Blog
All things Property Management posted on the 24th June 2014
Why should property Investors look to change their current Property Manager and what to know before selecting a Property Manager.
Owning investment property is an important step in your financial future. Using a Property Manager to manage your investment should help to minimise risk and maximise your returns.
If you choose the right Property Manager it should be utopia, but if you don’t then you could find yourself tracking the performance of your Property Manager rather than the equity and rental gain of your property.
A Property Manager will do more than just collect your rent – they understand the laws and legislation of Real Estate, find and screen suitable tenants, conduct inspections and organise maintenance where required.
A good Property Manager will also provide advice on increasing the value of your investment, ensure any disputes with tenants are dealt with quickly and efficiently, and provide a very high quality service which removes the stress for you. They will regularly review your rent return, have access to comparable rentals and negotiate appropriate increases, while minimising vacancy periods.
Most importantly, a good Property Manager will assist you to preserve the condition of your property, increase its value and maximise income – that’s ultimately why you are investing in property in the first place!
Property Managers aren’t all the same. Some are super-efficient, they scrutinise every potential tenant and have their finger on the pulse of every property. Others however are a little lazy. They become complacent often ‘skipping’ regular property inspections and they don’t follow up on documents. How often do I hear, ‘I mailed the lease but the tenant didn’t bring it back’. Not good enough!!. This type of Property Manager often costs investors a percentage of the weekly rent, but over the long term can cost a whole lot more …
The long-term costs of a lazy Property Manager can add up. For starters there’s the emergency maintenance, when early detection could’ve meant preventative maintenance, a whole lot cheaper.
To avoid emergency maintenance, routine inspections should be conducted every three or four months, and owners should receive a full written and photographic report on the dwelling condition.
With tenants it’s not just about paying rent on time, it’s also about maintaining the property to an acceptable standard. This is why routine inspections are crucial. Tenant reference checks with previous Property Managers from the start are important however the definition of ‘acceptable standard’ can vary enormously from one Property Manager to the next. It’s the routine inspections that will provide the real picture.
Then there’s the issue of a good tenant, who is diligently providing feedback to the Property Manager on any dwelling issues starting to rear their ugly heads, for example, a ceiling crack – yet that feedback is being ignored or filed in the ‘let’s not bother the landlord’ drawer.
Often owners don’t even receive this tenant feedback from the Property Manager. A good Property Manager should communicate this feedback to landlords, along with ways to improve the property to maximise capital growth potential and premium returns. This is what we do for landlords as part of our ongoing duty of care.
Our own personal experience gives us the experience and the tools to advise and discuss with our landlords ways to potentially add value, to ensure the property continues to target the ideal rental market, and also improve the equity position when the property is revalued.
Almost daily we are asked by property investors to help them with purchasing either their first or another investment property. If you are keen to find an investment property just ask us how.
We recently assisted some interstate investors to take control of their investment property. For 10 years a large local and well respected agency had managed their property. But after calling and once again being asked whether they were the tenant, a prospective tenant or an owner they had had enough. 10 years of putting up with this ‘you’re just a number mentality’.
These people had relied on their Property Manager to look after the property and to report back with routine inspection reports.
Upon undertaking the client’s portfolio review, we inspected the property and found it to be severely rundown compared to its condition at purchase.
To bring the property back to the original ‘as purchased’ condition, the owner would need to spend $20,000, and this spend wouldn’t be increasing the overall value of the home but just bringing it back to an acceptable standard.
The owner was shocked that his Property Manager, a business and a person he entrusted with his property, would let it fall into such a state of disrepair.
The owner told us that he’s not unreasonable when it comes to property maintenance. He understands that there are upkeep costs. If he was only told about any issues then he could’ve undertaken preventative maintenance and not be left with a lump sum bill of $20,000 to just repair what was the result of the Property Manager’s mismanagement.
So now I’m sure you understand the importance of a good Property Manager for your investment properties. A well-maintained property doesn’t just help attract a better class of tenant, but when it comes time to revalue your property, the valuer can see a clean, tidy home that compares positively with other properties in the area. This will ultimately achieve you the best possible value.