I had a very interesting (and sadly, all too recurrent) conversation with an onsite manager recently, who shall remain unnamed. It went like this:
Hey there, your marketing is due to be renewed this week, would you like me to renew it for you so you don’t lose any listings?
I’ll be honest with you, I don’t need to advertise my rentals.
You… you don’t need to advertise rentals? Aren’t you a rental manager?
Yes I am, but No, because there’s that many tenants out there, I just have to stick a sign out the front and I fill it within 4 hours.
Gosh that’s impressive, just think how much more rent you’d be able to achieve for your owners if you actually marketed their investments correctly?
No mate, I’m not in the business of screwing tenants over!
What this manager has failed to realise, is that tenants aren’t his concern. He is contracted by the investor, and fiduciarily obligated by law, I might add, to deliver the best possible value for money for them. Saving the tenant a few bucks might seem, to him, to be a noble venture, but in effect, by deliberately not achieving the highest returns for his investors, he’s not only (arguably) breaking the law, he’s also screwing over the very people who have employed him. He’s not doing owners any service at all. Particularly as interest rates climb. It’s simply a matter of time before investors realise they are paying for an inferior service and sell up, or switch managers.
The trouble with conversations like the one I recounted above, is that they happen to me with alarming frequency, particularly in the current market when rental demand is strong. I can recall the last time I had these conversations with managers was about 15 years ago. Back in those Halcyon days managers would say, constantly, they didn’t need to advertise because they had a sign out the front. Then along came the GFC and a glut of rental properties flooding onto the market, and *surprise* those same managers would call me up begging to advertise and in a total panic because some “dirty nasty mean horrible outside letting agent” has come along, out performed them considerably, and wiped out their letting pool from under them. The thing about doing a lousy job is, it isn’t a graduated affect. You can get away with screwing your investors over for a while, and it might all seem like smooth sailing… but as soon as a motivated outside agent realises this manager isn’t performing, they will grab a call sheet from the manager’s complex of all his investors, and clean him out with expert efficiency.…and the manager will blame the outside agent when in reality, it was his own lack of concern for the needs of his investors, that led to this happening.
In firm rental markets such as now, more than ever, managers should be delivering, and shown to be delivering the best possible returns for owners, because if they don’t, someone else will!