The Upshot Podcast – Episode 5: Donna Cross

Episode 5

Host: Ben Williams, Head of Investor Relations at Homely
Guest: Donna Cross, GM Property Management, McGrath Geelong

Homely is proud to welcome Donna Cross from McGrath to the Upshot Pod. A big supporter of Homely, Donna’s career has been extensive, with over 20 years in the industry generating an outstanding reputation for customer service and positive leadership. Passionate about the Geelong regional vibe, multi award winning Donna is highly respected in her field. A supporter of local charities and community events she is passionate about giving back to the local area to make a positive difference. The Upshot is proud and grateful to Donna for giving us her time. 

Ben:

Thank you all for joining us on the fifth edition of the Upshot podcast presented by Homely. Today, we have the privilege of interviewing Donna Cross from McGraw in Geelong, a renowned figure in the property management field. Despite her background in media advertising sales, Donna has built an incredibly successful team in Geelong. We’re excited to discuss the rental market with her, considering the current challenges and her career milestones. Welcome to the program, Donna.

Donna’s take on property news

The rental market is a hot top – what’s your take on the current situation?

Ben: We’re thrilled to have you. Let’s delve into the hot topic of the rental market. Usually, we start with property news, but this time, we’re interested in hearing your insights on the rental side. What’s happening out there?

Donna: Sure, so it’s important to note that the rental market varies across states and regions. It’s a dynamic landscape that can change within weeks or even monthly. As we  enter the winter cycle, we have observed a decline in interest from potential renters. Open for inspections have fewer attendees, resulting in fewer applications. This can be attributed to individuals choosing to stay in their current properties due to concerns about moving costs, potential rent increases, or uncertainties about securing a new property in the market. It’s a complex situation, especially considering media reports highlighting an abundance of renters and a shortage of available properties. This poses a challenge for us in terms of educating and guiding our rental providers.

Donna: It’s a challenging environment that requires careful navigation and communication with our clients, the rental providers.

The news is all ‘doom and gloom’ – what’s your take on the headlines we’re seeing?

Ben: It seems like every time I tune into the news, it’s filled with doom and gloom. I’m starting to think I should stop watching it altogether. However, it’s currently making headlines, particularly with segments featuring individuals who struggle to find suitable rentals despite submitting numerous applications. But from what you’re saying, the reality on the ground seems to be a bit different.

Donna: Absolutely.  In our agency, we prioritise finding the ideal renter for our rental providers. Selecting the right tenant is crucial for everyone involved. Individuals with a poor rental history often face challenges in securing a property. The media tends to interview individuals in those situations, some of whom have faced hardships or have compelling stories. However, when assessing applications, our main focus is to ensure we secure the best possible renters for our clients, the rental providers.

What makes a great renter?

Ben: In that case, in your opinion, what qualities make a great renter?

Donna: Well there are key criteria that we consider when identifying a great renter. Firstly, they consistently pay their rent on time. They maintain the property in a neat and tidy condition during routine inspections. They are easy to communicate and work with, displaying excellent communication skills. A good rental history with positive feedback from previous rental providers is also crucial. Even if there have been occasional issues, such as late rent payments due to unforeseen circumstances, they have been proactive in communicating and resolving those situations. We understand that not everyone can be perfect, and circumstances can change. Therefore, our ideal renters are those who demonstrate open communication and a willingness to address any issues that may arise.

Ben: Absolutely. I completely agree. It’s much better for tenants to communicate upfront if they anticipate any issues with rent payments rather than avoiding contact and leaving the property manager in the dark. Open communication is key in such situations.

Donna: Absolutely. It’s a recommendation we always make.

There’s been some changes to legislation. How are you adapting?

Ben: Absolutely. Now, let’s touch on the changes to legislation. Now we don’t want to make this a political discussion, but how have you been adapting to the legislative changes over the past couple of years?

Donna: Well, there are two aspects to consider. I’ll start with the challenges and end on a positive note. Firstly, the timing of the new legislation coming in after the moratorium and the COVID situation was far from ideal for agencies, property managers, and the overall market. The moratorium prevented rent increases and eviction of non-paying tenants. Introducing new legislation with unexpected costs for rental providers and investors, coupled with the stress and financial impact of the pandemic, created a highly challenging environment for my agency. We had to navigate the process of learning and understanding the legislation ourselves, while also educating rental providers and tenants who often had limited and inaccurate information from the media. This resulted in the loss of several property managers due to the increased workload and burnout. 

