In case you missed it: Console’s first customer-exclusive summit, Nebula, took place on 28 October 2019. It took place at the Brisbane Powerhouse in Queensland and was live-streamed across Australia and New Zealand. It was the first event of its kind in this industry, in this country.
A particularly popular segment of the day was the Zing Pow Wow sessions. Zing Pow Wow is an emerging format of presentation that focuses on brevity. Speakers have five minutes (on a countdown timer) to talk to 20 slides that auto-transition every 15 seconds. This means presentations are brief, punchy, and to the point—with absolutely no time for faffing about or getting off-topic.
Want to learn more? Of course you do! Read on for the transcripts and Zing Pow Wow videos.
You’ve probably all heard of Peter Drucker and—and if you haven’t, you should—he’s the modern inventor of business management training. He’s the absolute guru of business management. And he’s written 39 books on the subject.
His number one quote is this one: ‘If you can’t measure it, you can’t improve it’. And that’s what we’re going to talk about today—measuring and improving. And in Property Management, that means talking about the four separate numbers we need to know.
It’s a bit like when you go to the gym for the first time, and the first thing they do is pop you on the scales. Everyone cringes. But then you understand exactly where you are now, and we need to know that in order to get to where we want to go. This way, we can track our progress.
Property Management is no different in that sense. What is it that we need to know? Our four numbers. Where is it we want to go? Make a plan, and then track it along the way. What do we want to achieve? We want to grow. So let’s take a look at what those four numbers are.
The first number is the number of properties under management. How many properties are currently generating income right now? The second number is the average weekly rent of those properties. The third number is your average management fee. And lastly: what are your extra fees and charged? That’s all of your four numbers right there.
Let’s look at an example: Hodges real estate. At this particular agency, let’s say there are 125 properties under management, and the average weekly rent on these properties is $425. The average management fee is 7%, and the extra fees are roughly 15% of the weekly rent. Extra fees are things like let fees, relet fees, landlord insurance, account keeping fees, invoice processing and so on.
And these numbers combined give you your average annual management income, or your AAMI, which gives you your income per property per year. At Hodges, the AAMI per property is $1551, or $193,906 cumulatively per year.
Now when you buy or sell a rent roll, you’ll usually take that cumulative figure (in this case, $193,906) and use a multiplier factor to generate the sale price. That magic number, the multiplier. Except that actually, there’s not much magic to calculating it. There are just a lot more facts and figures involved than we have time for today.
But there is one key factor that does affect the price of the rent roll, and that is the geographical spread of the portfolio. A buyer wants to be able to walk out their front door and fall over the properties under management, that’s how close they are.
Ideally, your AAMI will be somewhere between $1600-$1800 per property. Now some agencies in states like Victoria and NSW will have a hard time getting that figure, but that’s generally where it should be.
So, we’ve stepped on the proverbial gym scales. We know where we are. Now we need to track it and grow it. As far as tracking goes: what’s your plan? Every quarter you should hopefully be able to build on your revenue and track towards growth. After all: isn’t that what we are all here to do in Property Management? To grow our businesses?
Growth means a little bit more cash in your back pocket or superannuation fund. So how do we take Hodges’ agency and increase its revenue by $100,000 in the next 12 months? We can do that by making a few simple tweaks.
Firstly, we add two more properties roughly per month and increase the average price of the weekly rent by $10 to $435. We then increase their management fee to 8% (up from 7%) and then add another $25,000 gross in extra fees across all properties throughout the year.
When we do that, we get an AAMI of $1814, or a 15% increase. And over the course of a year? That portfolio now produces $272, 185 gross. That’s a staggering $103, 631 more income per year than they are earning right now.
If it’s priced for sale on the market with a multiplier of three or four then that starts to look significant. If you know what those four numbers are, you’ll be able to track where you’re going with them in order to grow at the end of the day.
Imagine you wake up tomorrow morning and there is breaking news. Uber has launched into Property Management. Virgin has now entered Property Management. The big four banks are now entering Property Management and offering it as a free service.
