Lost Management Blues

So my first official day back and I see we have lost a management.

No reason. Just ‘we are moving to XYZ’.

I will ask him for a reason but I can only assume it will be for cheap fees.

My question is, should I match those fees (if that’s what it is) or let him go? He is already on a cheaper rate than I normally charge.

Someone tell me not to feel so bad

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Hi @Colleen. Fun fact, I have had a couple of conversations with people that say January is a common churn month for clients. Not sure why tho :slight_smile:

Anyway back to you lost management. What I’d encourage you to do is find your office water level. This is the minimum fee you will except for each property that makes you profitable. e.g. it might be that $130 per month is the minimum fee you will except. If it is a more expensive property, then maybe you can negotiate down on the fee. If it is a cheaper property you may have to stay firm on your fees.

I’ve attached a link to a simple spreadsheet calculator here to help with the water level calculations.

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@adam That is awesome! Thank you for that great little time-saving spreadsheet.
@Colleen Don’t feel so bad! I know of your reputation and I know that you will be doing things FABULOUSLY! Despite all efforts and negotiations and situations, sometimes you just can’t win them all. Sometimes despite the best service, people simply won’t pay higher … they will soon realise tho. We have had a few lost managements come back to us - I call them when they give notice, call them again after they have left and email them a few months later to make sure they are “travelling well” and being well looked after. It’s worked many times :slight_smile: I am sure you will do that!

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@Colleen - how long has the LL been with you? An interesting question I ask when I go into a new office to work with their team, is for them to show me steps they take to acquire new business from another agency - marketing, gimmicks, incentives, activity, mail outs, commission paid to staff or referrers, advertising, their new business database / targeting etc etc - which is generally a focus and effort put in by all.

Then I ask them to show me the program that they have to retain their existing clients (the same clients that their competitors are targeting with their marketing) and sadly the “retention strategy” is lacking, if there is one at all. If you had a landlord with you for 2- years - maybe movie tickets - 3- 5 years - maybe a lunch with you is in order )if they are local) - 6-10 years overnight stay in a hotel / winery (something) - you see where I am heading. Maybe run a Landlord event with good speakers just for your 3-5 Year landlords and another with a great speaker / sportsperson etc for your 5 year plus landlords. Nothing to do with real estate, but you want the LL’s to have positive experiences when they think about your agency - everyone likes to be “rewarded & recognised” but our industry does it poorly (in general).

Existing clients are so much easier to introduce new (profitable) products & services to, they are more likely to be your referrers, more likely to not be as hard on your / your team when you stuff up because you have credibility, and more likely to bring on other properties when they build your portfolio. I can’t offer much with this lost management - but when a LL moves management for fees - (generally) they have no longer seen value in the service so they go price shopping…shitty situation I know - but maybe do a quick summary on your “Existing LL retention strategy” and see if there is room for some new initiatives - hope this helps you and anyone else that has taken the time to read it.

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What water level is the norm?

Thanks Michelle. I do contact them when they give notice too but leave it at that especially if they don’t respond. I will definitely put that in my diary to follow him up. He is renowned for not responding though so I don’t know if I will have much success. It is the first one I have lost in a very long time so it is a shock.

My reputation precedes me! All good I hope?

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What a great idea. I didn’t think of those type of rewards for nothing. We do offer incentives if they refer a client.

This LL is of a nationality who doesn’t like to spend money. He managed it himself for 5 years and did no maintenance and in the last 18 months there has been so much to do as a result of the lack of a previous maintenance program. And they are big things like the plumbing, roof and the pool leaking. We have bent over backwards for him and he is so difficult to get hold of we can only email and then cross our fingers and pray he responds.

Anyway, Colleen …. onward and upwards, Buttercup.

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Thanks for your detailed contributions on having a retention strategy. Feels like there could be a webinar in that @mfurlong :wink:

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You make your water line up. It is your minimum fee in a worst case scenario. I usually play it on a law of averages. I work out the turnover of the portfolio and then apply my average gross profit as a deduction to give me my breakeven. I then divide this by the number of properties in the portfolio to give me a break even for an individual property. My waterline is between my breakeven and my total income for that property.

e.g.
Total monthly turner per property is $156 [450 x 8% x 53 /12]
Total monthly turnover per portfolio is $15,600 (100 properties)
Breakeven turnover per portfolio is $10,920 (Apply your average gross profit. I’ve used 30%)
Breakeven turnover per property $109 [$10,920 / 100]
Total monthly turnover for this potential lost management $135 [410 x 7.5% x 53 / 12]

Your water line would be somewhere between your average breakeven of $109 and your average turnover per property of $156.

In this case, if you made your water line $130 per property, you can see in this example that that you may be able to negotiate another $5 in fees. You also know that if you reduce it to less than $109 per month that you won’t be making any money at all from this LL.

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My pleasure @michelle1 I aim to please :stuck_out_tongue:

@Colleen All good! Of course! :slight_smile:

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This is excellent.

I’ve learnt something new.

Thank you so much!

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you are so clever…!

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I try :rofl:

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If he is a difficult client, non responsive or not wanting to spend money on maintenance, it may be good to wish him well and concentrate on your better clients, sometimes we spend so much time on the ‘bad’ landlords. better off putting in that time to get a ‘good’ landlord onboard.

Chin up - you are doing great!

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