If there is one thing that is likely to stuff up a property investor’s ability to hold the property over the long-term it is poor property management. Because, like most industries, there are good and bad property managers out there, so the key is being to recognise one from the other. The best property managers generally are the ones who consider their job a career rather than a stop-gap job, or a stepping-stone to someday working in sales. And, they’re likely to be working for agencies who recognise that professional property management is the backbone of their businesses, rather than a way for them to make extra money easily.
Now, the rental property sector is highly regulated with different residential tenancies legislation is each state and territory. So, it stands to reason, that you want someone who is at the top of their game because of the potential for it all to go legally pear-shaped.
What do professional property managers actually do?
The property managers you want looking after your property or portfolio will generally offer a range of services before, during, and the after the tenancy. There are some variations from agency to agency, but you really should expect to see most of these in their service offerings.
Before the tenancy
Professional property managers can help with pre-settlement inspections — especially for buyers from interstate — because they are experienced and trained in conducting these and they know what to look for in a local rental property. This is, essentially, an assessment to ascertain whether the property will be in demand from tenants in that area and whether it has all the local must-haves for that location.
This does not replace building inspections, but rather is an additional assessment to ascertain that the property is in the same condition that it was when you bought it as well as whether it will require any further compliance upgrades or the inclusion of such things as ceiling fans or a heater before it is ready to be offered for rent. This should ideally have been discussed at the above pre-purchase inspection.
Top property managers will provide you with their expert rent appraisal for a property, including the research to justify it. This can also be done before you purchase the property, so you actually have real life research into the likely weekly rent — rather than relying on the sometimes, erm … “wobbly” rent appraisals from some sales agents.
Selecting top tenants
Professional property managers have oodles of experience in selecting the top tenants for your property, including conducting reference checks. Even if the rental market is firing, it is vital that the potential tenants for your property have been selected professionally and ethically. Unfortunately, when there is more tenant demand than rental supply, bad property managers often adopt a tick and flick approach which could have serious financial consequences.
During the tenancy
Throughout the tenancy, the best property managers will complete the entry condition in a timely manner and manage the same from your new tenants so there is an official record of the condition of the property at the start of the lease agreement. They will also collect the rent and disburse it to you. If there are any arrears, they will manage that process professionally and take any further action as required.
As it outlined in my book, The Female Investor, professional property managers will also:
– Complete regular property inspections to check on the condition of the property and report back to you.
– Receive and action (with your approval as needed) any requests for repairs from tenants.
– Issue the required entry notices to tenants for any tradespeople that need to attend the property to complete repairs.
– Provide suggestions for the replacement of appliances as required.
– Issue regular rental statements so you have a record of the rent that has been paid.
– Facilitate entry to the property for other inspections allowed under the law, such as a valuer or a sales agent appraising the property.
– Manage the lease renewal process, including any changes to rent as well as recommending whether to offer the current tenants an additional lease term of six or 12 months.
At the end of the tenancy, the exit condition report will be completed, again in a timely manager, so that the bond can be released to the tenants if there are no major issues. If they are, again, they will manage this entire process for you.
How do you find them?
So, now, you should have a solid understanding of what a professional property manager should do for you, but, of course, you need to be able find one to engage them.
Firstly, don’t just sign up to the real estate agency that might be selling the investment property that you purchase because it’s easy. This decision can be fraught with future issues, especially if the agency is more focused on sales than anything else. Do some research — which is easier than ever to do online. Search for local property managers who have excellent reviews and pick up the phone to speak with them. Ask them what services they provide as well as how many properties they manage, because if they are trying to manage too many personally they are unlikely to provide you with optimal service. Some agencies organize themselves by task rather than by rent listing. So various members of staff will conduct different jobs for the tenancy. Which can make it easier and more seamless for the agency when someone’s on holiday or off sick.
Ideally, they should be local to the area where you have purchased your investment property in, so they understand the local market conditions.
If all this due diligence seems like too much effort, you could engage professional buyers agents such as ourselves, because we know and work with the best of the property management bunch around the nation every day of the week.
And finally guys, don’t skimp on paying for a decent property manager please. This is a $500-600-700K asset we’re talking about. You need someone good to look after it, keep it in good working order, if you need to sell it quickly, you need to be charging market value rent and it needs to be looking sharp and well maintained.