ARE YOU MISSING OUT ON RENT ROLL REVENUE?

So when was the last time you pulled back the covers and had a really good look at your rent roll? And I’m not talking about how many properties you have under management. I’m talking about: are you charging the correct fees? Do you have bonds for all your properties? Are your routine inspections up to date? Have you looked at where you are missing valuable revenue or putting your business at risk? When it comes to running a business and a property management business, there are a lot of moving parts. You’ve got legislation to comply with, you’ve got training, you’ve got systems, and you’ve got procedures. And, quite frankly, there is a lot on your plate. So it is very easy—and I have been guilty of doing this—to stick your head in the sand when it comes to knowing what is really going on in your business and especially your rental role. Do you know what your rent is currently worth? Do you know if you are charging the correct fees? Do you know if your routine inspections are up to date? Are the bonds he is required to post for each property? Do you have up-to-date leases? Is your paperwork being stored somewhere safe? If you are shaking your head at any of these questions, then this episode is for you. My guest today is Tarsi Hynes, and she’s the founder of The Tarsi Way. She’s like a fairy godmother for real estate business owners. She has waved her magic wand inside my own business as well. And let’s just say my ego was dented. My business wasn’t running as smoothly as I believed, and I was missing out on valuable income. Some properties were way overdue for routines, and it was really eye-opening, to be honest. And there were a lot of things that I simply didn’t know. You see all that stuff that you don’t know. Well, she does know it. In fact, she’s had over 25 years of experience valuing rent rolls, conducting audits, and performing due diligence. She runs her own real estate business, and she also helps business owners buy and sell rental properties, all while juggling a young family. And I’m exhausted just thinking about all that she does. But if you have a feeling that maybe some things aren’t being done quite right, something is amiss inside your business, or you just want peace of mind that everything is set up and running as it should, then you need to hear from Tarsi.

 

TELL US A LITTLE BIT ABOUT WHAT YOU DO

‘I specialise in real estate rent roll valuations, management right valuations, and rent roll due diligence as well. I offer that as a major service in my business, real estate agency consulting. I also have a buyer’s agency service for time-poor real estate professionals who are looking to buy a rental property. So that’s me in a nutshell. My mission is to assist business owners in running affluent and efficient businesses.’

 

WHAT’S CURRENTLY WORKING AND WHAT’S NOT IN REAL ESTATE

‘I’m still going out to businesses.” I still consult with businesses. I’m still working behind the scenes. It’s just that a lot of businesses are now moving towards a cloud-based kind of system. What I’m kind of seeing is that while we’re taking it to that kind of level, we’ve come through a very, very buoyant sales market. While we were focusing on that, property management has just been ticking along. And now we’re kind of trying to, as a business owner, hold our heads above water. Let’s put it that way. We’re still trying to run sales. We’re trying to run a property management department with a labour force. And let’s face it, that is very limited at the moment. And what I’m seeing is that some agencies are having very bad brand damage because they’re relying on property managers to manage and maintain a portfolio and not seeing what’s actually going on behind the scenes or knowing where to look.’

‘And I’m also seeing where systems, processes, and procedures are very much under utilised within a business. Whether that company has those processes and procedures in place, identified them, and related them is one thing; whether they’ve given them to their property managers is another. But I’m seeing a lot of different places behind the scenes where, you know, routine inspections aren’t being done. Bonds are being overlooked. I’m seeing, you know, entry condition reports being missed. I’m seeing just the normal things that we need to do in property management, which is a process of following the life of a landlord from the moment you get them right through to finding a tenant and looking after a tenant and looking after a landlord, right through to the landlord leaving you, and there are processes in between that that are not being done correctly, and it’s just because we are time poor.’

 

OVERCOMING TIME SHORTAGE

‘As a business owner, so talking specifically to a business owner, we’re starting to see a lot of business owners get burned out.” They appear to be simply trying to run a business, pay their overheads, and pay their property managers to look after things. So you’ve got all of that going on over here, and you’re also managing sales. Then you have, or even if you only focus on property management, you’re still running people, right? And people are away all the time. So we’ve got all of that going on. Then you’ve got property managers who are trying to give great customer service to landlords, tenants, and tradespeople, and we’ve got so much going on that we always have to remember the amount of legislation that we have to adhere to in real estate. It’s not just, you know, the Property Act; it’s tenancy laws, and those keep changing on us. It makes no difference what state you’re in; they’re always changing. So you’ve got all of that going on, and property managers are just doing the best they can with the knowledge and power that they’ve got, but they’re doing the same thing every single day. So at some point in time, and even as a business owner, you go cross-eyed, and things get missed. We are humans, and things get missed. And not only that, we’re trying to do our job with all the emotional stuff that’s going on behind the scenes, and that has to be taken into consideration. We’ve all got stuff. And we’re all doing our best. So when we talk about being time poor, we are simply referring to general human nature.’

 