Short-staffing and overloaded teams further compounded these difficulties. However, on the positive side, the legislation itself is incredibly comprehensive and provides clear boundaries. This clarity allows us to provide accurate advice to rental providers, enabling them to understand their obligations. Property managers can confidently communicate these requirements, emphasising that they are not just personal opinions but legal obligations that must be fulfilled for the property to be rented. This has been beneficial for my team and me. While I may not be naturally inclined towards a strict black-and-white approach, having clear processes in place is fantastic, especially when it comes to ensuring property safety and the well-being of tenants. It also alleviates the moral burden on property managers who previously struggled when rental providers refused to comply with necessary regulations, often leading to the loss of valuable team members within the industry.

Ben: That’s so true. The legislation has indeed led to rental properties being brought up to higher standards, particularly in terms of safety checks for gas and electricity. On the other hand, one aspect that has been somewhat perplexing to me is the increase in VCAT cases following the moratorium. It seems that now, under the legislation, almost everything requires going through VCAT, leading to a backlog of cases that may take years to clear. It’s a situation we have to accept and navigate through.

Donna: Absolutely, initially, it weighed heavily on me as the business owner, responsible for meeting the needs of rental providers and ensuring timely compensations. Many rental providers genuinely needed that money. However, as I familiarised myself with the process and understood that it’s how the system operates, I shifted my focus to teaching my team about negotiation. We guide rental providers in making informed decisions that align with their financial interests within the bounds of the legislation. It’s important for rental providers to experience firsthand that these decisions are driven by legal requirements, rather than being arbitrary agency recommendations. As a result, they are starting to grasp the significance and impact of the legislation. Instead of waiting for a hearing in six weeks for a $400 compensation claim, which may ultimately result in a lower amount due to depreciation, it’s often more practical to move forward and seek alternative solutions.

How did you navigate your way through uncertainty and obstacles to your current position?

Ben: I appreciate your willingness to share your career journey with us. It’s always interesting to hear how professionals progress in their field. Could you provide us with a brief overview of your career leading up to your current role as a successful business owner?

Donna: Certainly, I’ll try to keep it concise. Before entering the real estate industry, I worked as an advertising representative and also had writing engagements for various publications. My husband, a close friend, and business partner had the opportunity to buy into a Ray White business, which eventually became McGrath. I had the idea of working three days a week, believing it would be manageable given my previous sales and team leadership experience. However, I soon realised that real estate was a demanding profession centred around relationships and community engagement. It was a highly personal field where you become familiar with almost everyone you work with. So, the notion of working only three days a week quickly proved unrealistic.

Initially, I took on the role of a new client consultant, responsible for bringing in new business. Surprisingly, I excelled in this role, likely due to my authenticity and commitment to seeking expert advice when faced with unfamiliar topics. I developed strong product knowledge and focused on selling our team and services, as opposed to managing every aspect of property management. 

As our client base grew rapidly, we faced challenges in maintaining quality and timeliness, with no established KPIs or accountability measures. Recognizing the need for structure and accountability, I tried to address these concerns. However, this decision was met with resistance from some team members who questioned my authority and experience. Unfortunately, setting KPIs resulted in the departure of 14 team members, despite the fact that I was not directly involved in property management. This experience was undoubtedly challenging and impactful.

Donna: During that challenging period, I took it upon myself to learn all the tasks involved in property management, including conducting routine inspections and preparing condition reports. At that time, the requirements were not as stringent as they are now, so it was relatively easier for me to grasp those aspects. I then hired individuals to join the team, although I lacked experience in HR and hiring. I mainly relied on personal likability rather than assessing their suitability for the specific role. This resulted in hiring some individuals who were not the right fit, and I had to navigate the difficult process of letting them go or managing them out of the business. However, as I gained more confidence and experience, I attracted better-suited individuals to join the team.

Additionally, my strong community relationships, particularly through my work with the local newspaper, played a significant role in attracting clients and expanding the business. Over time, I learned to surround myself with talented people who possessed the skills I lacked, enabling us to provide comprehensive training and support to the team. Through this continuous growth and evolution, we have reached the successful position we are in today, and I am grateful for the incredible individuals who have been part of this journey.

In terms of things outside of real estate, what are your passions in life?

