Productivity, Conflict and Negotiation in Property

Management

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Agendao What do your tenants and landlords want?o Health and Safety at Work Acto Osaki Caseo Residential Tenancies Acto The Five Stages of Landlord Remorseo Managing Conflicto Preparing for Tribunalo Productivityo How to Win the Businesso Building Great Relationships

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What Do Landlords Want?

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How Much Does Being a Landlord Cost?

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What The Investor Wants

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What The Accidental Wants

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Investor v AccidentalInvestor

•Long Term Client•Wants good returns•Less emotion•Wants the facts•More likely to negotiate your fee

•Likely to have more property

Accidental•Likely be short term•Wants the property looked after

•More emotion involved•More likely to accept the fee

•Less educated

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Income and Expenses

Rent at $840 pw $43,680

PM Fee at 8% ($3,494)

Rates ($2,500)

Insurance ($1,800)

Repairs ($2,500)

Mortgage payments ($31,122)

Meth Testing ($200)

Smoke Alarms ($99)

TOTAL EXPENSES ($41,715)

PROFIT (LOSS) $1,965

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Income and Expenses

Rent at $350 pw $18,200

PM Fee at 8% ($1,456)

Rates ($2,000)

Insurance ($1,200)

Repairs ($1,500)

Mortgage payments ($18,096)

Meth Testing ($200)

Smoke Alarms ($99)

TOTAL EXPENSES ($24,551)

PROFIT (LOSS) ($6,351)

Do you survey your landlords?

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What to ask landlords1. Age2. How many properties they have3. How long they’ve been a client4. How satisfied are you with frequency of communication5. How would you rate the recommendations6. Preferred source of communication7. How often they wanted a rent review8. How often Would they want an assessment on what their

property is worth9. Recommendations10. Would you be interested in video inspections11. How likely would you recommend our service 11

Net Promoter Score

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Two Key Trends• Long term and older clients very happy

• New and young clients greater expectations

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How many properties do they own?

90% have less than 2 properties

1-2 properties 90%

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Future Clients• younger clients have higher

expectations• Less educated and greater financial

constraints• Vast majority of clients are stuck on 1

or 2 properties• Lack of communication and knowledge

greatest concern 15

Why We Fail Landlords• Ratio of Property to Landlord about 1.4:1• Property Managers are not educated• We are reactive rather than proactive• They rarely hear positive news• We do not educate them well enough

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Why They Go

30%

10%55%

5%

SoldReoccupiedOtherWe ended

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Average Rent Roll will lose between 15% and 20% of

its portfolio per year

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Units Lost % Lost Revenue Value 2.5:1100 20 20% $30,000 $75,000200 40 20% $60,000 $150,000300 60 20% $90,000 $225,000400 80 20% $120,000 $300,000500 100 20% $150,000 $375,000600 120 20% $180,000 $450,000700 140 20% $210,000 $525,000

The Cost of Losing Them

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What do Tenants Want?

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What can you do to improve tenant service?

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What can we do for tenants?

• Thorough induction• Tenant Handbooks and welcome packs•Call them one week after moving in• Tidy kid bedroom certificates• Movie nights• Tenant newsletters• Best inspections prizes• Jelly beans when doing inspections• Follow up on repairs 22

Health and Safety Reform BillHealth and Safety at Work ActComes into effect 4 April 2016

Pike River Mining Disaster 19 November 201023

Facts• Our new Health and Safety law is based on

Australia• Australia has seen a 16% drop in

workplace deaths since 2012 • In NZ 75 people die every year through

workplace accidents• Twice as likely to be killed or seriously

injured compared Australia• Six times more likely compared to the UK24

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What or who is a PCBUPerson Conducting a Business or Undertaking

Usually a business entity such as a companyA Sole Trader or self employed contractor might be a PCBUEmployee’s are not PCBU’s, these are Workers or Officers 26

What does this mean• Everyone is responsible for Health and

Safety• All PCBU’s have a ‘Primary Duty of Care’

to workers and other people• Officers (eg. Directors) of PCBU’s must

exercise due diligence to ensure H&S is being met

• All PCBU’s , so far as reasonably practicable, must engage with workers

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Choi Rentals and Dave’s Plumbing

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Choi Rentals has 400 managements and 6 staff. Kelly is the owner and director. She regularly engages Dave’s Plumbing to carry out work on her rent roll. Dave is the sole trader and owner of his business.

