“The income generated by my Property Management Department does not seem to be keeping pace with the much published industry benchmarks.”
If a Department is to realise its full income generating potential, growth in the number of properties managed is just one component. Achieving maximum income from the properties currently managed is a growth strategy that must be undertaken simultaneously.
There is a common belief that “Our clients are different – they would not pay the level of fees and charges achieved in other countries, States, regions, cities, suburbs and even streets!” If that is the case you would wonder why in some States the average of the total level of fees and charges represents approximately 13% of the rental income whilst in others, they struggle to achieve 9%. Consider also the anomaly where those agents who charge fees at a significantly lower rate that their competition never have the largest rent roll in the area.
If a Department managing 500 properties at an average rent of $300 per week could increase its average management fee by only 1%, $78,000 additional income would be generated and this would be total profit as no additional expense would be incurred.
But can you do it?
Then there are ancillary fees, some of which are listed below and all of these are charged by various agents across the country –
- Letting fee
- Administration fee
- Electronic media marketing fee
- Routine inspection fee
- Initial Property Condition Report fee
- Renewal of Property Condition Report fee
- Final inspection fee
- Tenancy renewal fee
- Tribunal attendance fee
- Documentation preparation fee
- Handover fee
- Takeover management fee
- Insurance claim fee
- Photograph fee
- Maintenance supervision fee
- Refurbishment fee
- Inventory fee
- Account payment fee
- Annual financial statement fee
How many of these fees are you charging and what strategies do you need to implement to include them into your fee package?
Quite apart from fees and charges, income maximisation is also dependent upon the operational aspects of the Department which also contribute to the growth strategy –
- Are routine inspections up to date?
- Are lease reviews up to date?
- Are rent reviews up to date?
- Are rent reviews linked to the current market value of the property?
- Are rent arrears at an ‘acceptable’ level?
- Are re-lets to the current market value of the property?
- What actions are taken to minimise the vacancy factor?
- Are pre-vacating inspections carried out?
All of these operational activities contribute to maximising the income and are directly in line with the growth strategy.