After an initial investment of just $6000 in 2001 Rental Express become Queensland’s largest property management business and one of the largest businesses of its type in the country. It is an extraordinary achievement considering that the two owners Chris Rolls and Stephen Sleswick were just 26 and 21 years of age when they started the business and that neither of them had any significant experience in real estate sales or property management.
The Rental Express story is also unique in that rent roll of more than 3000 properties was not built off the back of a massive sales business but as a result of a few strategic acquisitions and a dedicated focus on organic rent roll growth.
The business started on 1 August 2001.
“As you can expect we didn’t get much for our $6000 when we purchased the business, just a bunch of tables and chairs, a fax machine, a computer and the right to be a Harcourts office in Paddington.” says Rolls, “In fact, it was probably the most expensive bunch of tables and chairs ever purchased, but at the same time it was also the best business decision I’ve ever made.”
For the first two or three years Rolls and Sleswick, ran the business like a normal everyday real estate agency, building a small but profitable sales team and learning all about how to sell property.
Like any inner-city market the competition in Paddington, a trendy inner city suburb of Brisbane was fierce, and it took over a year for them to break even.
“We worked hard, often seven days a week, just doing the basics, calling people knocking on doors, doing whatever we could to generate sales.” Says Rolls
The ironic thing is that at first Sleswick and Rolls didn’t even have a property management department. It wasn’t until they moved to a bigger office to accommodate their growing sales team some 12 months down the track that they employed a property manager to build a rent roll.
“At first we weren’t even interested in property management we did what we were encouraged to do by our franchisor which was sell, sell, sell.” Says Rolls.
Rolls believes that the reason so few agents concentrate on property management, is because of the influence of franchise groups who generate all their income from commissions on the sale of property. Most principals do just that, they focus all their time on building huge sales businesses, which are difficult to manage, highly volatile and worth nothing to sell.
It wasn’t until, nearly three years down the track that they realised the error of their ways.
“Once we got about three years into the business, we wanted to fit out a much larger office to house our growing sales team. Somewhere we could fit 40 or 50 people. The problem was, we didn’t have the cash to do it”. Says Rolls.
So like any sales focused real estate business, they decided to sell their rent roll of about 300 properties.
“We got a business broker in who told us our rent roll was worth nearly $1 million. That was when the penny dropped. We realised we had spent all our time, building a sales business when we should have been building a property management business ”
Instead of selling the rent roll, they decided to borrow against it, and fitted out the new office. But instead of going back to their old ways, they employed a sales manager to run the sales business and started focusing more on property management, using a model where they would grow organically, to build equity and then borrow against it to fund small rent roll purchases.
The business quickly grew to 1200 properties under management. In 2006 they made a strategic decision that would shape the future of what was to become Queensland’s largest property management business. Taking a huge leap of faith they sold their sales business, (losing 70% of their total turnover in the process), and rebranded as Rental Express, becoming specialist property managers.
It’s what Rolls calls their tipping point.
“From the day we became Rental Express our entire focus and energy was dedicated to building our rent roll.” He says “I’m not sure if it was because of this focus, because we were specialists in our field, or because we simply had to build rapidly to pay the bills, but from the day we became Rental Express, the business really started to grow.”
Focusing on organic growth, Rental Express recruited a team of business development managers, whose job was to sign up new properties under management. The team operates just like a residential sales team. They are predominately commission based, have goals and targets to achieve, and are well rewarded for good results. Last financial year the team of four business development managers generated nearly 700 new properties under management not including acquisitions, and the business now manages over 3000 properties from 4 offices across South East Queensland.
While it is hard to accurately determine, experts agree that this level of organic growth is amongst the best in the country.
Jason Rose, Rental Express’ operations manager says ” There used to be a perception that you can only build a big rent roll if you have a large sales team, or if you go around buying every rent roll you can find. We’ve proven that through good marketing, good database management, and a well-managed sales team you can build a significant rent roll.”
The interesting thing about the organic growth that Rental Express has achieved, is that nearly all of the leads for the new properties signed up by the business development team, are provided from marketing that Rental Express does.
“The reason most businesses fail to sign up large numbers of properties under management, is that the business development team are left to their own devices to generate leads.” Argues Rolls
By providing their leads to them, Rental Express eliminates the one thing sale people hate doing… Prospecting.
This phenomenal growth rate has made Rolls a sort after speaker at real estate conferences around the country. After seeing Rolls’ presentation on how to grow a rent roll at AREC this year, Bob Walters (renowned property management trainer) called it “the best property management presentation he’d seen in 20 years.”
As a result of demand by others in the industry, Rental Express developed a DVD training package called “Ultimate Rent Roll Growth” and has put together the “Ultimate Rent Roll Growth Challenge” a business coaching challenge, where over 12 months the team at Rental Express train a select group of real estate professionals on how to double their property management business.
Asked why they give their secrets away, Rolls states,
“When you get good at something I think it’s important to teach others in the industry how it’s done. We’ve learnt heaps of ideas off other people, so I guess it’s giving something back, and overall it improves the level of service consumers receive across the board.”
However Rolls is clear that their number one focus is property management, and with a new office having just opened on the Gold Coast and plans for another office in Brisbane early next year, Rental Express looks set to continue their successful run.
BIO:
Rental Express is the largest privately owned residential property management business in Queensland with over $1.5 billion of residential investment property under management across SE Queensland. Each year Rental Express conducts over 9000 property inspections and accommodates around 6000 tenants.
I just opened my property management business in May 2009 and it’s great to hear success stories to keep you focused and inspired.
Hi, its encouraging to hear that a property management business is flourishing. As a home owner in NSW, I would NEVER ever be willing to risk having a property managed by a real estate agent again. Good on ya Qld for obviously doing things right. Best wishes, D