Donna: As a business owner in real estate, it’s hard to separate real estate from my life because it revolves around relationships with everyone involved. However, I have had the privilege of working with some amazing people and organizations outside of real estate. One example is Geelong Mums, a local organization that I have collaborated with on projects aligned with their mission. They have been incredibly generous and inspiring to work with. Additionally, being part of the Geelong Young Professionals group has allowed me to connect with a fantastic community of individuals who inspire me. I also mentioned earlier that my family is fortunate to have friends whose parents are also inspirational, and we often attend events together. Overall, real estate, my family, and my team are the main focus of my life, and it’s all interconnected.

How did you build your team? How do you structure your team?

Ben: How do you build out your team and just give us a bit of a rundown on, I guess, how you structure things?

Donna: When it comes to building my team, there are different qualities I look for depending on the role and the stage of growth. When I’m in a growth phase and have an opportunity to bring in new team members, I prioritize qualities such as genuine care, good communication skills, and the ability to articulate their thoughts and stories effectively. I want individuals who can connect with rental providers and tenants, genuinely care about resolving issues, and quickly adapt to the tasks involved in property management. Enthusiasm is also important in handling the challenges that come with taking on a significant number of new listings each month.

For senior property manager positions, problem-solving skills and critical thinking abilities are key qualities I seek. I want someone who can handle escalations and find solutions independently, allowing me to focus on other aspects of the business. Having team members who are proactive, goal-oriented, and capable of taking ownership of their responsibilities is essential to support the growth and ambitions of the business.

Overall, finding individuals who align with our values, have the necessary skills for the role, and can contribute positively to the team dynamic is crucial when building and structuring our property management team.

How are you finding things with the changes to the legislation over the last couple of years?

Ben: Absolutely. Now, we spoke off air about the changes to the legislation, and I promised I wasn’t going to make this a political conversation, but how are you finding things with the changes to the legislation over the last couple of years?

Donna: Absolutely, the legislative changes brought about a significant increase in workload for property managers. While I didn’t specifically quantify it as a percentage, I can say that it was a substantial amount of additional work. It required building new structures, processes, and ensuring compliance with the changes. Personally, I was in survival mode, driven to make it happen and create the necessary energy around it.

I didn’t have the luxury to analyse the exact percentage increase in workload. Instead, I focused on taking action, implementing necessary changes, and ensuring the team was equipped to handle the new requirements. We worked long hours, constantly thinking and planning, and pushing ourselves to meet the deadlines and comply with the new legislation.

However, there were challenges. The compliance teams and some other industry players weren’t adequately prepared or had the necessary infrastructure in place to smoothly transition to the new requirements. This lack of readiness and support caused additional stress and frustration. As property managers, we strive for professionalism and efficiency, and when external factors impede that, it can be incredibly stressful.

So, while I can’t put an exact percentage on the increased workload, I can attest to the significant impact it had on property management teams and the need for proper support and infrastructure during times of legislative changes.

What is the grief cycle and how has it been a part of your life?

Ben: Now we spoke a little bit about grief cycles in the market. Now, are you able to give me an understanding of what you mean by the grief cycle?

Donna: Certainly! When I refer to the grief cycle, I’m generally talking about the emotional stages that people go through when dealing with a challenging or difficult situation. This  concept is often applied to various aspects, including the market or teams.

In the context of the market, the grief cycle refers to the emotional reactions and stages that individuals experience during market downturns or fluctuations. These stages can include denial, anger, bargaining, depression, and acceptance. People may initially deny or resist the reality of the market situation, then feel angry or frustrated about the impact on their investments or businesses. They may attempt to negotiate or bargain for better outcomes, and eventually experience a period of sadness or depression. Finally, individuals reach a stage of acceptance where they acknowledge the market conditions and adapt their strategies accordingly.

Similarly, in the context of teams, the grief cycle can apply to how team members react and adapt to significant changes or challenges within their work environment. It’s important to recognise and support individuals as they navigate these stages, providing understanding and guidance to help them move towards acceptance and productive action.

Understanding the grief cycle can help leaders and teams better manage the emotional aspects of challenging situations and facilitate the process of adaptation and resilience.

Donna: But basically, the transition didn’t go across as I hoped. So there was a lot of work in the back end. They had to learn a new system and adapt to its features and functionalities. It was extra work for them, on top of their usual workload. And they were working with a system they didn’t know well, which added to the frustration.