PROPERTY MANAGEMENT SOLUTIONS

‘Well, there are a few little solutions that I’ve created and what’s called a rent roll due diligence health check, which goes behind the scenes of 18 managements.” also the software that’s being utilised by the property management team. And that will provide an overview of where things are being missed. Again, it’s only over 18 properties, but I find that even when I do an evaluation or a spot check just on a management agreement and a tenancy agreement, I don’t go into as much detail as I would in a full due diligence investigation. And I’m already finding discrepancies in just those two forms. It will tell you where you should concentrate your efforts, such as where we should train people. Where do we need to help people? How can we ensure that our processes and procedures are properly implemented? Well, you can’t get your processes and procedures running right when you don’t actually know what’s actually going on in your business or where to look. Let’s face it, it’s about the process that I’ve created and evolved over the years, which includes business valuation, rent roll due diligence, and owning my own agency, as well as all of the mistakes that I’ve made behind the scenes. You know, there are things that I wish I had known. There are things I wish I had done differently and things I would have done differently if I had more time because, let’s face it, I was running a valuation business plus my agency and a young family. I think Eli was nine weeks old when we bought the real estate agency, and I wish that I had done things differently. So definitely going behind the scenes of the property management portfolio in detail and having a look at what’s actually going on will give you an idea of where you need to focus your attention for your property management team. And with your property management team, I guess it’s having a little bit of empathy knowing that at the moment they’re probably carrying the weight of other people because they’re away, they’re carrying weight because maybe the processes and procedures aren’t established, and they’re just doing the best with the knowledge that they’ve got at the moment. They might need some more training. You just don’t actually know. And as a business owner, it is important to dedicate some quality time to the property management department and the sales department, where you can focus. It’s not just a meeting once a week or once every two weeks or something like that. We need to know our stats. ‘We need to know what’s going on behind the scenes, and we need to know where we need someone to step in and help.’

 

WHAT ARE PROPERTY MANAGEMENT BUSINESSES DOING WRONG?

‘Well, fees are definitely somewhere where they need to be checked.” If you’ve got a lot of properties on your rent roll, trying to check through all of them and make sure that they are being charged correctly can be a massive task. It depends on what you want to focus on. If you are focusing on making sure that your management agreements are done correctly, well, then it’s reaching out to people that, number one, I’d probably reach out to somebody I know here that can actually check your Form 6 and be like, “Yeah, you are making these discrepancies in these Form 6s, and it’s not about if it may ever bite, but what if it does?” What if you get that disgruntled landlord, and they’ve had a gut full and something’s gone wrong? They’ve been asking property managers to do maintenance or something like that, and they’re very unhappy. They haven’t received that communication, so they go to leave, and then they go to somebody and say, “Hey, this is my form six.” What if they can pinpoint exactly where there’s a loophole right there? I’m going for the agency. Let’s face it, we get sued all the time in our industry. That’s probably a place I would go first. Number one, that’s your management agreement. Then it’s time to double-check the fees and charges to ensure you’re charging correctly. At the end of the day, you have a bottom line that you have to adhere to. You’ve got all these overheads that keep going, and you’ve got people who are constantly asking you for more money because of the workload that they’ve got. I think we started at similar times, but, you know, a property manager was only earning $45,000, and that was considered good money back then. That’s not like we’re talking $70,000 or more now, is it? So there are areas where you want to make sure that you are receiving all the fees and charges that are in your management agreement.’

‘Bonds are always going missing, and bond top-ups are never done correctly.” So it’s an area where we want to make sure they’re being found, and that’s part of the due diligence process that we offer. It is making sure that those top-ups are being collected. So if anything does go wrong, you’ve got to make sure that you are collecting bonds. Make sure you’re doing routine inspections too. That’s another major area where we’re seeing things not being done correctly, along with paper management. You might be paperless, but you’re still not managing it correctly, and you’re still not saving things where they need to be. We’ve got a whole saving procedure, and I’m happy to share that with the world because it’s very specific and very detailed. However, if someone leaves tomorrow, you want to be able to locate all of the paperwork, and you don’t want to waste time going to QCAT looking for it. So paper management is another huge one. My girls constantly complain every time we go into an office; they’re like, “Oh my God, this hasn’t been looked after, so we can’t find this. “You know, we’re looking for entry condition reports, but we can’t find them. We’re searching for leases, but we can’t find them because, if you think about it, there are so many different programs now. You’ve got DocuSign or Adobe Sign, and then you’ve got Inspect Real Estate, and you’re tracking things through there, and it’s all over the place. Bring everything back to one central location, whether that is on your Google Drive or another similar drive, such as a cloud-based drive, or your property management program would be great if you could store everything in there; it makes life so much easier when you can find things.’

 

19% OF REVENUE IN A REAL ESTATE BUSINESS IS BEING LOST

‘It’s incredible The stuff that we find when we get to go behind the scenes—and we’ve been behind the scenes of thousands of businesses—you know, that statistic that I gave you was an actual business. In this one business, every single commission rate was completely incorrectly entered into the system. Every single one of them was missing out on so much income; it didn’t match their management agreement. And I had only gone through a handful of management agreements when I realised what was going on. So we had to rectify that part for them. Those things get missed all the time, and it is simply a matter of going back and having a look, like, you know, any business owner can quickly go and extract just their fees and charges and make sure whatever’s at zero asks the question because there might be a valid reason why it’s at zero but not for 12 months. You know? And if you are offering management free fee periods of three months or a month or something like that, there needs to be a system in place, a procedure that you and your team follow, where you make sure you go back and you update that fee.’

 

WHAT IS A PROPERTY MANAGEMENT HEALTH CHECK

‘Even if you haven’t gone cloud-based yet, we can still do the service because it is a behind-the-scenes service. What I love about due diligence is that your property management team doesn’t even need to know that we exist, and that’s the key for you as a business owner. So yes, it can all be done behind the scenes. If you don’t run a cloud-based system, I will just ask you to send through your files so we’ve at least got the files, and then we can go through it from this end. Just for those who haven’t yet made the switch to the cloud. If you want to go cloud-based, we do offer that service, but it takes a long time to get from A to B. If you’re relying on property managers to do that correctly, trust me, it doesn’t get done correctly. I’ve seen it a thousand times. So we are here to support you. So, let’s get back to the health check. Everything is done behind the scenes. It just means that on those 18 files I don’t do a key audit. That’s the only difference. But you do get the 30-minute Zoom with me, and we do make the recommendations. You get the findings of what we found within that portfolio, and then at least we can direct you to where you need to look more. And if we find serious discrepancies, then we need to have serious conversations.’