'Exciting news' from my PM. What do you think?

Has anyone ever received a letter from their Property Manager with 'exciting news'??

"We are writing to you to let you know of some exciting news for you as an owner. We have been approached by another agent with the opportunity to have them manage your home.

After careful consideration we have agreed to their offer and plan to appoint them as your managing agent based on the following factors:
- Are a local agency and the 2 directors boast a combined 45yrs experience within the real estate agency
- Senior property managers with over 20yrs of combined experience
- A local office presence increasing convenience to your tenant and an unsurpassed knowledge of the local market.

Enclosed with this letter, you will find new paperwork that you will need to sign. Please be assured that all fees are identical to what your are currently paying and the managing agency agreement contained within reflects that.

If you could please sign but not date the enclosed paperwork where indicated and please return in the envelope provided within 7 days. You will then receive a dated/signed copy from the other agent.

We will do everything possible to ensure this change over is a smooth transition for yourself and your tenant and believe that this is the best outcome for you and your investment.

Please feel free to contact me should you have any queries.

Assuring you of our best intentions at all times."

I thought we, as investors, choose our own PM's.. not another agency chooses for us..

The current PM is out of area.. but i have been with them for 3 years. They are suggesting one within area to my property. I personally thought this letter was quite disgusting. I had no phone call warning me about this.. just this letter. I feel this is a little gutless of them. Anyone else ever experienced this?

So, by the looks of things, i either go with who they have suggested or start looking for good PM's around Penrith area. Any suggestions?

 

You're free to not sign with the recommended agents and find your own, just as the current agent has the right to sell their rent roll (happens all the time).

 

Really? They sell their rent roll? I've never heard of that. What exactly happens?

 

Rent rolls are commonly bought and sold, similarly to mortgage broker books and accountant client lists.

They're an asset that banks are willing to lend high LVR on, just like houses, because there's ongoing revenue that continues long term.

The email youve got is because the agent has already sold their rent roll. This might be because they're retiring or moving areas or whatever the case may be.

A rent roll is valued at a multiple to the expected revenue it has. There's usually clauses in the purchase contract that allow for a certain number of clients to not continue on with the new (purchasing) agency, ie purchase price might be rebated by an amount equivalent to the value of the clients who don't continue on.

 

Rent rolls are indeed a sale-able commodity and tend to have a clawback clause indicating that the purchaser ultimately pays less if landlords on the rent roll leave within a certain period of time of the sale.

 

So business' looking to purchase rent rolls are generally either new or struggling business' looking to increase their client base?

 

No I don't think you can make that generalisation. Buyers of rent rolls (typically at multiples of 2.5 -3 ) can be owners of a large rent roll looking to get larger, for example.

 

Rent rolls run into the hundreds and hundreds of thousands of dollars. Not for a startup or struggling agency. They are bought by strong profitable agencies to expand their revenue. It is much cheaper to acquire clients than to actively solicit them.

 

Yep they do this & yep, it can end up a mess, or much better, look into who is taking it over and decide if you want to go with them or go elsewhere.

 

Nah - could also be a larger company buying out a smaller one.

Cheers

Jamie

 

Time to review your decision to use a pm.

• Why did you choose the current pm?
• Were you happy with them?
• Did you interview the proposed agency? (Why didn't you go with them?)
• Will you interview the proposed pm to determine if they are a 'fit' to your business?
• Will you interview other agencies as to taking the management?

 

We use Jim Aitkins out there. No real complaints, the girls get on with it.

 

Sure.

While I'm at it I'll send you a cheque with the amount blank and you can fill it in.

 

The issue with not dating the paperwork is that the agent has to countersign and serve the MAA back on the LL within 48 hours of the LL signing and dating or it is not a valid agreement under the Act.

 

Not my problem.

Are there non-compete clauses in rent roll sales?

 

Yes, and also rollback clauses if the new properties don't stay for X amount of time. It pays to read your management contract!

I recently had a potential client whose agency was selling up their rent roll, they chose to come to me instead of going onto the new agency, but because of wording in the contract they had to go over to the new agency for 3 months first.

 

I'm also transitioning to another PM company due a rent roll acquisition. The confidentiality around such business transactions is similar to the corporate world and is generally based on a need to know basis. It would cause uncertainty around customers if they were notified before the deal was struck which would likely cause customers to leave.

I'm not sure how much time you were provided as I felt I was provided sufficient notice with about a month before the transfer. So I could choose to sign a new management authority or have about a month to find a new PM. They also handled the communications well with regular but not overbearing emails and also my current PM will be transferring across to the new company.

Whilst a phone call would be nice, if they have sold a rent roll of 200 properties with about 150 landlords to contact. A 10 minute explanation call would take about 25 hours. That is significant additional workload to the usual business responsibilities. What I expect is a response to my call/email if there are concerns, which was provided.

They were a little sneaky with the new management authority as I originally had a clause which allowed termination at any time and this was not put in the new contract. I usually also only sign for a year and they defaulted to three years. There were also some additional charges which were not in my original contract, though they agreed to have these removed.

We shall see how it all pans out as the transition date is still to come.

 

The new owners could be exceptional - you don' know. I'd let them know in writing i was happy to assign the management agreement but at the reduced management rate of .x , and ask them if they still wanted you to sign.

 

this letter is really self serving .

if you choose another PM , your original realest cant sell your part of the rent roll , prolly $1700
give them some exciting news and tell them to FO

 

Hi Kimba,
I think they are selling your goodwill for a fee, to someone else, who you don't know.
I would be asking a few questions like :
Why is this good for me?
are this new crowd any good?
How long have they been in business?
What is there staff retention like?
What are their / your service expectations?
How much training and experience do their staff get?

Do you know anyone who uses the new crowd?
I hope this helps!