But there’s more. Silence. The internet, technology has shut down. I was so excited to be invited here to part of this event because the future of Property Management and technology is something I am very passionate about. Yes, 30 years in Property Management. There’s an industry running joke that I started when I was 5. I think I started that joke.
But what I want to do over the next 3 minutes is take you on a pow wow journey of the what-if. And we’re all thinking about it, we’ve all got the questions in the back of our head but what happens if you wake up in the morning and Uber or the banks have suddenly decided to get involved in Property Management?
If each different representation of these three big companies decided to break into our industry, I want to know: how would you deal with it? How would you survive?
What I want to get you to think about here are these questions: what are your risks? What are your threats? What do you do well? How are you going to retain your clients? Because we are entering an era of disruption and other heavy-tion words—but we have a lot of people still burying heads in the sand, and not automating their payments systems. There are people who are still taking cash. There are people who still don’t use apps for routine inspections.
The technology that is here right now is incredible. We can take a property and we can style it using augmented reality. We have smart houses. Soon, if we’re not careful, we won’t need people. I want everyone who is listening around the nation to survive.
If we think about the people trying to break into our market, they threaten us. They threaten our people. And that’s why we need to remember that our business is people. We can’t afford to be three steps behind.
We don’t need to compare ourselves just with other people in real estate. We need to compare ourselves to the rest of the market globally. Be aware. Beware, be aware. Interesting, the closeness of those two words.
The key takeaway is not just to be aware, but to embrace the human aspect. Connect with your landlords and tenants. Yes, we are moving towards a robotic society, but right now, connect and develop relationships. So when the disruptors come in, you’ll have that relationship with them already.
Let’s talk about some of the findings of the 2019 ANZ PropTech survey that we (Console) did earlier this year. There was an overwhelming response from our customers and agencies that they understand that customer expectations are changing. Customers here are your landlords and your tenants.
So the market has changed. As Domonic Thompson of Macquarie said earlier, the Ubers, Apples and Googles of the world are training your customers about what to expect when they come to dealing with service providers—like Property Management businesses.
And that change is driving challenges to the traditional Property Management business model. These challenges shouldn’t be a surprise to anybody in the room.
Key challenges facing the Property Management sector in 2019:
And we all understand that technology and property management software can help solve a lot of these challenges too. What you may not be considering, however, is how your choice of technology to solve these problems will dictate the rate and ease of change in your business. So that change is going to bring a lot of benefits to you but specifically, the benefit I want to talk about is your top line. How your choice of software in your business can actually help you drive revenue.
You can’t just run out and charge more commission. The market dictates what you can charge. So we need to think differently about how we find more revenue in your business.
In particular, there are three other ways that technology can help you make more money.
We’re finding a move towards fees for service, and in Console Cloud we’ve accounted for that by allowing you to program the ad hoc and scheduled fees that your agency wants to charge for. And then we build those into our workflows so that you’re not missing or accidentally forgetting those fees. That’s how we maximise that income stream.
Only 21% of our agencies say they’re receiving money from adjacent service suppliers like utility providers, landlord insurance, water efficiency, smoke alarms, pool compliance, advertising companies, and others of that ilk. These companies are all willing to pay you to allow them to provide a service to your customer.
How do we capture that revenue? We address that revenue option for our customers through the development of Console Cloud’s Marketplace. EDITOR’S NOTE: the marketplace features in Console Cloud are still in the development phase.
We also know from things like Uber surge pricing and premium car brands that people are prepared to pay for quality and experience. It’s that quality and experience that allows us to hold our heads high and charge at the top of the bracket for commissions.
Part of that quality and experience is about your communications channels. Now we have data that suggests that 70% of property managers are technology embracers. These respondents are also looking to engage technology to address that communications problem in the market.
That’s not about making more calls to tenants and landlords. That’s about putting the right information in front of them through things like the landlord portal or the tenant app so that you can get decisions.
All of these things though, take an investment in time. And that means investing time now so you can get the returns later. And our focus is on helping you do that. And that is what we mean when we say do less and make more.
More fees, more services: it takes time to create those services and time to execute more of those services. So our Console Cloud platform is looking at how we can do that.
