Presented at the RETG event in Auckland on the 7th April 2017. David Faulkner explains why focusing on business retention in today's economic climate is equally as important as focusing on business development. Also, why too many unregulated Property Managers are causing us to have a race to the bottom.

1. Good to Great in
Property Management

2. About Real iQ
David Faulkner
Director
Candice Burgess
Head of
Recruitment
Rachel Shepherd
H.R. Consultant
John Crocker
Principal
Mike McGarry
Rent Roll Broker
Avelyn Holcroft-Lewer
Office Manager

4. Why is this relevant?
$
TIME
Apr 15 Oct 15 Apr 16 Oct 16 Apr 17 Oct 17
Revenue
Cost

5. “In business, you are either
growing or you are going
backwards”

6. The Race To The Bottom

7. Basic EconomicsPrice$
Quantity
Equilibrium
Supply
Demand
2008
2017

8. Cost of Doing Business
• Wages
• Rent
• Cars
• Insurance
• Power
• Computers
• Software
• Marketing
• Phones
• PI Insurance
• Human Resources
• ACC
• Accountants
• Legal expenses
• Auditors
• Bank fees
• Health and Safety
• Rates
• Office supplies
• IT charges
• Subscriptions
• Training

11. Over 50% of Property Management
businesses have less than 200
managements
Statistics from Real iQ Great Property Management Survey October 2016

15. MORE PROPERTIES MANAGED
BY FEWER COMPANIES

17. Tara's Property Management
Portfolio Summary
PORTFOLIO 1 PORTFOLIO 2 PORTFOLIO 3 #1 PER ANNUM
#2 PER
ANNUM
#3 PER
ANNUM
DIFF 3 V 2 DIFF 3 V 1
Management Fees Collected $16,076.42 $20,751.12 $26,059.78 $192,917.09 $249,013.43 $312,717.36 $63,703.93 $ 119,800.28
Maintenance Fees Collected $803.82 $1,037.56 $1,302.99 $9,645.85 $12,450.67 $15,635.87 $3,185.20 $ 5,990.01
Letting Fees Collected $1,929.17 $2,490.13 $3,127.17 $23,150.05 $29,881.61 $37,526.08 $7,644.47 $ 14,376.03
Inspection Fees Collected $1338.75 $1482.19 $1625.63 $16,065.00 $17,786.25 $19,507.50 $1,721.25 $ 3,442.50
Other Fees Collected $300.00 $300.00 $300.00 $3,600.00 $3,600.00 $3,600.00 $- $ 0.00
Total Fees Collected $20,448.17 $26,061.00 $32,415.57 $245,377.99 $312,731.96 $388,986.81 $76,254.85 $ 143,608.82
Average Management Fee Per
Property
$135.10 $157.50 $180.34 $1,621.15 $1,890.05 $2,164.13 $274.09 $ 542.98
Average Management Fee (% /
Property)
6.50% 7.50% 8.50% 6.50% 7.50% 8.50% 1.0% 2.0%
Number of Owners 85 85 85 85 85 85 - -
Number of Managed Properties 119 132 145 119 132 145 13 26
Average Number of Properties / Owner 1.40 1.55 1.70 1.40 1.55 1.70 0.15 0.30
Average Rent (Weekly) $480.00 $485.00 $490.00 $480.00 $485.00 $490.00 $5.00 $ 10.00
Total Rent Received $247,329.60 $276,681.59 $306,585.65 $2,967,955.20 $3,320,179.05 $3,679,027.80 $358,848.75 $ 711,072.60
WAGE COST AT 30% $ 6,134.45 $ 7,818.30 $ 9,724.67 $ 73,613.40 $ 93,819.59 $ 116,696.04 $ 22,876.46 $ 43,082.65

18. Two Aspects of Property
Management
BUSINESS
DEVELOPMENT
BUSINESS
RETENTION

19. Life Time Value 4 Years
Units
Managed
Year 1 Year 2 Year 3 Year 4 TOTAL
1 $2,080.00 $2,184.00 $2,293.20 $2,407.86 $8,965.06
2 $4,160.00 $4,368.00 $4,586.40 $4,815.72 $17,930.12
3 $6,240.00 $6,552.00 $6,879.60 $7,223.58 $26,895.18
4 $8,320.00 $8,736.00 $9,172.80 $9,631.44 $35,860.24
5 $10,400.00 $10,920.00 $11,466.00 $12,039.30 $44,825.30

20. Life Time Value 6 Years
Units
Manage
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 TOTAL
1 $2,080.00 $2,184.00 $2,293.20 $2,407.86 $2,528.25 $2,654.67 $14,147.98
2 $4,160.00 $4,368.00 $4,586.40 $4,815.72 $5,056.51 $5,309.33 $28,295.96
3 $6,240.00 $6,552.00 $6,879.60 $7,223.58 $7,584.76 $7,964.00 $42,443.94
4 $8,320.00 $8,736.00 $9,172.80 $9,631.44 $10,113.01 $10,618.66 $56,591.91
5 $10,400.00 $10,920.00 $11,466.00 $12,039.30 $12,641.27 $13,273.33 $70,739.89