• Is Kelly or Choi Rentals a PCBU?• Are Choi Rentals employee’s workers or PCBU’s?• _______ is an officer of Choi Rentals• Is Dave’s Plumbing a PCBU?• Does Dave become a worker of Choi Rentals when

engaged to carry out work or does he remain a PCBU? 29

Choi Rentals has 400 managements and 6 staff. Kelly is the owner and director. She regularly engages Dave’s Plumbing to carry out work on her rent roll. Dave is the sole trader and owner of his business.

• Choi Rentals is a PCBU. • Choi Rentals employees are workers of Choi Rentals• Kelly is an officer of Choi Rentals• Yes. Dave is a PCBU, conducting his plumbing

business• Dave becomes a worker of Choi Rentals.30

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Health and Safety duty to: Workers Other people at workplace

Take reasonable care for his or her own health and safety Yes Yes

Take reasonable care that his or her acts or omissions do not adversely affect the health and safety of other persons

Yes Yes

Comply, so far as reasonably able, with any reasonable instruction that is given to them by the PCBU to allow the PCBU to comply with the law

Yes Yes

Cooperate with any reasonable policy or procedure of the PCBU relating to health or safety at the workplace that has been notified to workers

Yes No

Potential Fines

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Section Act Fine

47 Offence of reckless conduct $3,000,000

48 Exposing individuals to risk of death, serious injury or illness

$1,500,000

49 Failing to comply with duty $500,000

55 Failing to preserve a site $50,000

56 Failing to notify a notifiable event $50,000

57 Failing to keep records $25,000

58 Failing to engage with workers $100,000

Maximum Fines for PCBU’s

Fines for Workers and Officers

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Section

Act Person not an officer or PCBU

Officer or individual who is a PCBU

47 Offence of reckless conduct in respect of duty

$300,000Or max5 years

$600,000Or max5 years

48 Exposing individuals to risk of death, serious injury or illness

$150,000 $300,000

49 Failing to comply with duty

$50,000 $100,000

How does the relate to RTA?

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Section 45 Landlord ResponsibilityThe Landlord shall comply with all

requirements in respect of buildings, health and safety and any enactment so far as they apply to the premises

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Does Every House Have To Be Tested For

Methamphetamine?

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10 Things that should happen1. Your contractors need to be on agreements2. Landlords should not do their own maintenance3. Directors have to engage workers on H&S issues4. You cannot manage non compliant property5. H&S must become an agenda on meetings6. You must identify risks involved in your business7. You have to have policies around these risks8. Only bailiff's should do evictions9. Have a ‘No Cash’ policy10.Large companies need to consider committees

or H&S representatives.39

Contractor Agreements

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Landlord Maintenance Contract

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Health Homes Guarantee Bill

Link to Bill• Beginning of minimum standards for housing

• Based on heating, insulation, ventilation, indoor temperatures, drainage

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Amendments to RTA• This now becomes law 1 July 2016• State level of insulation of property• Smoke alarms no more than 3 meters from bedroom

• Who is liable for Smoke alarms•Link to new bill

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Holler and Rouse V Osaki

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Basics of the Act

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Termination of Tenancy• What is the difference between section 55 and

section 56?– 55 Termination on non-payment of rent,

damage or assault• Rent must be 21 days or more • EXAMPLE

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Section 55 v 56– 56 Termination for non-payment of rent and

other breaches• 14 day notice is served• The breach must have expired to get

termination• EXAMPLE

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Landlord Responsibilities• Section 45 of RTA• LINK• Example of breach by landlord

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Tenant Responsibilities• Section 40 of RTA• LINK

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Property on Market and Rights of Entry

• Section 47 of RTA LINK• Landlords must inform in writing to tenant• Section 48 of RTA LINK• May enter with consent of tenant• In case of emergency• 48 hours when inspecting• Check work done • Prior consent of tenant enter property for prospective

tenants, purchasers, real estate, valuers• Tenant cannot withhold reasonable access

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Unlawful Acts• Section 109 of RTA• LINK• What the act says• Example of order using exemplary damages• Who pays, the landlord or the Property Manager?

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The Case of the Broken Window• Case one: Rule in Landlord’s favour• Case two: Rule in the Tenant's favour

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5 Stages of Landlord Acceptance

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5 Stages of Acceptance•The Kubler Ross Model• Inspired by a lack of resources for nurses dealing with terminally ill patients

•Denial•Anger•Bargaining•Depression•Acceptance

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5 Stages of AcceptanceApply this to Property Management:

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“It is not true what you are telling me”“It is not that bad, I lived with it for years”Silence……..“I have a mate who will fix it at a fraction of the cost”“How much!!?!!”

