If you are someone who already holds a property portfolio as an investment or are landlords or owners who want to get the most of their Property Manager, here are my top tips on what to look out for based on my ten years’ experience as a Property Manager.
Do some research
You need to be able to work with someone that you trust. As with everything in business, shop around and speak to more than one agent operating in the area where your property is based. If you are not sure where to start, visit the REIV website to review details of registered members and agents who are compliant. Talk to business colleagues and get recommendations from them and review local newspapers or business networks for names of agents you can contact. A good Property Manager will be happy to let you have a list of all the services they offer, a schedule of fees, share client details for testimonials and demonstrate experience in the field of property management. Also, the key ingredient is to know and be able to work with the property manager and not the listing/sales agent or Business Development Manager. If they are not offering a transparent service and shy away from discussing any of the above, then move on.
Qualities of a great Property Manager
When looking for a Property Manager, you’re looking to receive the best support to your investment. This is why it is imperative to find someone who is experienced, qualified and committed in helping you every step of the way. Communication with your Property Manager will also play a major role in ensuring you receive the highest possible rental return on your property. Not only would they need to deliver tenant satisfaction and collect rent on time, they will also have to deal with any unexpected issues and keep you informed as well. Most times you will not be anywhere near your property, so you will need to put your faith and trust in your Property Manager.
The right Property Manager will help you save time and earn more, by providing expert guidance and prioritising your investment property above all else. Remember to find a dedicated agent who won’t avoid your emails or phone calls, is efficient and professional in carrying out their responsibilities, and will work tirelessly to maximise your property’s profitability so you can reap the rewards.
Once you have chosen your Property Manager then the next step is to ensure there is a proper contract in place. Avoid the “gentleman’s agreement” because a professional agent will want to have everything in place, be upfront and transparent about what they are going to take responsibility for. They should discuss with you exclusive leasing or managing authority or both, this is a legally binding document signed by both of you. An experienced and trustworthy Property Manager may also include an ‘instruction form,’ as part of the agreement, stating what they will be required to do. Once signed, it means you are allowing your property agent to find a tenant and manage the property on your behalf. What you do need to know is that once your property has been let to someone, it does not mean you are exclusively tied to that agent.
In this day and age, tenancy laws have become quite intricate, so it is important that you find a Property Manager who knows what to do when legal implications arise from your property rental, for example, in the form of a tenancy agreement breach. Find a Property Manager that has a comprehensive understanding of the constantly evolving tenancy laws and is covered by the suitable liability insurances to shield you from any potential lawsuits.
Importance of marketing
Look out for a Property Manager that has a good understanding of marketing and the right resources to carry out their well-planned marketing strategies. An ideal way to check on this is by evaluating their current listings and asking yourself the following:
- Are these listings easy to find?
- Does the property look attractive?
- Is all of the relevant information listed?
- If I was a prospective tenant, will it be easy to view and apply for the property?
Having a Property Manager that is well-versed in social media and will go the extra mile by having evening and extra inspections, being accessible 24/7 and throws in extras like annual smoke alarm servicing are definitely noteworthy.
Costings and fees
The initial set up cost of finding, vetting and placing a tenant is known as the leasing or letting fee. What you have to remember is that this is negotiable, so question what goes into the work behind charging the fee, however, what is not negotiable is that it will normally be charged at the start of the tenancy agreement. Don’t forget to ask if there is a current tenant in place signing a new tenancy agreement if a re-leasing fee will be expected as well.
Next, there is the management fee which will be taken out of the rent received every time it is paid. If you have been quoted a percentage, then make sure that the figure is shown in dollars on the contract you have with the agent. Don’t forget all fees must be recorded on the contract you hold with the agent and have to include any GST liabilities.
Some agents will also charge you a marketing fee. Other costs may include an admin fee, cost for producing regular statements, fees to cover the agent if they have to appear at a tribunal or if the property is repossessed. These are all areas to bear in mind and check through when discussing the services provided.
Depending on what you have agreed in writing, your agent can also arrange to pay any rates on the property directly from their office and from the rent received. This is an area you might want to consider as it saves you the time and effort in dealing with this sort of administration. A good property agent will also organise payments of water rates and energy bills all deductible from the rental income and this will have a fee attached. Review if the agent will deduct a cost for insurance or corporation fees or management fees linked to maintenance of apartments or flats. Remember they must be clear and transparent about any costs deducted and there should be no hidden costs.
Make sure you get the agent to outline their accounting timelines, as rent must be passed on to you within a reasonable time.
Property Managers will ensure that your investment property is kept in tip top condition for a few reasons; long term returns, better rent and a higher quality of tenant. It is vital that you check with your Property Manager the various inspection and maintenance processes that will be carried out. Bear in mind the following questions:
- How many routine inspections will be conducted and over what period of time?
- Who conducts these inspections?
- What will happen if an issue arises?
- What type of recommendations do they make?
These inspections can help to highlight needed repairs, and prevent them from escalating to major issues over time. What could have cost you a few dollars could end up costing hundreds, if not thousands, of dollars.
Repairs and condition reports
You can authorise the Property Manager to carry out urgent repairs up to a certain amount but ensure this is written in the contract. Before a tenant moves in, where possible do take photos of the property to show its condition. Signed copies of the condition report need to be given to a tenant before they move in. A well done Condition Report is essential should any disputes arise about damages and repairs during and after the tenancy period.
An outgoing inspection needs to be arranged and the ‘Exit Condition Report’ updated which you must read and check that all the relevant information is in there. Part or all of the bond may be claimed if the tenant has damaged the property during their stay and if items are missing. If there is any dispute about the amount of the bond, free claims may be made through the Victorian Civil and Administrative Tribunal (VCAT).
When a tenant leaves, your Property Manager needs to discuss with him how the bond money is to be disbursed. You can claim all or part of the bond under these circumstances:
- there were unpaid bills which are now left to you to settle
- damages to the property beyond normal ‘wear and tear’
- items that were part of the tenancy agreement have gone missing
- the tenant had abandoned the property
- additional cleaning to the premises needs to be done
Contracts with your Property Management Agency
Remember to check your contract but in most cases, you can end the Property Manager’s management of your rented property immediately and collect any keys and documents from the agent or get your new agent to do this. Likewise, the agent can terminate the agreement with you. Either way, a professional will ensure you understand all of this before entering into an agreement with them.
Follow the above guidance to optimise your Investments, find the right Property Manager and minimise the work and input that you need to put in.
For more information about what I can do for you as a Property Management Specialist, check out my website and my 60 days “money back guarantee” to you.