21. The Difference
UNITS 6 YEAR 4 YEAR DIFFERENCE %
1 $14,147.98 $8,965.06 $5,182.92 57.8%
2 $28,295.96 $17,930.12 $10,365.84 57.8%
3 $42,443.94 $26,895.18 $15,548.76 57.8%
4 $56,591.91 $35,860.24 $20,731.67 57.8%
5 $70,739.89 $44,825.30 $25,914.59 57.8%

22. The Difference Between
15% and 25%
APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR TOTAL
Properties 500 500 500 500 500 500 500 500 500 500 500 500 500
Won 10 10 10 10 10 10 10 10 10 10 10 10 120
Lost -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -10 -120
Net Gain 0 0 0 0 0 0 0 0 0 0 0 0 0
Life Time Value 4 years
Life Time Value 6 years
APR MAY JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR TOTAL
Properties 500 503 506 509 512 515 518 521 524 527 530 533 536
Won 10 10 10 10 10 10 10 10 10 10 10 10 120
Lost -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -7 -84
Net Gain 3 3 3 3 3 3 3 3 3 3 3 3 36

23. #1 Understand Your
Worth

24. What would your hourly rate be?
• 70 properties per member of staff
• 2,080 hours worked per year
• 30 hours per property per year
ANNUM MONTHLY
• $74 per hour: $2,210 $184.17
• $65 per hour: $1,950 $162.50
• $56 per hour: $1,690 $140.84
• $48 per hour: $1,430 $119.17
• $39 per hour: $1,170 $97.50
• $30 per hour: $910 $75.83

25. #2 Invest in Your
Team

27. Training Budget
Revenue $ %
Management fee $500,000
Letting fee $75,000
Total Revenue $575,000
(Expenses)
Marketing $23,000 4.00%
Training $2,000 0.34%

28. NZ Residential
Property
Management
Level 4

29. #3 Constant
Education of Clients

30. Knowledge is Power
Training your team
Newsletters
Video Blogs
Investor Evenings
Investor Webinars
Budgeting for landlords
Booklets for tenants

31. Webinars for Clients

37. #4 The Emotional
Bank Account

38. What do you see?

39. Build the Relationship
1 hour a week calling landlords = 2.2%
of your time

40. Emotional Bank Account
Withdraw Deposit
2% of
your
time

41. #5 Think Win Win

42. Win Lose = Lose
Lose Win = Lose
Lose Lose = Lose
Win Win = Win

43. Principled Negotiation
• Separate the People from the Problem
• Focus on interests, not positions
• Invent options for mutual gain
• Insist on using objective criteria
• Know your BATNA
• Best Alternative to a Negotiated Agreement

44. Best Alternative to a
Negotiated Agreement
Property Manager
• I’m prepared to lose the
management
• I’m not prepared to lose the
business
• What is this worth to me
• I’m prepared to pay $500
• I’m prepared to manage the
property for free for three
months
Landlord
• Threaten to leave and go
elsewhere
• I don’t want to leave really
as I may get nothing and it
is a hassle
• I just what to hear an
acknowledgment they got
it wrong
• So far they have not let me
down

45. #6 Pre-emptive
Service

46. • Why don’t we educate tenants on house hunting?
• Why does a tenant have to view a house to apply?
• Why can’t we pre-approve tenants?
• Why can’t they be inducted before they view a
property?
• Why can’t the tenant pay for their own credit
check before applying?
• Why can’t we sign them up on spot and email the
contract to them?
• Why don’t we call tenants one week after they
have moved into the property?
Ask Why?

47. Gross Yield v Net Yield
Gross Yield
Revenue / Cost of Sale
X
100
=
Gross Yield as %
Net Yield
Revenue – OPEX
/ Cost of Sale
X
100
=
Net Yield as %

48. The Cost of Being a Landlord
• Rental at $525 per week $26,250
• PM Fees @ 8% ($2,100)
• Body Corporate ($1,800)
• Rates ($2,300)
• Advertising ($150)
• Repairs ($1,500)
• Meth & Smoke alarms ($300)
• PROFIT $18,100
• Purchase Price $575,000
• Net Rent/Purchase Price * 100 = _______%
• ANZ Term Deposit = 3.25% = $18,687.50

49. Income and Expenses
Rent at
$525 pw
$26,250
PM Fee at
8%
($2,100)
Rates ($2,300)
Body
Corporate
($1,800)
Repairs ($1,500)
Mortgage
payments
($34,086)
Meth
Testing
($200)
Smoke
Alarms
($99)
TOTAL
EXPENSE
S
($42,085)
PROFIT
(LOSS)
($15,835)

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

51. Social Media Workshop
$295 plus GST
20% Discount: Use code RETG
Friday 21st April Adina Apartment Hotel
http://bit.ly/2jhYC9q

52. Thank You