Independent Agents a thing of the Past?

[The_Dog]

There is common advice that when choosing a Managing Agent, you should choose an independent organisation that is not affiliated with a real estate chain. The reasons for this are it avoids conflict of interest, but also Property Management is often seen as the poor relation of the far more glamorous sales division and therefore does not attract the staff or business focus of the sales. i.e., property management is often seen as an ‘add on’ to property sales.

Notwithstanding the ‘second rate’ image of property management, I’ve also heard that it’s often the rental side of the business that will pull a RE company through the hard times when there is basically no income from sales.

I mention this because I used to use 2 independent Property Management Companies, and they have both sold out to RE chains, one to Crockers and the other to Ray White. I guess these big companies have the systems, the market momentum, and the advertising budgets to have a ‘presence/reputation’ and get the business. Also, I guess there is cross-over from the sales side and they have business flow from the sales and visa-versa.

Are other people experiencing this? Are Independent Agents a thing of the past? In the same way that Starbucks is drowning the small café, are RE chains whipping out the kiwi battler?

The Dog

[LondonKiwi]

Well my Wgtn based property managers (that were part of a Wgtn based local RE agency) recently sold out to a NZ wide Property Management company that has no other RE Sales arm.

So slightly different in that the new company does not have a RE side to it but similar in that it got devoured by a larger company.

LK

[Glenn]

So what is the big issue about someone selling. Just when has money not been a motivating force in the industry.
Those agencies that have made a killing in the bull run of the last couple of years are no doubt desperate to expand their business or at least empty their coffers.
Have you noticed how few Real Estate firms are major investors in their own name of real estate investments like property.
The two independents that have sold in Christchurch have no doubt done well. The business world is not divided into the good guys and bad guys.
It is divided into successful and could have done better.

[The_Dog]

I have no axe to grind either way. I have moved from two independents, one before takeover and the other one after. Why did I move? Because they weren’t performing. Who did I move to? A management company attached to a RE sales chain.

So, are these companies being taken over because the owners are motivated by money, they have build a company and sold for a handsome profit, or are they being taken over because they are struggling and effectively thrown in the towel?

And, looking forward, are all the takeovers a sign of the times. Are ‘Big Players’ the only ones that will survive in tomorrows market? What can we, as small independent property investors learn from this? Do we need to adapt?

TD

[Fritz]

We run a small private pm company in Taupo and we had it on the market. Highest offer came from RE office wanting to buy our rent roll.

We decided against it and have since restructured and decreased the number of houses over time to suit our lifestyle. We are now turning LL away and only take on more if one drops out. Friends have started a Tokoroa license with our systems.

It certainly is an UNEVEN playing field with REINZ PM being able to charge key money. So it was interesting experience they were obviously after the rent roll not the business itself.

PM definately seems to be regarded as the poor cousin of RE sales when you talk to REINZ offices.

Fritz.

[Glenn]

I have no axe to grind either way. I have moved from two independents, one before takeover and the other one after. Why did I move? Because they weren’t performing. Who did I move to? A management company attached to a RE sales chain.

Well I only know of two that have sold in Christchurch. That was TLC and House of Cameron. With the massive size of TLC portfolio I fail to see how they could have been struggling.
Are we talking about these businesses or not.
I do not know how good their service was but the owners seemed onto it and I have good reports from customers I has sent their way.

[The_Dog]

Are we talking about these businesses or not.

No, we are talking about Interactive and Rental Solutions in Auckland.

[Glenn]

There was one small independent in Nelson with 40 properties that sold recently. Rumour was that the operator was not finding the going easy.
So perhaps there is some sort of encouragement around the country to stamp us out, by buying us out. I doubt the Real Estate industry is that unified to make it a national policy.
A lot of small operators in lots of industries get swallowed up this way. Just look at the commercial cleaning industry to name but one business class.
Buying up small operators can certainly be a very effective way of growing a business.
I would love to find out what sort of multiple of earnings they paid for the rent rolls.
Does anyone have the inside on this sort of data.

[sheree99]

I think there are

many different reasons why pm companies are selling out. In Wgtn Tommjys sold their rent roll becasue they eanted to concentrate on their sales side. It was old to a non mreinz co. Another one also sold their roll again to a non mreinz because of health issues with the owner. Other one man band or small operations are sold becasue the cowner can get a very good price for the roll( which is really the only place the value is) and find it a hard slog to do the work day after day. I do know of one small Pm co where the owner literally hadn't had a holiday in 10 yrs. A good pm is avail 24 hrs and unless the co has good back up many just burn out. Also others may be selling becasuse they realise there is more to being a pm than they realise. Not only is there all the normal things of running a small business but there is the addes responsibility of managing property and it's not as easy. if done well as people imagine. Many people do think it is easy so amny untrained/unqualified people have been jumping on the bandwagon in recent yrs.

[sheree99]

Also many of the larger Pm co that appear to be part of a re company are actually independent co under the samu umbrella or franchise.. take professionals in wgtn itis a spe co from the RE arm as itis with Leader and Bayleys in wgtn and even Crockers in Akld.

[Glenn]

I do know of one small Pm co where the owner literally hadn't had a holiday in 10 yrs.

Are you quoting me.
My holiday in June of 19 days was the longest I had taken in 20 years. But I had fitted in a few one week or slots over the years.
If a PM is one of those types who does not have lots of committments of time, with multitasking and all that they will be useless.
Who needs nice people that go home at 5pm on Friday and come back at 9 am on Monday.
They would be better occupied chopping fish at the factory.