7 Mistakes made by Principals when it comes to growing a Rent RollMar 13, 2023
✍️ AUTHOR: Terri Handy ⏱️ READ TIME: 8 minutes
When I say ‘mistakes’ in the title of this article, I guess I just mean the things I see Principals do or don’t do, often. If you find yourself nodding along to some of the things I’m mentioning here, I see this as a good thing as it means you now have an invitation to really stop and look at how you’re growing your rent roll, and look at where some improvements can potentially be made. Let’s dive in, straight off the bat here’s the first mistake I see Principals make when it comes to growth.
Underestimating how much attention a property manager will give new business
When someone has a portfolio of properties to manage, regardless of how small it is, most people will find it difficult to change their focus between the two roles. I am not saying it can’t be done but for someone to be doing decent numbers, there needs to be a lot of attention paid to activities like prospecting. Property Managers find this hard to do when they have a number of other clients, current owners and tenants, who are vying for their attention. It’s actually the consistency of those prospecting activities which are hardest for them to maintain. Meaning, as a property manager gets busier, their pipeline starts to dry up. Think about it. All of a sudden, they are not just generating leads and converting them, they also have to lease the properties, prepare entry condition reports, action maintenance and before too long, conduct routine inspections on all the properties they have leased. They can’t help but be sucked into the PM side of things.
So, if your property manager is also your BDM or is the person responsible for the growth of the rent roll, then your strategy needs to be a little different than if you had a person who was solely responsible for bringing on new business. They need to be supported in a different way.
In my experience, most PMs are actually very good at converting warm leads into signed management agreements. They know their market, they know how to build relationships, the potential client feels comfortable meeting the person who will be caring for their property - they actually possess all the requirements to get the deal across the line.
So, if you want to be growing your rent roll quickly and you don’t have a designated BDM, then providing warm leads to the PM for them to convert is going to be your best strategy, to give you the growth you are looking for. How you do this, is probably a conversation for another day, but I will say, rather than getting frustrated by the lack of results they are getting, look at what your expectations are and how you can support them to maximise their potential.
Not incentivising everyone in the team for bringing on new business, just the BDM or the sales team
For me, growth is a team sport. Everyone on the team needs to not only understand why it is so important for the health of the agency, but also that you want to reward them for bringing new business to the table.
And make it simple for yourself. If you pay a salesperson $250 per converted lead, then that is your standard. Is the lead that comes from the receptionist worth anything less to the business? Nope, not at all. Likewise, for property managers who receive a referral from a current client, or have a current owner purchase another property and give it to them to manage (these are gold), the value to the business is just as much. Regardless of whether the BDM is involved or not, the PM should be rewarded. If the cleaner sends you a lead, incentivise them too. And pay them quickly. As soon as that property is income-producing, hand the goods over.
When you think about it, there are so many opportunities that your team may not be capitalising on simply because they don’t see growth as their job. Rewarding them is a great way to help keep it front of mind.
A Leasing Consultant with an agency I work with regularly brings in great leads to the business. In fact, outside the BDM, she produces the most leads for the business. Just the other day, a prospective tenant’s brother signed with the agency simply because she recognised an opportunity.
Discounting fees without considering their team’s value
Remember, I am talking about the mistakes Principals make today and I often see, particularly with selling principals, a tendency to promise cheaper fees to mates, relatives, friends of mates and relatives, the barista at their favourite coffee shop - the list is never-ending. If this is you, stop doing it. You are not only decreasing the value of your asset, and the rent roll, but you are also diminishing all the amazing work your team does.
If a friend or family member asks straight up for a discount, just say, "Of course, I will look after you, my team is fantastic at what they do, I’ll get .... to give you a call". But, whatever you do, don’t talk about reducing fees or matching fees or doing some kind of deal. Let your BDM or PM do their job. The chances are, your friend feels more comfortable hitting you up for a discount than they would your BDM, once they understand the value the team is providing.
If you are expecting your team to provide a premium service, then don’t undermine their confidence by diminishing the value of what they do.
