29 May 2010
Posted in Rental Property

I'm not getting enough from my rental management company - Isn't there a better way?

A completely new concept in property rental marketing

We have sections here that cater both towards the person that wishes to rent out their property and to the potential clients for that rental. It won't be a surprise to anyone that most online companies keep these two areas very seperate. We're guessing that it is felt to be bad form to let clients see promises of large amounts of money being made to property owners. But we don't work that way - we completely welcome both parties to read what we write about the industry and the possibilities that we see for a new concept to improve the situation of this industry.

Some of this is complicated, but if you bear with us, we are totally sure that at the end, you will be convinced of our philosophy and will share our views about the best way to work in this industry... again, for both parties. For the sake of clear publishing on websites, we have two articles explaining things from both viewpoints - but neither is hidden from the other and we welcome all readers to read both articles.

First, let's look at how things currently work...

Current business models

Web "Mega-Portals"

The most common business model at the moment is for a property owner to place their property with one of the big rental portals. Great... it's where a lot of clients go to look for a property to rent and has the advantage that clients can browse through many properties to find one that they like. Many portals make their money by charging an annual fee to the property owner to place their property on the site, so basically this is an advertising fee. The problem comes from the fact that the vast majority of property owners receive absolutely zero business from these portals. Also, these vast sites have so many properties that there is rarely enough checks made to ensure that a property is still available and hasn't for example been sold, or rented out already on a long term basis. What a pain it must be for clients having to enquire on so many properties before finding an "active" one - and how uneconomic for the property owner to be paying fees without receiving any business. How can we explain all of this?

OK, firstly due to the size of these mega-portals, any client is faced with hundreds or even thousands of choices for rental property. Quite simply the property owner faces such monumental competition levels whenever a client is browsing for properties, that the majority receive absolutely no business whatsoever from this method, completely wasting the annual fees in most cases.

For the clients, they have to hope that the portal is monitoring its property owners and a) finding out if a property has been sold or a long let is in place and b) actually de-listing properties efficiently. Many property owners advertise on many sites and let's face it, if you sold your property, how motivated would you be to remember to inform everyone to de-list you? Even if you did, what priority would these portals give to de-listing? After all, it is in their interest to boast about how many properties clients can choose from on their site.

Another problem comes with portals that take a commission on each rental transaction. Great - no upfront fees for the property owner! But with the average commission being around 20% the property is now 20% more expensive than competing websites and portals and todays clients are no fools when it comes to knowing the market rates and where to go for the best prices.

Local Rental Management Companies

I have lived abroad for many years now. I have lived and worked in markets that include various areas of Spain, the Canary Islands, Cape Verde and to a lesser extent Bulgaria and Turkey. Believe me when I say that I know many people involved in rental management. The vast majority are honest, hard working people, typically ex-pats earning a crust - we can all imagine the typical profile of these people and will not be far wrong. There is a rising trend of bad guys that are hitting the headlines recently, but more on that later.

To dig a little deeper, we have to examine the skills required in this role. Normally it is things like arranging for properties to be cleaned and readied for clients, making sure inventories are maintained, ensuring keys are securely managed and incoming clients are looked after. Great... someone with good administration skills is perfect at this - and especially if the property owner has established a rapport and feels trust towards someone looking after their keys and property. Where we see problems, is where property owners also expect these skills to extend to marketing. In this age of internet marketing, there is a hugely specialised requirement for skills, effort and resources are that are necessary to market at the most professional levels and to ensure properties are put in front of searchers... or should we say "googlers". Basically, who can argue that the skills necessary to generate business for the renter are now at a whole new level and are massively specialised? Now, does this seem like the profile we mentioned above?

For us, this clearly identifies the need for a separation of these roles and the savvy property owner today is beginning to acknowledge this. Now, many management companies win business with claims of "just give us the keys and we'll look after everthing else and keep sending you money". Great... fully hands off for the property owner... a one-stop shop. I can fully understand the attraction for the property owner towards this kind of service, but it just doesn't work. Does anyone even know one person who does this and is satisfied with the business generated? We think that even having this mentality works against the renter, as we'll show in the "Take charge of your product" section below.

Industry scams

One here is arguable in it's status as a scam. We'll leave it up to the reader. There's no doubt about the other.

Me first!

