Discover the secrets of successful property management and investing on "The Property Investors Handbook" podcast. Join Colleen Sutherland as she shares expert insights and strategies for acquiring, managing, and maximising returns on real estate investments. Whether you're a beginner or seasoned investor, this podcast is your essential guide to navigating the world of property investment. Tune in and unlock the keys to financial success in real estate.
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Hello and welcome to another. episode of the Property Investor's Handbook. My name is Colleen Sutherland. I'm the Director of Sutherland's Property Management and today I have Aaron Emery with me who is, has a multitude of, talents.
Welcome Aaron.
Thank you. Thanks for having me.
Now it's probably a bit odd that I'd be having another, property manager business colleague that doesn't work within my business, but today I wanted to emphasize, and what he has done to help me and that I can collaborate with Aaron when I have a little bit of a tricky situation or he needs some clarification, on legislation.
And so today Aaron and I are going to talk about firstly how we met and then, Just move on to what you do for my business and that sort of thing. So just give us a little bit of insight into how we met.
Okay. I think it was 2019. I think around that time seems so long ago now. Obviously we had always been, I guess, connected through social media.
And we both seem to have very similar views and values in terms of landlord advocacy and making sure that property management done is correctly and done the right way and that landlord clients have good service and a good experience. And so I think we might have Either commented on something together, a post together, or something that maybe someone had written in the, in one of the Facebook groups and we potentially didn't agree with what they were saying, but agreed that we didn't agree.
And, did we
get into an argument?
No, we didn't, but I think we both agreed that what the person had posted was probably not quite kosher or correct. And the advice that they were giving was maybe not the best. And from there it kind of just snowballed and we organized to catch up. And I drove down from Brisbane and we went and had lunch.
at some coffee shop at Rabena Town Centre. I can't remember where it was now. I can't either. And from there, the rest is kind of history. We talked more, obviously, about your business, and I had known a little bit about Sutherlands and done some of my own research and Googled your, And I had a look a bit into, you know, how long you'd been in business for, which I think is now 20 years, 21, 21.
Wow. Okay. Yeah. And so we caught up, we had a coffee, we talked about what each other does within the industry, what our experiences are, obviously what we both agree is done correctly and not done correctly. And. You mentioned that you might've needed some, a little bit of guidance in the business and probably needed someone who would have the time because, you know, most business owners are very time poor, which is very, very common, to really, you know, dig deep into your business and give you a bit of an overview or more of a holistic view on what was going well, what wasn't going well.
And I think I did a prognosis audit for you. And we delivered those results and then kind of work backwards from that through the fix ups and the changes. And here we are 2024, and you still have me in the business, so I must have done something right.
So, to be clear, you work with me and my staff.
staff to keep, not so much keep us on track, but just, you know, making sure that we're looking after our clients to the best of our ability. And to make sure that we're meeting all sorts of legislation.
Yeah. Yeah. So, I mean, some of the things that we've looked at is, we did a, you know, a, management fee increase, strategy together with your clients.
So, went through and talked about what that would look like.
So, before we move on, the management fee strategy, because I know for a lot of agencies and a lot of landlord clients have it in their heads that, we're just in it for the money. So that strategy involved what exactly and why?
Well, the strategy was not more so, it wasn't so much about increasing your fees just so that you could make more money.
Rather, it was increasing your fees so that you could survive and continue to thrive in business and operate the business. Because obviously there's been a lot of cost increases for business owners. You've had wage increases go up. You've got additional superannuation now that they have to pay because that percentage has increased.
You've got operational costs that have increased technology and subscription costs that have increased. All of the suppliers to the real estate industry, the web advertising portals, all of their fees are consistently going up. And like a lot of business owners, you had tried to shield those increases from passing them on to the owners for as long as you possibly could, but it had reached that point where it was, you know, you weren't even really breaking even.
And so we looked at a strategy where. You could justify those, fee increases very positively, even though it may not have come across to the owner as something positive because they're going to have a fee increase. But you demonstrated it in a way that provided value and provided a valid justification as to why you weren't just saying, I'm putting your fee up just so I can make more money.
It was, well, no, I need to put your fee up because these costs for me have increased and I have. Absorbed that for as long as I possibly can, but I can't do that anymore. So I needed to, you know, re strategize how to do that and how much I needed to put each person's fees up in order to be able to still then, You know, pay for those, subscription costs and everything else and the other costs that you've got.
But also yes, still make a decent living so that you don't shut your doors after 21 and a half years. To remain
sustainable. Correct. Yeah. Yeah. Now, the other thing about the commissions that we charge on a monthly basis, and to me it's relatively low but do you find that the commission is not necessarily on the minutes that we work on a task?
It's more about the knowledge and the experience that goes along with those tasks that we can minimise any risk to the owner. Do you, is that a? Yes, I do
think that. I think that, I think, you know, And I'll be very, very transparent here because, it's interesting. I've just recently done a social media post for my own business where, it's probably going to get a lot of attention because the opening caption says, Landlords don't care about your fees.
Now hear me out. And it goes on to say that, you know, the investor groups that I am part of The reality is that there are investors out there who are happy to pay a higher management fee, but they want to get good service. And so it's not really about the fees, it is about the service. And as an industry, I think that we sometimes struggle to really differentiate ourselves.
And a lot of agents and property management agencies out there think that their point of difference. Is because they're prepared to or able to go 1 percent lower than the other agency, just to win the business, just to win the business. And it's not a point of difference. It's just that, you know, who is obviously, dare I say it, desperate enough for the business that they're prepared to do it at any cost at any location, et cetera.