That’s where the grief cycle started. The first stage was disbelief. Some of the team members were in denial and didn’t want to accept the change. Then came the stage of anger. They were frustrated with the extra workload and the challenges they faced with the new system. They directed their anger towards me as the business owner, feeling like I had misled them or not adequately prepared them for the transition.

After anger, there was a realisation that they had to go through with it. They couldn’t avoid it, so they reluctantly started adapting and doing the necessary work. And finally, there was acceptance. Over time, as they became more familiar with the new system and its benefits, they started to appreciate it and see its value. The initial resistance and frustration turned into a recognition that this change was actually beneficial for them and the business.

But that grief cycle took time, over a year in our case. It’s not a quick process, especially for property managers who are already juggling a demanding workload. The culture within the team was strained during that period, and it was challenging for me as a business owner to navigate through it. However, we eventually reached a point of stability and embraced the new system.

The grief cycle can manifest in various situations, not just with software transitions. It can occur during market fluctuations, team restructuring, or any significant changes that affect the dynamics of the business. Recognising the stages of the grief cycle and supporting the team through it is crucial for maintaining a positive work environment and ensuring successful adaptation to change.

People don’t like change, find it hard to adapt. It’s all about a positive work environment.

Ben: Not many people like change. I mean, it would happen in anything, right? So, you know, if you start changing things up and it feels too different…

Donna: Exactly, Ben. Change is not easy for most people. It can create resistance and discomfort, especially when it disrupts established routines and processes. Looking back, I realised the importance of thorough preparation and communication when implementing significant changes. Asking questions, gathering information, and addressing potential pain points beforehand can make a significant difference in how the team responds.

In the case of the software transition, I would have taken a different approach. Instead of immediately switching to the new system, I would have kept the team on the old system (rest) and designated a champion or a highly efficient team member to work with the new system and identify any challenges or areas for improvement. This would have allowed us to gather valuable insights and create a smoother transition plan.

By learning from this experience, I now prioritize gathering information, preparing the team, and managing their expectations during periods of change. While there may still be some pain points along the way, having a clear strategy and involving the team in the decision-making process can minimize resistance and foster a more positive transition.

Change is inevitable in any business, but it’s essential to approach it with careful consideration and open communication to ensure a smoother journey and maintain a positive team culture.

Losing clients is expected when businesses make changes. How do you manage that?

Ben: And so did you lose many clients off the back of this change? Was that, I guess that’s the most important side. Did they, were they unhappy with it? Was there problems on that front?

Donna: It’s an interesting question, Ben, and honestly, I hadn’t thought about it in those terms before. Surprisingly, we didn’t lose many clients directly because of the software change. However, there were challenges and frustrations that some clients experienced, especially those who were accustomed to the old system and had their statements organised in physical folders.

The ledgers in the new software, PropertyMe, were different from what they were used to in rest, which created difficulties for some of our rental providers. It took a lot of effort to explain the changes and work closely with them to adapt to the new system. Additionally, there were challenges with links that expired after a certain period, which affected clients who preferred to print and file documents.

While I can’t say for certain if we lost any clients due to the software change, there were likely some who left without explicitly stating that it was the reason. Some may have used reasons like renovating or selling their properties as a way to exit the service. It’s important to recognize that different clients have different values and preferences. While I thought they would appreciate having a portal to access their information, some clients simply saw it as our responsibility to handle those matters.

Overall, the transition to the new software was challenging, but it didn’t result in a significant loss of clients. It highlighted the importance of understanding and addressing individual client needs during times of change and being proactive in managing their concerns and frustrations.

Do you have any regrets from your career so far?

Ben: The next question from my end, are there any business decisions that you regret making over your journey?

Donna: When I look back on my journey, I wouldn’t say I have regrets, but there are definitely business decisions that I consider mistakes and have learned from. One decision that stands out is attending a seminar where an impressive speaker shared their experiences as a business owner. However, they lacked the perspective of a general manager of property management or a property manager themselves.

Based on their presentation, I made the decision to switch to a software solution before PropertyMe was available. It turned out to be an excruciating experience for both my team and clients. One of our clients, who is also a close friend, had 60 properties with us and was bombarded with an overwhelming number of texts and emails. I had no idea about the extent of the impact on our end users. During a dinner conversation, he expressed his respect for me and the business but requested to be taken off the software. He couldn’t handle the constant influx of messages.