The property relationship—the relationship with your tenants and your landlords—is about the quality of the service you provide. How do you create an exceptional experience that builds brand loyalty and trust?
That brand loyalty and trust you can create will actually maintain high commissions and reduce loss and turnover in your business. We know from the survey that most of you are ready to embrace new technology. In fact, 86% of survey respondents are ready to go on this journey.
In businesses with a technology vision and strategy, that number soars up to 96% of respondents. So your vision and strategy are important.
Why though? Because we’ve got all these disparate systems that are causing our property managers to look messy and miss fees. And that happens because those disparate systems don’t talk to each other very well. We’re missing the connectors between them all, and stuff drops out.
You need to establish your strategy, question where you’re going, and what you expect to get from your software. That means looking at the efficiency it creates for one, but for another, how you will use that software’s efficiencies to drive more revenue into this business.
Recap: downward pressure on commissions continues to hurt agencies. Customers’ expectations, meanwhile, are only increasing. They’re fueled by influences outside this industry. But luckily, most of you are technology embracers and are willing to go on this journey.
How do we do it? We need to find new fees, maintain a high level of commission through higher quality service, and we need to unlock those adjacent revenues through partnerships.
Staff are ready to come on this journey with you, so you don’t need to fear the change. But what you do need to find are those people who are ready to come on this journey with you, and bring them into your vision. Get them to help drive the change in your business, so that you can actually realise the income that will help your business grow into the future.
My question to you now, is what will you do next?
1997. What a year. Have you ever had a year like that? A year that is etched in your memory forever. For me, it was the year I fell in love with the man that would become my husband. It was then I fell in love with the law firm that would become my second family.
But fast forward 19 years to 2016 and all of that comes crashing down. And I am left, feeling hurt, alone, and above all rejected. And I think if those people no longer want me, nobody will want me again. So what to do? To wallow in self-pity? Well of course yes for a little while, yes.
But then I thought to myself, what’s missing, Midj? The thing I had but then lost was confidence. This self-doubt had been in my head. So how to get that confidence back? How to become unshakable?
Well step one, is to know you. Get to know the real you and who you are right now. What are your priorities? What are your motivations? What gives you meaning and motivation when you get up in the morning each day to go to work. What’s your legacy?
Mary Oliver once said, ‘doesn’t everything die at last and too soon?’ So tell me, what do you plan to do with your one wild and precious life? When all of this is said and done, why were you here? And what’s your magic? What do you do better than anyone else? And amplify that.
Turn that up to full volume.
And the second thing you need to do then is to be you. Be real, be authentic, and stop pretending to be someone you’re not. To be yourself right? And to take off the armour, because it is so heavy to be carrying it around every single day. Just be vulnerable. Let people see the real you.
Be seen, and then let go of perfection. You know what? Nobody trusts it. Someone that is perfect? People don’t trust it. It’s an illusion and a lie so let that go. Instead: be present. Be in the moment. Stop worrying about yourself, and start focusing on the person standing right there in front of you.
And finally: believe in yourself. Create an unwavering self-belief. I know who I am, and guess what? I am awesome. Stop the comparisons! Stop comparing your real life to someone else’s highlight reel. Because comparison is the thief of joy.
So be grateful for who you are and what you have right now. Silence that inner critic. Silence that voice that says you’re not good enough or smart enough or pretty enough. Instead, let your inner cheerleader be loud and be proud.
And find your tribe. Find those people that lift you up. If you are the average of the five people you spend the most time with, choose wisely my friend. Your confidence is like a strong, majestic tree. Its strength comes from the roots. Your roots are in who you are, your values, principles, your character. You don’t need to prop your tree up with what you wear, the car you drive, the suburb that you live in. you don’t need any of that. Your tree is strong and unwavering without it.
Unshakable confidence allows you to do your very best work. It allows you to forget about yourself and instead be of service to others and to make the difference in the world that you were meant to make.
Wondering what to read next? Read up on the latest highlights from the 2019 Spring Release Webinar, get a refresher on Dean’s four numbers with ‘What is your rent roll worth?’. Or, learn more about our migration process with these five qualities of effective migrations.