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THE ONGOING RELATIONS WITH THE OWNER
By arlene | June 17, 2008
After you have taken over the management of a property, communication between you and the owner may take several forms, including —
- the routine monthly or quarterly statement of income and expenditure, expenditure vouchers, cheques or deposit slips;
- periodic contact with the owner, either to inform him of new developments, or to obtain his decision on, or approval of, some matter, such as the replacement of a major item of equipment;
- a periodic review of the owner’s investment; and
- unexpected visits by property owners.
ROUTINE COMMUNICATION WITH THE PROPERTY OWNER
Of all reports routinely produced by your administration system, the owner’s statement of income and expenditure for the previous month or quarter is one of the most important, since it helps to create confidence in your abilities. This report should be clear, easy to read and orientated to the needs of the owner, for whose benefit it has been prepared. It need only specify —
- income for the period;
- total expenses deducted (attach a schedule of these);
- levies deducted (if applicable);
- commission deducted; and
- balance due to owner (attach cheque or deposit slip).
Some owners may require more detail, for example a rent roll or credit control report which provides information about individual tenants.
You should review every report before it is sent to the owner, and it should preferably be accompanied by a covering letter or a compliment slip. By routinely examining the monthly or quarterly statement, you can ascertain whether the return on the property is as expected. Include explanatory notes regarding any variances from the operating budget in your covering letter. This routine examination keeps you fully informed on the status of the property, which is useful when having to discuss the property with the owner at short notice. The covering letter or compliment slip softens the impact of the rather sterile information contained in the statement of income and expenditure. By means of this letter the owner can also be informed about any special efforts you are making on his behalf. This serves to reassure him that he is obtaining the best service available.
PERIODIC CONTACT WITH THE OWNER
From time to time situations may arise where you wish to communicate with the owner, either to inform him, or to obtain his decision or approval, on some matter.
The equilibrium in the local market may have been disturbed by the erection of a new building, thereby necessitating the upgrading of facilities or a lowering of rentals in order to retain tenants, or a major item of equipment may need replacement. In these situations you or the account manager (if your firm is large) should contact the owner. In creating confidence in the abilities of your firm, personal contact, even by telephone, is usually more effective than written communication. If you require written confirmation of a conversation, a covering letter with the owner’s monthly or quarterly statement is a convenient method.
The owner should, as far as possible, always be contacted by the same person in your organization. This ensures that no duplication or conflicting communication takes place. It also facilitates building a long and profitable relationship with the owner.
PERIODIC REVIEW OF THE OWNER‘S INVESTMENT
Although some property owners prefer to conduct their own investment analysis, leaving the day-to-day administration to the property management firm, investment advice and opportunity search are two of the major benefits gained from entrusting a property to a management firm. The normal activities and experience of your firm facilitate the spotting of opportunities for increasing the investment returns of clients. In cases where your collection and management fee warrants the effort, or if the owner is likely to act on your recommendation to purchase or sell, you may consider conducting a periodic analysis of the owner’s property. Such an analysis may reveal that alterations to the building itself are necessary, for example that the ground floor of an office building should be converted to higher-rental retail shops. On the other hand, an analysis of development in the neighbourhood may indicate that a property should rather be sold, or demolished and redeveloped. Your analysis should culminate in a projected income and expenditure budget, with a projection over a two- to five-year term. The projections resulting from your proposal can then be compared with the expected results should no action be taken.
Should the income or potential of a property not warrant analysis, you can nevertheless use your knowledge of market trends and individual properties to advantage in keeping clients informed of your efforts on their behalf. You could, for example, send each owner a letter which provides significant facts about his property, such as trends in rent level, vacancy level and bad debts, typical tenant profiles or maintenance problems. These may then be contrasted with trends in the market in order to allow the owner to evaluate your performance in managing his property. Many larger property management firms periodically produce brochures in which these facts are communicated to clients. The brochures often contain information about the activities and capabilities of the firm and serve as useful sales promotion material which can be distributed to prospective clients, or incorporated into a sales kit.
UNEXPECTED VISITS BY PROPERTY OWNERS
Property owners have a habit of visiting one unexpectedly. As clients, they feel important and are sensitive to the manner in which they are received. Introduce all new clients to at least your front-office staff. This will ensure that they receive prompt and efficient attention whenever they call. Be sure to treat your clients as special people — their goodwill is essential for the growth of your firm.
At the beginning of this section I reminded you to prospect for new owners continually. Prospecting is essential, but it will not always be your primary source of new business. As your organization grows, you will find that most new business is generated by existing clients. If an owner is satisfied with your service, you will eventually administer all his properties, and he will recommend your services to others. Referrals are a major source of new clients.
This completes our discussion of that very special person — the property owner. Let us turn to an equally important aspect — his property.
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