Not making the most of the data they already have at their fingertips
What I am talking about here is basically not recognising that our clients see us as the one expert, the one service provider. They don't see a Sales Department, a Property Management Department, an Accounts Department - you get the picture. So if they have had a conversation with a salesperson at an open home about the rental market, they are probably going to be okay with someone from the property management team calling them. Actually, not only should the salesperson set it up for the BDM to call them, but they should also flag the person who has attended the open home in the CRM as either an investor or potential investor - whatever your categories are. Too often this isn’t being done and again it is because we aren’t looking after our data properly. Our database housekeeping often isn’t very good and this needs to be driven by the Principal. Keeping it front of mind, making sure it is easy for salespeople to do and then actually using it properly.
And also, what about all those missed appraisals? What are you doing about those? All those overdue tasks from the last two BDMs, who is responsible for actioning them?
Too often, I see so much low-hanging fruit being missed. And we definitely see this with our participants in the first week of our BDM training program, Next Level Growth. Agencies don’t understand just how much data they have available and are certainly not capitalising on what they do have.
The Accountability Piece
Often, the boss isn’t communicating their expectations around performance with their team or they just focus on the number of managements gained each month - not the activities that are happening to produce these results, nor the properties that are lost. In my experience, they also only leave it until the end of the month before they pay any attention to what is going on around growth.
Just like a high-performing salesperson, BDMs need to know their numbers and be held accountable for them. The reality is, most principals are pretty good salespeople themselves so they actually have a huge amount of value to add to the growth of the PM Department in a coaching capacity. I would love to see more get involved in this space.
Natalie South, our resident Growth eXpert was the number one BDM in Australia. She brought in 333 new managements in a 12-month period when on the tools and her clients loved her. But she still had a catchup with her principal each week and they went through her numbers religiously. What she had achieved for the week, if she was on target for her goals, what was she struggling with? Even though she was the best in the business, Nat had to share how many calls she had made for the week, the number of appraisals she had conducted, and what was in her pipeline and she credits the accountability that came with this weekly meeting as one of the biggest reasons for her success. It’s a simple thing, but I see so many Principals not able to take the time for a 30-minute catch-up with an important income producer for the business. It’s so easy to implement but is often not consistently done.
Failing to build capacity within the team for new business
Growth can be painful at the best of times but if we are asking a Property Manager who is under the pump already, to welcome new clients and provide an amazing experience for them, something is going to give. And it is usually the level of service provided to their whole portfolio. It takes time to build relationships and new clients deserve our time and attention but so do our existing clients, who are already paying us. Also, new business is time-consuming. The conversations are longer. There is compliance to get sorted and condition reports to prepare. No wonder Property Managers sigh when they hear "I’ve got another one for you". This is one of the reasons why I see so many agencies bring on big numbers, but also lose them at almost the same pace - not enough capacity.
If your focus is on fast growth in your agency, then you will need to ensure that your property managers have the time and resources to properly service your new clients.
Also, it is important to understand net growth can be an expensive exercise for a business. When you are in hyper-growth mode, your profit is probably not going to look as good as you would like because you need to build this capacity and you are throwing a heap of resources at your goal. Recognising this will make you feel a whole lot better when you have your catch-up with your Accountant.
Not providing appropriate training for non-BDMs
I think this one is pretty self-explanatory but my message is if you want your whole team to have a growth mindset, f you want your property managers to be responsible for increasing the numbers of the rent roll, then you have to provide them with the training to do so. Scripts and dialogues, the process to follow, how to conduct an appraisal - not only will this training give them confidence, it will help hone their skill at recognising opportunities.
By not equipping the Receptionist with a clear process on how to handle enquiries or even a question about fees, then you are almost definitely missing out on opportunities or at the very least, starting the BDM off on the back foot with the client.
If your Leasing Consultant doesn’t know what to say to a potential client who wanders into an open home because they have a property in the same building, then you are missing out on business.
When your property manager doesn’t feel comfortable asking about an owner’s other investment properties, that is money walking out the door.
Don’t underestimate the power of growth training for the whole team. If you are not sure where to start with this, check us out at pmxcite.com.