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The 5 folders, Applications, Stephen Jackson


The 5 folders, Applications, Stephen Jackson

Stephen Jackson is one of Australia’s most successful property managers. Stephen’s agency, Jackson and Rowe is one of the largest and most profitable managers of rental property in Sydney’s northern suburbs.

In the last issue of Hot Topics, we introduced readers to the first of his highly successful 5 Folders approach to property management - Vacating - and in this issue we discuss folder number two - Applications.

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.”

The 5 Folders approach is not just a way of organising paperwork. Rather, it’s a decision tree. As Stephen explains, “It’s a way of thinking so that property managers can make good decisions because it’s the good decisions that reduce their work.” Implementing the 5 Folders approach is not as simple as purchasing five different coloured folders and allocating different aspects of your business to each folder.

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".

The Second Folder of the 5 Folders: Applications

Stephen explains, “The purpose of the Applications folder is to find a tenant with a high probability of stability, so that they stay and pay rent on time. You want them to maintain the property in a condition consistent with how you gave it to them; and you want someone who is fairly relaxed: a person who doesn’t scream every time something goes wrong, someone who is easy to work with.”

The folder also has a second purpose – to bring the owner onto the same page. “So, where Vacating is setting up to lease,” says Stephen, “the Applications folder is the carry on, the work through, whereby the owner readies for the market and has the property suitably prepared to attract the kind of tenant we want.”

It is important to remember Stephen believes, that “renting a property is not about securing a tenant; it is about having a property that tenants want to secure. The steps that we follow in this folder are about creating that property.” up and their issues are never subdivided.”

The following are key issues that must be #2 considered in the Applications folder.

Access

You must have access. Show the house when it is tenanted in a way that would make it attractive to the kinds of tenants you would like to attract.

Advertising

Make sure that the property presents well on the Internet - that it’s being reached and read.

Functionality of the property

Ask yourself: is this property going to need work to bring it up to a standard to get the tenant that we want? Built-in robes may need to be added. Paint vermiculite ceilings as most people hate them and change the lights if necessary.

Stephen explains, “Once all of the above is fixed, then you’re in a position to talk to the owner about competitive pricing, and by that I mean what else is on the market. And it’s very important that you get this idea of competitive pricing because the reality is one week a property may be worth $400 a week; the next week, because other properties are being rented, it now may be worth $410 or $420, or if a whole lot of the stuff comes on the market that is similar to yours, it’s now only worth $380 or $390.”

Stephen’s experience has shown that once all of the above has been achieved, and the owner is ready to rent, good applications start coming in very quickly after that. And as Stephen says, “When you get the right tenant, guess what, you get less vacancy, meaning if you get less vacancy you get less property coming up for rent and you can be more picky with your next tenants and so on.”

The purpose of the Applicat ions folder is to find a tenant with a high probability of sta bility, so that they sta y and pay rent on time.

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 profitmaking 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 fith 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.

Stephen Jackson's 2 folders is part of Real Estate Academy's Hot Topics Property Management Audio.


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The 5 folders, Applications, Stephen Jackson