Stage 1: Denial

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“This is the tenant’s fault, they’ve made it worse!”“It’s not fair, who can I blame”“You should have picked this up sooner”“Get rid of those tenants now!”“I’m not happy about this”“Why can’t you find a tenant?”

Stage 2: Anger

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“Can’t the tenants just put up with it”“I will attend to it when the tenants leave”“Can’t you get another five quotes?”“What are you going to do for me?”“I need this amount of rent to make it work!”

Stage 3: Bargaining

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“This is going to cost me a lot of money”“Just get it done but I’m not happy about this”“This is too hard, I’m thinking of selling”“You could have handled this better”“You could have avoided the vacancy”

Stage 4: Depression

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“It actually isn’t that bad”“I understand that you are working for me”“Thanks for your help, I couldn’t have done this without you”

Stage 5: Acceptance

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1.Denial2.Anger3.Bargaining4.Depression5.Acceptance

The Five Stages of Acceptance

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The Weetbix FloorThe floor in the laundry has gone soft from a gradual leak. The tenant never reported it and you didn’t notice this at the last inspection.

How do we break the news?How might the landlord react?

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The Repair BlowoutThe hotheaded landlord has finally agreed to get shower repaired as the mixer is broken. You have estimated the job to cost $400. However, once the repair starts the plumber realizes that there is far more damage than first thought. The plumber is on site and calls you for instructions. What do you do?

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Managing Conflict

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Exercise

Think of the most common complaints

What are they?

How will you respond?

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Three Natural Reactions When Attacked

1. Strike Back2. Give In3. Break Off

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Positional NegotiationSoft

•Participants are friends

•The goal is agreement•Make concessions•Be soft on people•Trust them•Make offers•Change your position•Avoid contest of wills

Hard•Participants are adversaries

•Demand concessions•Be hard on people•Distrust others•Make threats• Insist on your position• Win a contest of wills

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Principal Negotiation•People

–Separate the people from the problem•Interests

–Focus on interests, not positions•Options:

–Invent multiple options looking for mutual gains before deciding what to do

•Criteria:– Insist that the result be based on some objective standard

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Dealing with Complaints•Don’t React. Go to the Balcony•Listen activity•Acknowledge how they feel•Remember, nobody wins an argument• Never, ever tell someone they are wrong•Know your BATNA

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Best Alternative to a Negotiated Agreement

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The Property that won't rent!

You have set the rent on a new management. The owner pushed you into setting it higher than what you thought it should be however you agreed to it in fear of missing the management. You are aware that she has more properties.

After 3 weeks the property has not rented. How do you address the situation?

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Mangania Bananas

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Mediation and Tribunal

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Serving a 14 dayService method Notice Starts How long to waitPersonally given to tenant The day after it is served 14 days

Post to address Four working days after service

4 working days then 14 days

Put letter in box or affix to door

Two working days after service

2 working days then 14 days

In AdditionEmail Immediately 14 daysFax before 5pm of day Immediately 14 days

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Top Tips• Give 90 days notice prior to any Tribunal

application (periodic only)• Do not wait till 14 day breach has expired before

making application• Try and come to an agreement with tenant prior

to any mediation• Ask the tenant for a solution• Always follow company policy• Know your BATNA

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The Role Mediation• Object of Mediation is to clarify and sort

out a dispute• The Mediator does not tell you what to do• Mediators are there to try a find a

resolution• Any agreements are confirmed in a

Mediated order• Only enforceable once ‘Sealed’ by Tribunal77

David’s Top 5 Tips for Mediation

1. Be prepared. Know what you want to get out of it

2. Know your BATNA• Best Alternative To a Negotiated Agreement.

3. Always maintain control4. Get the tenant to say ‘Yes’5. Do not let the mediator make the decision

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The Role Tribunal• Adjudicator will make decision based on the

following.– Evidence provided– Your credibility– The tenant’s credibility

• Level of proof is based on a balance of probabilities– This means you need to prove your case 51%

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The Tribunal ProcessThe Tribunal Standard ProcessThe Applicant Presents The applicant has to prove their case with

documentary evidence and witnesses if necessary

The Other Party Presents The other party gives their evidence, including any documents and/or witnesses

The Applicant Responds This is a second chance to clarify, or rebut what the other party may have said

The adjudicator makes a decision In most cases the decision is then delivered by the adjudicator

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Depreciation Schedule

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CHATTEL Estimated Life Expectancy (years)

Carpets (varies with quality) 10 -25Light Fittings 10Curtains and Drapes 8Ovens 8Dishwasher 7Wallpaper 5-7Painted Walls 5

David’s Top 10 Tips for Tribunal1. Be prepared, even on straight forward cases.

