More than 54% of rental properties in Australia currently benefit from the expertise of a property manager, according to the Real Estate Institute of Australia. Why? Because choosing the right property manager to manage your rental property can be vital to the success of your investment.
If you don’t have the time or find it difficult to manage your own investment property, an experienced property manager who treats you and your tenants well and provides the best management service can make a world of difference.
Here are some tips to help you choose the right property manager to take care of your investment.
They know the market, and all legislation and requirements
A good property manager knows the ins and outs of the local market, as well as the real estate market as a whole. If they have a lot of experience and expertise in your particular suburb, they could be the right property manager for you. Ask them how many properties they manage in the area, how many are similar to yours, what their average days on market is, what the current vacancy rate is, what the tenant demographic and suburb profile is, and so on. A good property manager should be able to answer these kinds of questions clearly and confidently.
They should also know all the legislation and requirements pertaining to rental properties in that area and state. This includes understanding the legal rights of tenants and landlords; in the event of a dispute with a tenant where you end up at the tribunal, the property manager should be able to help set things right for both of you. A good property manager also knows how to organise the lease agreement and process the bond payment.
They have fair property management fees
A property manager’s fee is calculated as a percentage of your investment property’s rental price. This varies by state from 4%-7.7%. Therefore how much you spend depends on the size and type of property you’re renting out. For example a luxury apartment or premium office space in the city will cost more to manage than a single unit outside the city.
To find out what a property manager’s fees are, have a look at other leased properties in their portfolio. If they specialise in luxury or exclusive rentals it’ll cost you more, but the higher price means you and your tenants will receive a more premium service.
Some property managers will also charge a fee that’s equal to 1-2 weeks rent for advertising and letting a property. Find a property manager who you can negotiate a good deal with, and won’t charge you a re-letting fee when a tenant stays on.
They manage multiple properties in multiple areas
Choose a property manager who can manage properties outside of the immediate suburb, council district, city, or state your first investment property is located in. This is so you don’t have to hire another manager when you expand your property portfolio. Before growing your portfolio, ask them what their growth capacity is and what discounts you’re entitled to if you choose them as your property manager.
Another benefit of having one property manager to manage multiple properties is it will reduce your overall holding costs. When you own just one property, the difference between a property management fee of 6% from one manager and 4% from another may seem small. But when you own 10 properties, that 2% difference in management fees is huge. Choosing a property manager who charges less could save you thousands of dollars a year.
They promote quality advertising and multiple open inspections
A good property manager will advertise your property both online and offline so it gets seen by as many potential tenants as possible. You can find out how they’ll advertise your property by looking at their other listings online (do they have professional photos and well-written descriptions?), as well as from your own questioning.
They should also ensure all prospective tenants can inspect your property properly by planning open inspections that run on different days and times, and last for at least half an hour. When showing the property at an inspection, they need to be mature enough to handle questions in order to maximise interest.
A property manager needs a strong presence in the local area where your property is located in, as well as good communication skills to ensure the successful letting of your property. If they’ve also managed properties with few vacancy days between periods of occupancy, that’s all the better.
Handling of tenants, inspections, maintenance and repairs
A good property manager can swiftly source new tenants when current ones decide to leave. Ask for a copy of the rental application form – if it’s thorough, this shows good quality property management. They should also be able to promptly respond to complaints and general enquiries from tenants, and offer direct mediation in the event of a disagreement. Moreover, they have to be tough; they may need to chase down wayward tenants for late rent or follow up rental arrears (non-payment), as well as issue evictions.
A property manager must also conduct regular routine inspections. For example, a property manager in NSW will need to carry out inspections up to 4 times a year. They should also be able to promptly deal with regular maintenance and repair requests from tenants to avoid bigger and more costly repairs in the long run.
Big vs. small agencies
When it comes to the size of the agency the property manager works for, bigger doesn’t necessarily mean better. Big agencies generally offer more security and manage more properties, but this can mean some properties won’t get the attention they deserve.
Small agencies, on the other hand, will often have specialist knowledge of an area and provide a personalised service more suitable for you and your tenants. But like big agencies, if they’ve got too many properties on their plate your property could get lost in the shuffle.
Doing thorough research and asking the right questions can help you choose which agency and property manager is right for you. Consider the agency and property manager’s background, reputation, experience and practices, and also check staff credentials, client testimonials and references.
With these tips, you should now be able to choose a property manager who can help protect your investment and deliver you great returns.