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ELEVEN Property Types You Should Say ‘NO’ to! (15 minutes)
When building a profitable, healthy rent roll, knowing what properties to say NO to is just as crucial as to what properties you permit on board.
Many agencies fall into the trap of accepting ‘any property with a roof and front door’, but this leads to higher staff burnout, reduced profit and increased expenses, reputational damage and toxicity that simply makes your rent roll unpleasant to work in.
To help you avoid this pitfall, here are the top eleven property types to steer clear of.
From low-rent and low-grade properties to long-distance or problematic landlords, saying ‘no’ to these will ensure you focus on high-quality, revenue-generating properties.
For a deeper dive, explore these strategies in detail in our book Win Your Worth Secrets.
Today, I want to talk about why a quality rent roll is as much about what you choose not to sign up as it is about the properties you manage.
Too many agencies fall into the trap of taking on any property with a ‘roof and a front door’, but this approach will only lead to staff burnout, higher churn, and a rent roll that no one wants to work on.
To help you maintain a high-quality rent roll that is both profitable and sustainable, I’m going to outline ELEVEN WRONG property types to avoid.
These are taken directly from our book, ‘Win Your Worth Secrets’, which is packed with strategies on how to increase your fees with both new and existing clients.
The book is free; just cover the shipping, and you can get instant access to the e-book and audiobook versions at WinYourWorthSecrets.com.
Before we start, here’s a good saying that sums up this teaching:
If good tenants don’t want to rent a property, you shouldn’t want to manage it either!
Let’s dive into the ELEVEN types of properties you should say ‘no’ to when taking on new business.
1. Low Rent Properties
Low-rent properties often attract tenants with higher social and financial challenges, which means more headaches and time challenges for you. Additionally, low-rent properties mean low fee revenue. You’re in this business to make a profit, so you need to ensure that every property brings in a healthy amount of revenue.
Tip: Set a rent limit for the properties you take on. Work out what rent level is too low to ensure your time and effort are properly compensated.
- Standard Marketing Fee This fee covers the costs of listing properties on portals. In Australia, you’re likely familiar with the two major portals that charge fees. New Zealand has its own marketing portal costs as well. Make sure you’re covering those costs, and if you haven’t updated your fee recently, ensure you’re adjusting it, as portal charges tend to increase on a regular basis.
Don’t forget to factor in any additional marketing efforts, such as Facebook or LinkedIn campaigns. Always check your local legislation to ensure you can on-charge these costs. - Professional Photos If you’re taking professional photos for listings, you should be charging a fee to cover those costs. It’s a straightforward service, but make sure it’s reflected in your fee structure.
- Video Walkthrough Fee Offering video walkthroughs is becoming increasingly common. If you’re walking through the property with a camera or phone, narrating as you go, that takes time—editing and uploading included. You should be charging for this service, and the suggested fees are detailed in the book.
- Virtual Tour Fee Using high-tech tools like Matterport or 360-degree cameras to create virtual tours can be time-consuming and require expensive equipment. This is another service where you should be charging a fee for the value you provide.
2. Low Fee Properties
Even with low rents, consider how much a property is likely to earn you in a year.
Factor in management fees, leasing fees, and other income.
I recommend properties that will earn at least $3,000 a year, though a healthier benchmark is $4,000 to $5,000 annually.
If a property isn’t generating enough fee revenue, it’s not worth managing.
3. Low-Grade Properties
Properties that haven’t been maintained properly by the owner will inevitably attract low-grade tenants, leading to more problems and costs down the line.
You’ll spend more time managing these properties, and the financial return won’t be worth the extra effort.
In addition, poorly maintained properties could hurt your reputation and expose you to legal risks.
4. Low Socio-Economic Properties
While it’s controversial to mention, properties in low socio-economic areas often bring more social problems, including higher rates of tenants not paying rent on time.
These areas tend to attract tenants who have competing financial priorities, which means rent may not be at the top of their list.
Tip: If your agency is located in a low socioeconomic area, focus on the better parts of town for your business.
5. Long-Distance Properties
Long-distance properties can kill your productivity. I’ve seen property managers spend up to 25% of their time in the car, which means they’re only effectively managing their rent roll 75% of the time.
Keep a tight radius around your office, and avoid properties that are more than a 30-minute drive away (during peak hours).
6. C-Class Landlords (Toxic Landlords)
Toxic landlords bring with them a number of problems: they’re unreasonable, demand too much of your time, demand fee discounts, expect above-market rents, invest little in their property with upkeep and repairs, and have low-rent properties.
The result is likely a property that tends to only attract a low-grade tenant, causing even more issues to manage.
These landlords are toxic to your business and can ruin your team’s morale. Avoid them at all costs!
7. Accidental Investment Properties
An ‘accidental’ investment property is a former family home that the owner needs to rent out due to forced circumstances (like a job relocation).
These landlords are often emotionally attached to the property, and they struggle with the idea that tenants won’t care for the home the way they do.
This often leads to tension and conflict, so it’s important to ask upfront if the owner is ready to take the emotion out of the situation.
8. The Wrong Property Type
Certain property types attract problematic tenants.
For example, I’ve managed one-bedroom ‘flats’ that only attract a certain type of tenant I’d rather avoid.
Further, ex-government housing properties, though some are now purchased by property investors, still attracted a certain ‘low-grade’ type of tenant that caused lots of issues like non-payment of rent and property damage.
What types of properties can bring you a certain result that isn’t good? Avoid these types!
9. Furnished Properties
If you’re managing traditional long-term rental properties, avoid furnished properties.
Furnishings introduce a host of unique problems, from missing items to damaged furniture, which leads to unnecessary conflict between tenants and owners.
Unless you’re managing short-term rentals, holidays or student accommodation, keep it unfurnished. Most quality tenants want it this way.
10. Eviction Properties
When an owner approaches you with a self-managed tenant who is weeks or months behind on rent, think carefully before taking on the property. Eviction situations are time-consuming, emotionally draining, and often result in frustration.
My personal preference is to avoid these cases—let the landlord handle the eviction, and then consider taking on the property once it’s been cleaned up.
11. Leasing-Only Properties
Some landlords only want you to find them a tenant, leaving you out of the ongoing management afterwards. While this might seem like easy money, it often leads to problems.
If the landlord mismanages the tenant and they fall behind on rent, it reflects poorly on you, even though you’re not responsible (and could have saved the tenancy).
I avoid leasing-only properties because they can hurt your reputation.
Besides, quality tenants that I select I want to have in my own fully managed properties and not give them away!
Build a Quality Rent Roll by Knowing WHEN to Say ‘No’!
Saying ‘NO’ to these eleven types of properties will help you maintain a quality rent roll that’s profitable, efficient, and manageable.
It’s essential to take on properties that enhance your business, not drag it down.
For more tips on managing a quality rent roll and increasing your fees, check out my book, Win Your Worth Secrets. The book is free—you just need to pay for shipping.
Get instant access to the ebook and audiobook versions at WinYourWorthSecrets.com when you order the hard copy.
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