2. Always take three copies of evidence3. Take a copy of the RTA with you4. Never talk directly to the tenant5. Speak clearly and to the point. Have a script6. If tenant provides evidence ask for an

adjournment7. Don’t let support people speak8. Try to address the facts on the application only 9. Don’t be afraid to challenge the adjudicator10.Charge the landlord for your time at court82

Productivity

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John Maynard Keynes15 Hour Working Week

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Cyril Northcote Parkinson

“Parkinson Law”85

Parkinson’s Law“Work expands so as to fill the

time available for its completion”

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Parkinson’s Law

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effor

t

Time

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How many properties where you managing when your desk looked like this?

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How many properties are you managing now?

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Technology AvailableCloud based softwareInspection AppsVideo inspections and walk through toursInspect Real Estate, Viewing TrackerApp TrackerMaintenance ManagerOnline Access for landlords and tenantsTINZ, TPSClient Relationship Management Software (CRM)Scanning Paperless offices 93

Shouldn’t We Able To Manage More?

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How Hard Would It Be To Manage 10 More Properties Per Person?

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Energy Management

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How Many Hours a Week do you Work?

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Time per Property

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•80 properties per staff member•Work on average 45 hours per week•Work 2,340 hours per year

2,340 / 80 properties = 29 ¼ hours per property per year

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Top Tips to Save Time

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STOP FOR LUNCH!!!

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Tips To Control Your Email Management1. Auto response when out of office

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Use Even When Doing Inspections

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Tips To Control Your Email Management1. Auto response when out of office2. Do not send emails after 6.00pm or at weekends3. Have set times when you clear your emails4. Don’t play Email Tennis5. Pick up the phone if there is emotion in the email6. Use tenant emails for inspections notifications

and breaches

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Use Video To Reduce Disputes

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Tenant Induction VideoHow to prepare for an inspectionHow to get your bond backRent Arrears VideoReport repairs and maintenanceHow to lodge a complaintHow to read a statementHow we select the best tenantPrepare your property for rent

Use Video

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Have a To Do List• Start each day with a plan• Write down tasks• Prioritize level of importance• Be decisive• If still on list by end of week

use the 3D Concept– Do it– Delegate it– Dump it

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Paperless Office

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Phone Management

Change voicemail every dayDo not make calls in the eveningReturn calls at set timesMake most difficult calls first thingDiarize conversationGood news calls

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Profit

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How Profitable?Revenue per property per annum

Average hours work property per annum

Revenue per hour worked on property

Hourly Wage cost at 45% of total revenue

$3,000 29.25 $102.50 $46.13$2,500 29.25 $85.50 $38.48$2,000 29.25 $68.38 $30.77$1,750 29.25 $59.83 $26.92$1,500 29.25 $51.28 $23.07$1,250 29.25 $42.74 $19.23$1,000 29.25 $34.19 $15.39$800 29.25 $27.35 $12.30$500 29.25 $17.09 $7.69

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✓ Is the Property Compliant?✓ Is the Owner good to deal

with?✓ Is the Tenant good to deal

with?✓ Is it Profitable 114

ADCB

Grade Your Properties

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Winning the Business

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What Questions Will You Be Asked?

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Tell A Story!•How long will it take to rent out my property?

•How much will my property rent for?•XYZ Rentals will do it for less than that•Can I use my own contractors?•Can I pick the tenant?•How do you arrange maintenance?•What about disputes?•I am worried about drug use

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People do business with people they like

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Building Great Relationships

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Why do Doctors Get Sued?

Doctors Sued Doctors Not Sued

Average Time 18.3 minutes

Average Time 15 minutes

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Exercise: How much time do we spend talking to our landlords

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How often do we call our landlords?

The 2% Rule

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The 2% Rule

Once every quarterApproximately 100 landlordsTotal of 400 calls per year229 Working Days in the year

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The 2% RuleOn Average 2 calls per day10 minute job to call two landlords2,400 working minutes10/480 * 100% = 2.08%

Are your landlord's worth 2% of your time?

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New Key Performance Activity

40 Good News Landlord Calls Per MonthBlock out one hour a weekEverybody stop what you are doingCall your Landlords

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Measure your losses

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SMART GoalsGoal Target By When

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Specific, Measurable, Attainable, Relevant and Time Based

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Thank You

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