But I fully believe that as an industry, we need to get better and do better. Actually selling ourselves and showing and demonstrating to the client what we do for the fee and what we actually, you know, do for them to save them money. It's not about how much it's going to cost them. It's about how much we're going to save them because the better agency.
We'll want a higher fee because they will be more proactive and they will stop, you know, well not have not stop it's you can never, you know, nothing I can't do anything or you can't do anything to say that something will never happen. But the actions that you take and being more proactive as opposed to reactive will certainly help reduce the additional expenses that a landlord has because someone has been reactive rather than proactive.
That's right. Yeah. So, you know, if you're more proactive with maintenance, then you're going to obviously be able to save them. On, annual maintenance and not having to do things unnecessarily. If you're more prudent with your tenant selection and you turn around and say to that landlord, look, I don't really have a good, you know, good feeling about this one.
I think that we should skip this one and wait for another one to come along. Obviously, not all landlords are in that position to be able to wait that additional week because that's another week without rent. but Would it be better to be a week without rent rather than 20, 000 in rent arrears because you put the wrong person in there, who then damages the property?
So it's those kind of things that, you know, You definitely can save owners money over time and your behaviours and the way that you deal with property management and the way that you run your business in particular is more about the long term benefits and yes, there's going to be a little bit more of a higher fee for that but I always say as well and I've always said this, Your tax, management fees are fully tax deductible and it actually reduces the amount of tax that person pays.
So is it such a bad thing to actually pay a little bit more because you're paying a little bit less in tax? Can't be a bad thing, really. No,
that's exactly right.
That's exactly right.
Yeah. And what is, your opinion, so we've worked together for quite some time, now, and what is your opinion of how we, work with our clients in a more proactive, manner to, really demonstrate our fee.
What do you think that my business does that has been outstanding?
Well, first and foremost, unlike a lot of property management business owners, you are quite hands on in the business, which I think is important, because it means that when someone calls, You're not going, Oh, I'm really sorry, Sally, I don't understand that situation, or I'm not aware of that current situation and what's happening.
That gives your landlords a level of confidence that you are at the forefront and you do know what's going on. You're not necessarily doing the day to day because you have a property manager that does that and that's not a bad thing. That's great But you still under have an understanding of what's going on that is probably not as common as what some landlords might think because there are a lot of business owners that Especially in property management where they've never worked a day in property management.
And so they heavily rely on whoever they decide to hire to be their head of department or general manager or whatever the role might be. One of the things that I think you do very well is in regards to your lease renewals. I know that you always do them three months out and I know that yourself and Bree, you understand the reason why that's important because of the legislative timeframes and requirements where the tenant must be given two months notice, not 60 days.
Two months notice. And I laugh about that because it's a bit of a running joke in the industry.
Yes.
But you understand the process around that. And because you do them three months out, it would be fair to say that you rarely have one where you're like, Oh my gosh, we haven't done it. We're not going to be able to have enough time to give them the two months notice.
Or if we do give them two months notice, it means that. Their vacate date is going to be four weeks later than when the actual lease has expired because you're on top of it. So that's that proactive behavior and proactive mindset of always thinking about the end in mind. You're very detailed with your entry condition reports, you know, and I have always been trained and thought detail defeats doubt.
and You know, you can be detailed without needing to have 1, 200 photos. I think that people, they sometimes go a bit overkill with photos, but I'm talking about description in terms of how you describe the condition of the property is very detailed. I have seen some entry condition reports where it just purely says, white wall.
Oh, great. You know, I'm sure that there might be a mark on that white wall, or it could be a small defect that might need to be discussed or mentioned. So I have, found that especially in that aspect, so lease renewables, entry condition reports. You've got the detail there. You're proactive with the entry condition report.
You are thinking about the end in mind. So making sure that detail is actually what's going to protect your client and your landlord client at the end of that tenancy, because you can confidently. stand up to the tenant and say, this is what's on the entry condition report. A copy of it was given to you.
You've read it. You've signed it to agree to it. You didn't add any additional comments to say that there was a problem back then. And so this entry condition report will stand. And this is what will be presented if we end up in a QCAT situation. And you don't have many of those. I know, you know, you've been, You are a QCAT legislation guru, I will give you that, and even I have sought advice from you for QCAT stuff because I've probably been a bit blessed in that I, I've been, but I certainly don't go regularly, especially these days.
And so yeah, there's a lot of things, the lease renewals, the entry condition reports, even the way you do your billing, you know, you are very much onto that. You get those bills paid on time. You do your water invoicing, very, you know, strategically and thorough in that, making sure they always go out on time and get paid on time.
And I think it's that. Those little differences would, for me, as a property management coach and consultant, but also someone who invests in property, if I was looking for a property manager on the Gold Coast, absolutely, I would use your services. I do believe that kind of property management service Is what I would be happy to pay 1%, 1.
5%, 2 percent extra for than someone that doesn't do things that way. And they're constantly coming to me going, well, I'm really sorry, but we actually missed the deadline to give your tenant that notice to leave. And now the lease is reverted to periodic. And the only way that we can get rid of them is to tell them that you're selling.
And even though you're not really selling, but let's just tell them that because that's what's happening. So yeah, so there's a couple of things, but there's a few examples for you. Thank
you. You boosted my confidence there and being a business owner. So thank you very much for joining us today, Aaron.
And I'm sure that we will speak again on another episode of The Property Manager's Handbook. Fantastic. Thanks for having me.