Let me paint a picture and see if you think this is common, uncommon or just a maybe? An ex-pat gets an inheritance, redundancy, early retirement or maybe just sells up and moves abroad. He buys a couple of properties and lives in one. He has a couple of mates who have additional properties also. They all look to rent their properties out. Maybe he puts up a quick website. He thinks "hey!" I could put other properties on my website and charge advertising. Then I'll have a business up and running so I don't spend all of my time on the beach or in the bar. Now he is a suddenly a rental management company. Although not always the case, this is by far the most common scenario that occurs when a management company is formed. I'm sure you can imagine this scenario - but what's the problem you ask? OK - you find a management company and place your property with them. It so happens that the management company came into being exactly as I stated - do you see the problem yet?

OK - an enquiry comes in from a potential client via the website, or even from a walk in client - "I'm looking for an apartment for x date". Is it a stretch to envisage that the apartment that is the perfect fit and available for the client is... in this order...

 

1. the property of the business owner
2. properties of close friends of the business owner
3. properties of drinking buddies of the business owner
4. your apartment

 

To what degree this is a scam, or just human nature, or even if it is done consciously or subconsciously, who can say? But the real question is to ask just how common this scenario is?

For clients too - how sure can you be that you are being offered the best deal if this is the scenario?

Its a crime!

Very simple - you give keys out and ask someone to manage the renting of your apartment. They rent it out, they take money, they don't tell you.

This truly sickens me, and although it's been going on for years, it is only just starting to get press coverage. The average property owner would be amazed at how often this occurs in the industry. Again, do not tar all rental management companies with this brush - but make sure you have trust or a mechanism in place to ensure this doesn't happen to you. Perhaps getting a third party to regularly take electricity readings to match against rental periods could help.

So what is the new concept?

We are marketers. It's what we do, using highly specialised knowledge, tools and techniques to get web sites/pages to the top of Google's search results to ensure that whatever those pages hold gets the maximum exposure to an audience which is highly targeted, by utilising the content of the search phrases used by those potential clients doing the "googling". Hmm... that sounded complicated, so let me explain...

You may have noticed that this website is not called "rent-your-property-here.com". It is well known that statistically speaking, searchers for this kind of information will normally qualify their search with what's called a geo-locater. This is what normal people would call "a place". Now you could type "apartments in Tenerife" into Google, but that would just give you thousands of websites back. Most people will have already decided the specific area they want. So they will type in one of the following examples...

• "apartment rental golf del sur"
• "golf del sur apartment rentals"
• "golf del sur accommodation"
• "how to rent an apartment in golf del sur"
• "renting an apartment in golf del sur"
• "golf del sur apartments for rent"

I'm sure you get the picture by now, and hopefully you'll agree that this would be typical search behaviour. What's clear is that the words "apartment", "rent" or "rental", and "Golf del Sur" do tend to crop up a lot! If the searcher wanted villas then this would be a word to add to the list.

So unlike the portals and other web sites that specialise in rentals, we specialise in rentals in Golf del Sur amongst other things, and over time our website will rank at the top of google for the searches listed. This is because our web site is totally dedicated to Golf del Sur and is therefore considered by Google to be extremely relevant to anyone typing in searches including this phrase. Likewise with the other phrases... our site has large sections devoted to these phrases and the combination of everything is extremely relevant and, we like to think, of high quality. This means that the clever people at Google have no problems to calculate that this site is highly specific to search terms like those given. We invite you to try the phrases above for yourself. At the time of writing this article, our website is not yet live, and the process of ranking near the top of Google will take some time. Otherwise I would already be able to prove our claims. But for sure I'll be back soon to edit this part of the article!

So essentially what we are saying is that by building a highly specific website with content that is highly relevant to a target audience that happens to be your ideal target audience based on their search terms, that we will have a much better chance of placing your property in front of "buying eyes". More so than a generic property rental site... but testing of the search terms in Google will prove thisover time.

If you ever hear anyone boasting about "being at the top of Google" make sure you know what they are at the top for... which search phrase. It's no use being at the top for the phrase "my new property" when you are looking for rental clients and understanding which search terms are used the most is critical to driving those clients to your site.

What we are not is is a rental property management company. We won't clean your apartment or villa as we would be absolutely useless at it - and we'd probably lose your keys also. So we recommend either to use a management company where you have established trust, or even to use an individual locally that you know or have met and formed a trusting relationship with. The key word here is trust. You can trust us to market your property effectively as we can prove our ability to do that. But to trust someone with your property is something only you can establish, and we really advise you to take this responsibility seriously. It's your investment and you may be thousands of miles away from it most of the time, so it is really important that you achieve peace of mind with this.

So what this achieves is to separate the management and the marketing of your property into two very differently specialised areas. You wouldn't get an electrician to fix the kitchen sink would you?

