Youtube: Real Estate Consultant | Trainer | Speaker – Interview with Michael Furlong & Kevin Turner – Pt 1
The Right Kind of Property Management & Rent Roll Growth
Greetings from the PPM Conference 2023 on the Gold Coast! It’s been an incredible event so far, and I’ve had the pleasure of discussing some key industry insights with Real Estate professionals who are passionate about property management.
One of the most important conversations we’ve had revolves around the idea of Rent Roll growth versus the quality of each management in Rent Rolls. The reality is not all Rent Roll growth is good growth. In my experience at Rent Roll Maximiser, I’ve seen many agencies take on properties that simply don’t serve their long-term profitability. So, how do we determine the right kind of growth?
Profitability First
When analysing a rent roll, I always start with a profitability benchmark. I conduct both an above-the-line and below-the-line benchmark analysis to determine whether a property is worth managing. Let’s break it down with simple numbers: if it costs an agency $1,000 annually to manage a property and they want to achieve a 20% profit margin, then they need to generate at least $1,200 per property per year in AAMI (Average Annual Management Fee Income. Anything below that figure should be questioned.
Too many agencies focus on a flat management fee percentage—whether it’s 6% or 5%—without considering the actual rental income. Six percent of a $1,500 weekly rental is excellent, but six percent of a $350 weekly rental could mean running at a loss. The focus should always be on total revenue per property, not just percentages.
Geographic Spread – The Silent Profit Killer
Another critical factor is location. I recently worked with an agency managing 550 properties across 93 different suburbs—an operational nightmare. A scattered rent roll leads to inefficiencies in staffing, longer travel times, and difficulty coordinating tradespeople for maintenance. The more spread out your portfolio, the higher the likelihood of staff burnout and poor service delivery.
When evaluating adding a new property management to a rent roll, we should always ask: is it within our catchment area? Can we deliver high-quality service to these properties without stretching our team too thin? If not, then it’s bad business, regardless of the revenue potential.
What’s the Main Role of a Property Manager?
Landlords don’t want problems—they want solutions. A Property Manager’s job is to solve issues, not create them. This means ensuring that the properties under management are well-maintained and that Landlords are willing to comply with reasonable requests to keep Tenants satisfied. If an Agency constantly battles with non-compliant Landlords, it can negatively impact the Property Manager’s efficiency and job satisfaction.
Service Quality and Property Manager Staff Retention
A fundamental question in property management is: how many properties should a property manager handle? The answer isn’t a fixed number—it’s about maintaining quality service. If a Property Manager can effectively oversee 200 properties while keeping clients happy and ensuring low staff turnover, that’s fantastic. However, if those same 200 properties are spread across a much larger spread of suburbs, the number of properties per portfolio might need to be significantly lower.
Poor-quality rent rolls lead to overworked staff, high turnover, and ultimately, unhappy Landlords. Retaining quality staff and Landlords should be a priority for any Agency looking for long-term stability, growth & profitability.
Understanding Rent Roll Losses & Factoring in Rent Roll Churn
Losing properties is inevitable, but it’s essential to differentiate between acceptable and unacceptable losses. If a Landlord sells a property through the Agency, or if they move back in, that’s an acceptable loss. However, if the Agency is receiving a lot of Transfer of Management requests, that’s a red flag. Understanding these patterns allows agencies to adjust their strategies and reduce unnecessary losses. Agencies should factor into their budgets & plans a small percentage of the portfolio that will naturally churn each year.
Final Thoughts
Growth is important, but only if it’s the right kind of Rent Roll growth. Agencies need to focus on profitability, efficiency, and service quality rather than just increasing the number of doors under management. By analysing profitability benchmarks, optimising geographic reach, expanding the level of services and prioritising quality Customer service, Agencies can ensure sustainable, long-term success.
—Michael Furlong, Rent Roll Maximiser
Rent Roll Growth Consultant | Property Management Trainer & Coach | Conference Speaker | Podcast Host | Easy to follow Trello Online Systems & Procedures Manuals | Real Estate Agency “Systems” Specialist
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