Realising the negative consequences and lack of customization, I understood the mistake I had made. It was a rookie’s mistake, and I felt embarrassed by the impact it had on our clients. Although I don’t regret the experience because it taught me valuable lessons, I do regret the negative impact it had on my clients’ experience.

This mistake highlighted the importance of thoroughly understanding the impact of decisions on end users and the need for effective communication and feedback loops with clients. It was a valuable lesson that has shaped my approach to making business decisions and considering the impact on all stakeholders involved.

AI is really shaking things up. How do you feel about it?

Ben: It’ll be very interesting to see what happens in that space anyway over the next few years in terms of the AI space.

Donna: I completely agree with your perspective on automation. It can often cause more problems than benefits, especially when it doesn’t consider the individual client’s preferences and needs. AI and automation may work well for a certain percentage of your portfolio, but it may not be suitable or preferred by the other portion of clients. The AI space is evolving, and it will be interesting to see how it develops and adapts to meet the diverse needs of clients in the coming years.

In our region, which is more relationship-oriented, personal contact and communication are highly valued. Clients want to be able to call us or receive personalised emails. Automation is necessary to some extent, especially for businesses managing a large number of properties like ours with close to 1300 properties. Without automation, running the business would be cost-prohibitive. However, in our regional context, building and maintaining relationships are crucial.

When it comes to AI, what excites me is how it can help us streamline processes and handle tasks more efficiently. For example, using AI chatbots can assist my team in responding to certain types of complaints by providing suggested responses that they can then personalise. It becomes an extension of my own approach and care for our clients. This is particularly valuable when it comes to bridging the communication gap between younger team members who may struggle to connect with older clients. AI can help them communicate effectively and in a language that resonates with different age groups. So, while automation has its drawbacks, I see the potential of AI in enhancing communication and providing more efficient support while still maintaining a personal touch.

It’s crucial to find the right balance between automation and personalised service to meet the diverse needs of clients and ensure that relationships are not lost in the process.

Tenants and property owners both need to know their rights and responsibilities. 

Donna: For investors or landlords, my advice would be to prioritise the following:

1. Presentation: Ensure your property is well-presented and maintained. First impressions matter, so make sure it stands out positively to potential tenants.
2. Competitive Pricing: Research the market and set a competitive rental price for your property. Pricing it too high may deter potential tenants, while pricing it too low may raise concerns about the property’s condition.
3. Prompt Responsiveness: Be responsive to inquiries and applications from potential tenants. Timely communication shows professionalism and can give you an edge over other landlords.
4. Thorough Screening: Conduct a thorough screening process for potential tenants, including background and credit checks, employment verification, and references. This helps to ensure you select reliable and responsible tenants.
5. Clear Communication: Clearly communicate your expectations and requirements to potential tenants, such as rental terms, lease agreement details, and any specific rules or regulations.

For tenants looking to secure a rental property, here are some tips:

1. Be Prepared: Have all the necessary documentation and information ready before applying for a property. This may include identification, proof of income, references, and rental history.
2. Submit a Complete Application: Fill out the rental application accurately and provide all the requested information. Incomplete applications may be overlooked or delayed.
3. Be Professional and Polite: Present yourself professionally when interacting with property managers or landlords. Be polite, respectful, and demonstrate your interest in the property.
4. Follow Up: If you have submitted an application, consider following up with the property manager or landlord to express your continued interest and inquire about the application process.
5. Maintain a Good Rental History: A positive rental history, including timely rent payments and good relationships with previous landlords, can enhance your chances of securing a rental property.

Remember, the rental market can be competitive, so it’s important to present yourself as a responsible and reliable tenant while meeting the expectations of landlords or property managers.

In these uncertain times, what should every renter and rental provider be aware of?

Ben: What piece of advice would you give to renters and rental providers?

Donna: For renters, my advice is to make sure your rental application is fully complete and includes all the necessary information. Go above and beyond by providing additional details about yourself, your family, and even your pets. Personalising your application can create a connection with the rental provider and increase your chances of being chosen. Also, ensure that you submit all required documentation promptly to avoid any delays in the process.

As for rental providers, I recommend contacting me for a comprehensive 15-question list that you can ask any agency. These questions will help you make an informed decision when choosing an agency to work with. It’s important to find an agency that aligns with your needs and provides excellent service and support for your rental property.