Stand out from the crowd

So your prospective client has searched google, found our site and is browsing properties in Golf del Sur. The last thing we want to do now is give them thousands of choices like the mega portals and dilute any chance of generating business for you. This won't happen. For a start our website is totally focused on Golf del Sur, putting a natural limit on what we can offer. It is our intention to provide enough choice for clients without swamping them. For example, some clients will want "sea views" some won't. Some will want golfing properties, some "in the middle of it all", some "out of it all". Some will want villas with a pool, some just a family villa. Some will want one, two, three or four bedroomed apartments. In our view, a handful of each type is enough and we will scale with demand and maintain contact with all property owners to ensure any necessary de-listings. The objective is to find the right balance between the demands of owners and clients and to continually monitor this. By staing focused on one area, this becaomes achievable.

Take charge of your own product

This may surprise you, but we want property owners to take an active responsibility for what is essentially their "product". What do we mean by this?

It's your investment and you wish to generate revenue from it. That makes it your business and a business for which you are ultimately accountable for. We touched on this briefly before. The property owner who simply hands off this business is not being accountable for it... neither a management nor a marketing company will ever be fully accountable for your business. It just doesn't make sense does it? I'm not sure any business book or course would ever recommend this "hands off" approach. The problem is that, at some level, whether it is in any practical way, or even subconsciously, it becomes apparent when properties are managed in this way. I can't put my finger on it, but I'll guarantee that on average "hands on" owners achieve better results. I don't think anyone would disagree either.

For example, and as always the devil is in the detail, we want owners to write up their properties. This is not because we are lazy and of course we are here to help and can make sure nothing has been missed. Try to read some property write-ups and see if you can guess those that are written by the owners and those written by someone in the property industry. For sure, the industry guys will win normally on smoothness and use of colourful descriptive words, but does that sell any more? Industry guys write these all the time, and for this reason the descriptions become pretty bland and inane over time. What would you want to see if you were the client? Doesn't a bit of character add value?

The reality is this... If you have bought a property, fallen in love with it, spent time in it, know how lovely it is to have coffee in the kitchen at 10 in the morning and read the papers when the sun shines in that particular window at that time of day... then this is what you will write about. Your passion will show through and be attractive to a client. Am I making sense? The best salespeople are always the ones that are most passionate about their product. Whose product is it and who has the passion?

Even to the point that we prefer you to think through how many sets of cutlery you need and how much bedding. Again, we can help, but your involvement and thought all adds up - everything you will put into this will show through in the end. Your care for the client and your thoughtfulness will result in some special touches that will show up in the marketing and in how you write up your property. I hope you understand what I'm getting at, it's your "buy-in" to the whole process that will evolve into a more personalised product which will develop into more character in the marketing, even into how much you will speak about it to other people... which is just better marketing all round.

The financial bits

Saving the best until last is always good, and our model in this regard is the best for all parties as I'm sure you will agree.

Firstly, setting the price for you property. Again, as you are accountable for your product, we ask you to research the market value. There is plenty of data out there to achieve this and your personal situation is also a factor. We want you to have choice in this. Our website is effectively a marketplace that you have the chance to manipulate as in any market. For example, you can see all the prices of similar properties and naturally so can any potential client. If you wish to set your price to be competitive to a greater or lesser degree, then let us know and we'll change it within 24 hours.

We do not get involved in any rental financial transactions. We want to have the model where the clients contact you directly and negotiate the how to pay and the how much directly with you. We can route enquiries directly to your email address, so that clients contact you and not us. "OK they are being lazy again", I hear you say. Not at all as the reason is simply to give you control, to remove ourselves from handling your money, and giving you peace of mind that we can't do any of the improper things mentioned previously.

So we don't touch your keys and we don't touch your money. What we do is to send you clients. Isn't that the way it should be?

Our fees are annual and we don't charge any commissions on any rental transactions. Other than knowing if a client has sent you an email, we don't even know how many transactions you have done. As our fees will likely be more than covered by your first transaction, you don't have to deal with any agency 20% commissions which you would need to build into your pricing. This means your advertised price is already 20% under most of the market. Priced under the competition, and displayed in front of it!

Summary

I hope what I've been able to achieve in this article here is to tell you the good, the bad and the ugly of the industry. I also hope I've managed to explain some of the problems for both clients and owners and the difficulties that occur as a result of the existing business models. More importantly, I hope I've been able to show you solutions for all of those problems, and in a way that is both creditable and demonstrable.

If there are any questions you have about any of this, please contact us via the contact details of this website and we'll be more than happy to answer. Even, and especially, if you want to challenge any points made. If you are an owner, I also recommend that you read the corresponding article on this site that is geared towards clients - just to get a balanced viewpoint.