Blog / Property Management
Stephen Jackson, 5 folders, Maintenance
Stephen Jackson knows how to run a successful business and he knows that the key to success in property management is about maintaining good relationships with owners and tenants.
At his agency, Jackson and Rowe in Sydney’s northern suburbs, they have more than 1000 properties on their books but Stephen says, “our turnover of property is something like once every four and a half years. If my property managers were having to suffer with turnover of once every 18 months, instead of managing about 200 vacating tenants a year, we would be managing 600 to 700 vacating tenants a year, and we would be getting probably around the same amount of money.”
Dealing with turnover is not profitable. In the last couple of issues of Hot Topics, we have introduced readers to Stephen’s highly successful 5 Folders approach to property management. Stephen devised the 5 Folders approach because as he says, “it enables us to make better decisions, have better conversations, get resolutions quicker, and makes people happier.”
For The 5 Folders to work, Stephen thinks that all aspects of property management need to be integrated, in a portfolio style operation. Stephen says, “We’re property managers, our titles are property managers, but in reality we manage people and, in that sense, we manage clients. Clients don’t like to be subdivided up and their issues are never subdivided.”
The Fourth Folder of the 5 folders is:
Maintenance
Stephen believes that the key to maintenance is to minimise the discretionary activity that tenants do. He says, “Maintenance issues arise when things aren’t fixed properly or where issues just keep on going on and on which are things you want to reduce.”
Dealing with maintenance requires using your time effectively, observing your legal obligations, focusing on what you have the power to control and identifying the problem and resolving it in such a way that is best for the property and the owner in the long term. Again, as with other aspects of the life of a property manager, it is all about nurturing the relationship the agent has with an owner. Stephen says, “When you’ve got a tenant in a property and an owner’s collecting rent and there is something broken, maintenance is about bringing it back to that, getting it back to a stable thing.”
“You will be trusted by an owner and be able to deal with maintenance issues,” Stephen believes, “if the owner thinks you are competent, and you do what you say you will; if you are candid and open and if you show that you care about what the owner thinks, not about what you believe she or he needs. That is where so many people fail.”
Stephen says, “Too many property managers actually try and keep on pushing owners to do things that they’ve already said no to; they’re just not aware of it.” The question should not be, “Will I get you another quote?” but, “Look, if it came in at $2,000 is this the sort of thing you’d like to do? If it’s not, let me know and I’ll just say no to the tenant.” That’s probably one of the most effective and important conversations you can ever have with an owner in maintenance, or a tenant in maintenance, but too few property managers have it.”
“So many property managers go wrong by getting quotes. Quotes is the thing that floods this folder with work that you don’t need to do. What you really want to do is have a good idea, or a reasonable idea, of roughly how much this is going to cost.”
Stephen also insists that agents know exactly what the problem is. He says, “If you can’t understand it, guess what, the owner’s not going to understand you. Don’t deteriorate your relationship with the owner by wasting time having conversations about things you don’t understand. Go out and see what the issue is, talk to the tradesman. Don’t always believe your tradesmen; if they don’t make sense to you they’re probably not making sense for a reason. Check things out.”
A computerised maintenance tracking system is vital, Stephen believes. ‘Whatever your system is, it must not be able to be deleted. If you’re ever sued and a tenant says, “I rang you about this problem and you never did anything about it.” If you don’t have that record, you need to be able to prove that, not that it was deleted or that it wasn’t recorded, but that it never happened. So, if you’ve got a maintenance system that refuses to allow deletion, then you’re reasonably protected.”
Of course, Stephen sees the relationships property managers have with tenants as a vital part of this folder as well. He says, “If you’ve got bad news for a tenant, ring them – and don’t make it personal. Remind the tenant what they requested to be fixed. Explain the owner’s decision. Don’t say anything, just wait.”
Stephen believes that it's important not to be scared. Agents needs to handle tenants’ misunderstandings or misbeliefs and to not be frightened of the Tribunal. “You are acting in the landlord’s best interests if you’re good in Tribunal. You’re not acting in the owner’s best interests if you’re hopeless - the solution is not avoid the Tribunal; the solution is be good at Tribunal!”
The Five Folders
The first folder is Vacating , which looks after all the activity that is generated once a tenant gives notice through to the tenant vacating. It’s turnover, dealing with tenants moving out and the new tenants going in and it’s the biggest part of property management and the area that agents have the least control.
The second folder is Applications . This is also part of turnover and involves all the activity around finding and securing the next tenant. Stephen says, “It is not a profit-making area, it is a cost area, it is a pain, it is where all your issues are, it is where your owners become most volatile. It is a nightmare and you need to control that, you need to reduce it. Turnover is your biggest issue that you have to worry about.”
The third folder is Bonds, and this looks after all the activity from when the tenant vacates and hands back keys through to the finalisation of the bond and the processing of the monies.
The fourth folder is Maintenance, and this involves all the work that needs to be done to a property and all the invoicing and the payments.
The fifth folder is Arrears, and this really encompasses misbehaviour of tenants, so it involves arrears, it involves strata complaints or notices where the owners decided to give the tenant notice to move out.
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