighted just how different their approaches were and just how expensive traditional behaviour is in property management.

In this guest post for Forms Live, industry expert Kylie Davis explores what it feels like as a modern investor to be faced with property management practices that are “the way we’ve always done it”.

1. Try to make your landlord your executive assistant

When tenants depart, many states now require landlords to complete a form that provides information about themselves and the property. How are you doing that?

If it's by emailing your landlord a PDF and expecting them to complete it in full, please stop.

When you do this, you’re committing yourself to sending numerous tedious messages begging it to be completed and annoying them deeply in the process. Sure, it's a form required under the regulation but you know their property address and details - did you really need to send a completely blank form? Are they one of your landlords or your admin assistants? Emailing a PDF might have allowed you to tick the Send Form item off your to do list, but it gave your landlord a major headache under the headline of “Wait, if you’re managing my property, why am I doing your job?”.

Great service looks like making it easy for your landlord (and renters) to fill in forms and contracts and meet their regulatory obligations - not requiring them to have their own paid subscription to Adobe on your behalf. It does not look like giving them all the work that should be largely completed by your assistant, or an integration that pulls the majority of the details for the form automatically from your CRM just because you haven’t taken the time to mark up a form.

Ask yourself what are you expecting when you email a static PDF file? And what is the workflow that you’re committing both the landlord and yourself to? You’re asking them to print it out -or have their own PDF editing subscription - to fill it out - including questions that are likely to confuse or be difficult for them to answer, sign and send you back as a photograph or attached file via email so you can review, remind them of the places they missed and start the process again. Once the form is finally completed, you’ve got the job of manually attaching it to their CRM record. This process can take weeks, and untold annoyance.

A better experience is to use the integration between your CRM and your forms system to prefill the form with the details you do know (including their name!) and allow them to complete and sign the form electronically. Then it will be returned in no time with minimum friction. One of my PMs regularly does this the hard way. The other gets five star reviews.

2. Insist they micromanage the letting

Sure, some landlords want to be consulted on every repair and additional expense. These are usually the difficult ones. So why are your processes trying to make every landlord difficult and guarantee that renters will get angry at us both?

Increasingly, many investors do not want the interruption in their day, nor do they enjoy playing endless phone tag to approve a $250 tradie call-out fee for a simple repair that clearly needs addressing. If good tenants have already been inconvenienced, no one is benefiting from a process originally designed to obtain permissions that can slow thing down by weeks. Everyone’s blood pressure gets elevated.

The trick is to understand at what point permission needs to be obtained. Providing delegated authorities for minor repairs (at a preset limit of say one week’s rent) is a great way to streamline this transparently.

When onboarding, create an option for a landlord to choose a pre-approved expense level under which repairs can automatically proceed can reduce delays and frustration for all parties. It's a simple enough thing to set up with a pre-approval form attached as an annexure or PDF when signing up your landlord. Or send the option out to all your landlords this week, to see how many of them respond with a “hell, yes!”.

One of my PMs has a system in place for this. The other does not. Guess which one is my favourite and which one I am currently reviewing.

3. Save them $100 at the cost of thousands

Two true stories. In one of my properties, my (then) property manager decided not to bother acting on a report by the renter that the kitchen tap was constantly leaking and failed to call a plumber for a minor washer repair to “save me the money”. Endlessly frustrated, my tenant decided to fix the problem themselves and, when that went wrong, improvised with a DIY tap replacement involving a spanner instead of a tap handle.

The result was that after months of slow leaks down the back of the cabinets, the MDF crumbled, mould took over and the entire kitchen needed to be replaced. All for the sake of a $5 washer replacement. My PM’s response was it was all okay because we would claim the bond back from the tenants because their action caused the damage. We did not do that. Instead, I sacked the PM. It was his inaction that caused the damage.

The frustration was that a delegated authority (as outlined above) would have resolved this entire scenario better for everyone. A good tenant and two months rent was lost while we peeled back the layers of the problem and completely renovated. An entire kitchen needed to be replaced to save me the inconvenience and expense of a tap washer.

In a separate incident with my other PM, a pipe leak behind a wall flooded the carpet in a bedroom and destroyed the plasterboard. It was reported quickly, the PM organised quotes within days and was able to quickly confirm that the job required two separate trades (new carpeting and a plasterer). I was able to review quotes online that evening and approve the ones I wanted to go with before dinner. An action plan to resolve the drama was in place within three days.

The carpet was replaced in a week and while it took a bit longer to fix the hole in the plasterboard, we reduced the rent to compensate. Our tenants recently signed a new lease. I came away from the whole experiencing wondering if I could marry my PM and give her our primary residence to manage.

4. Expect them to guess your process

There are many different ways to manage a property. What are your commitments and the service level agreements you’re prepared to commit to as a property management team to your landlords and to your renters? What processes and workflows does your team follow? What obligations and duties do investors have when they choose you? How do your landlords - and renters - know this information?

And what are the consequences if any party acts outside the guidelines?

Too many property management pitches focus on the commission charged, and a buzzword bingo of terms that mention ‘personal service’ and ‘customer service excellence’ without any backup.

That’s all great. But what I need to understand as an investor are the processes and guidelines you have in place to make great service happen. Without it, real estate agencies rely on the discretionary effort of their individual property managers to constantly go above and beyond. That leads to bad decisions (like my guy with the broken washer), staff burnout, infuriated renters, and investors wearing additional costs and wondering why they’re being painted as the bad guys.

5. Refuse to use the technology you already have

I work in the sector, so I know the technology property managers have at their fingertips with their forms and CRM systems that can streamline the best experiences I’ve outlined in this article and eradicate the bad.

So it is incredible to me to witness PMs actively refusing to engage with technology they are already paying for on the basis that “they just don’t have time” or “it’s too hard” while complaining about being stressed and harangued.

We live in times of heightened expectations around customer service. There is a heavy cost to these attitudes that put direct costs into your business and onto your people. It means teams run themselves ragged, are in a constant state of stress and regularly infuriate both tenants and landlords which loses clients.

Everyone is busy. But we no longer have the time in our days to do the work the way you’ve always done it. And it’s just too hard to try and deliver superior customer service through manual means. We need to make different choices.

The automations, integrations, electronic signatures and workflow processes have been designed to make life easier for property managers and deliver superior experiences to your clients. Why are you fighting so hard everyday to avoid something you just have to learn it once?

Make the decision to set aside time to change. Make time in your week with your team to review websites and online material to get a feel for what is possible in the systems you already subscribe to. Then get in contact with your provider and request training and further guidance. They’ll be happy to help. And your investors, your renters and your bottom line will thank you.