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Choosing the Right Property Manager
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It’s Not Just About Price!
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You did it. You trusted the process, you followed all the steps, and you've reached the point in your property development journey when you can start holding one or more properties for ongoing income.
Which gives you a new challenge - finding a great property manager!
Most real estate agencies nowadays have a property management division. That's hardly surprising, as the rent roll provides a steady flow of income to smooth out the hills and valleys of sales income for an agency. It's tempting to just hand the property management of your property over to the agency you bought the property through, or the one you used for selling other dwellings in your development.
But that could be a big mistake….
Which gives you a new challenge - finding a great property manager!
Most real estate agencies nowadays have a property management division. That's hardly surprising, as the rent roll provides a steady flow of income to smooth out the hills and valleys of sales income for an agency. It's tempting to just hand the property management of your property over to the agency you bought the property through, or the one you used for selling other dwellings in your development.
But that could be a big mistake….
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Within most agencies, sales and property management are quite separate, and therefore there's no guarantee the property management operations are good. It's tempting to just ask what the management fee is (% of the Gross Rental collected plus GST) and if it sounds okay, go ahead.
But when it comes to choosing a great property manager, you need to look at a whole lot more than just the management fee. In fact, many agencies know that landlords compare rates and not much else, and so deliberately charge a lower management fee, and then line up a bunch of other fees to charge. This can seriously impact your returns when you add them all together.
But when it comes to choosing a great property manager, you need to look at a whole lot more than just the management fee. In fact, many agencies know that landlords compare rates and not much else, and so deliberately charge a lower management fee, and then line up a bunch of other fees to charge. This can seriously impact your returns when you add them all together.
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For example, have you come across any of these fees before?
And the list goes on!
Which is why it's crucial to spend time sitting down with a prospective property manager and having a chat about their services. Ideally they will give you an information pack which outlines any fees that may be applied to your account as a landlord. If not, then ask about some of the more common ones listed above - and that list is definitely not exhaustive!
- Administration/Monthly Technology Fees
- Letting Fee (new tenancy)
- Re-letting fee (repeat tenancy)
- Statement fees
- Advertising fees
- Photography Costs
- Inspection fees
- Repairs and Maintenance fees
- Court attendance fee
- Valuer attendance fee
And the list goes on!
Which is why it's crucial to spend time sitting down with a prospective property manager and having a chat about their services. Ideally they will give you an information pack which outlines any fees that may be applied to your account as a landlord. If not, then ask about some of the more common ones listed above - and that list is definitely not exhaustive!
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During your meeting, it's also important to get a feel for whether or not you'd be comfortable working with the property manager when problems arise. Reality for most landlords is they don't hear a lot from property managers apart from regular updates and perhaps some contact around the time a lease ends. But if there is a major issue, which may result in something like a court visit, then it's vital you feel confident both in the property manager's ability to handle it well, and their ability to communicate positively with you throughout the process.
Also, be ready with a list of questions that are service related. Here are a few that I consider should be at the top of that list:
Also, be ready with a list of questions that are service related. Here are a few that I consider should be at the top of that list:
- How many years of experience do they have?
- How many properties do they manage personally?
- Do they pay regular bills for you?
- If they pay bills, do they manage it in a way that manages your cashflow as well, so you don't get big gaps in income?
- Do they have a portal you can login to and view rent received and invoices paid?
- How often and when do they disburse rent to you as a landlord?
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Once you’re close to a top 2 list of property managers you’re interested to work with, then move on to questions which determine how hard they're going to work to maximise your investment, to help you make your final decisions:
The bottom line is, you're the client, and the property manager is working for you. Having a good working relationship is key to ensuring you get the best results from your investment. So take the time to do your research. Interview at least 4 or 5 potential property managers, and get a feel for which one you believe will provide the best service. If you know people who are renting in the area, ask them about their experiences with their property manager - both landlords and tenants.
Most of all, don't make the mistake of choosing a property manager solely on the management fee they charge.
...In the words of the great Warren Buffet: "Price is what you pay... value is what you get."
- What strategies do they use to maximise rent for the first lease?
- Where do they advertise?
- How do they minimise vacancy?
- What is their process for handling arrears?
- What training have their property managers received?
The bottom line is, you're the client, and the property manager is working for you. Having a good working relationship is key to ensuring you get the best results from your investment. So take the time to do your research. Interview at least 4 or 5 potential property managers, and get a feel for which one you believe will provide the best service. If you know people who are renting in the area, ask them about their experiences with their property manager - both landlords and tenants.
Most of all, don't make the mistake of choosing a property manager solely on the management fee they charge.
...In the words of the great Warren Buffet: "Price is what you pay... value is what you get."
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