So you’ve purchased your first investment property (or perhaps you’re upgrading and planning on renting out your current abode), congratulations! The hard part is over, now to select a Property Manager (PM) to help you on your landlord journey. Whilst this may seem like a fairly simple task, ensuring you get it right is pivotal to the success of your tenancies to come.
Becoming a landlord is a larger task than one often considers. Unless you’re awfully charitable, we do it for the money; to create wealth for ourselves and our families and ensure a healthy retirement. But what many don’t consider, are the responsibilities that come with being a landlord and the importance that meeting them can have on the well-being of your respective tenants, as well as our own stress levels. Below is a 6 phase intro to ensure you get things right every step of the way.
Phase 1 – Choosing the right Property Manager
This may seem like a simple task; after all, your wife’s, sister’s cousin is a Property Manager and she’s offered you a cheap deal, right? Whilst selecting a PM is easy in practice, ensuring you have chosen somebody that is not only competent, but diligent in their practices is essential. It’s also great if you can find a Property Manager that you genuinely get along with; remember, you’ll be interacting with them regularly and for a long time.
Here’s some bullet proof questions that you need to be asking when making your selection:
1- How long have they been working as a PM? (over 3 years is desirable)
2- How long have they been working for that particular company? (the longer the better, staff turnover in Property Management averages approx. 9 months)
3- What is their average “time on the market”? (anything over 10-14 days in a strong market is too long)
4- Why do they feel your property is worth X rent? (a competent PM will pinpoint your properties strengths and weaknesses, which will help them arrive at their rental estimate)
5- How is their office set up? Who will you be dealing with on a day to day basis?
6- Do they have administration assistance? If so, will you be liaising with them?
7- What does their tenant selection criteria entail? (do they check tenancy references or simply recommend anybody)
An experienced Property Manager should be able to answer the above questions without hesitation. If they’re stumbling through their answers or unclear, you know to give them a miss. It is also important to focus on the person you are hiring, rather than the fees they charge. The agency with the cheapest fees are often times the worst choice, as their budget only allows them to hire inexperienced Property Managers. This can lead to big mistakes and things getting missed, costing you money overall. As they say – “Pay peanuts, get monkeys”
Phase 2 – What do I need to provide to my Property Manager
When bringing your property on board, an experienced and competent PM will walk you through the process smoothly, however it helps to be organised.
Upon coming on board with their agency, you’ll need to provide the following:
1- All keys and remotes to the property (including copies of any operation manuals)
2- Your banking details, emergency contact details and any further instructions you have relating to the property (your Property Manager will have paperwork for you to fill in containing this)
3- Copies of your insurance certificate (it is also helpful to provide your insurance company permission for your PM to liaise with them on your behalf, should the need ever arise)
4- Copy of your Power of Attorney (if you are acting on behalf of an original owner)
5- Details of the owners corporation and the specific contact person (if applicable)
6- Any professional property photographs you may be in possession of
You will also be asked to sign an authority, confirming the fee structure and terms in which you are bound with the agency.
Phase 3 – Working with your Property Manager – Keeping a healthy relationship
Keeping a healthy relationship with your PM can be imperative to a successful working partnership and the overall well-being of your property. It is important to remember that Property Management is a demanding job and your PM works with hundreds of landlords and subsequently, their tenants. Whilst a competent PM will always respond to you in a timely manner and complete the tasks you request of them adequately, keep in mind that they are your gateway to all things related to your property. As with any professional relationship, if your PM feels comfortable speaking with you, they are more likely to respond to you faster and are more likely to maintain open and honest lines of communication; so be nice.
Phase 4 – Signs you have a great Property Manager
You’ve been working with your Property Manager for a number of months now, but how to know if they are doing a top job? Items such as the below are ways to tell you have a top PM on your side:
1- Advertising your property quickly and holding at least 2 public inspections per week (plus private inspections if necessary)
2- Phoning you immediately when rent is delayed and following the tenants up until payment is made
3- Discussing the current market with you and assessing the value of your property when the lease period is coming up for expiry, exploring increasing the rent when necessary
4- Conducting regular routine inspections (every 6 months) and issuing a detailed report
5- Following up on maintenance and ensuring repairs are completed in a timely manner
Phase 5 – Signs your Property Manager is not working for you
On the contrary, perhaps you’ve been in the property game for some time now and for some reason, you’re just not satisfied with the job they are doing, but aren’t sure whether they’re doing a bad job, as you have nobody to compare them to. Recurring instances such as the below are a key indicator that you’ve got yourself a dud:
1- Days go by and your calls/emails aren’t being returned
2- Rent is always late and you’re the last to find out about it
3- You don’t know when the last time an inspection was carried out at your property, or even how your tenants are keeping it
These are all signs that you are dealing with an incompetent Property Manager. This may be due to high workload, poor office structure, or perhaps they are simply inexperienced. Regardless of the cause this relationship is one sided and it’s time to break up (It’s not you, it’s them).
Phase 6 – Process of moving to a new Property Manager
In the event that your PM is not working out and you’re ready to make the move, the process should be very streamline. Assuming you’ve spent time interviewing some new candidates and have selected a new Property Manager as per the above guidelines; upon signing of the new authority, they will correspond with your current PM to collect the file and will alert your tenants to the change. You can simply sit back and relax and save yourself any awkward conversations.
Important – When signing on with a new agency, your agent may include an exclusive authority period, meaning that you cannot take your property to a new agency within that period. If you are in the early stages of renting out your property and wish to change Property Managers, ensure you check this period (usually 30-60 days) before signing on with the new agency.
Things your Property Manager does behind the scenes
A lot of people don’t realise the work that a Property Manager puts in to your property behind the scenes. Their care and due diligence can be enormous money savers for you in the long run. Some of these things include:
1- A detailed condition report – the difference between a brief and a detailed report at the beginning of a tenancy can save you money should a dispute arise at the end of the tenancy. A detailed condition report on a 3 bedroom home can take hours and your PM does hundreds of them across their career, so it’s easy to slack off.
2- A thorough inspection report – Your PM will conduct routine inspections throughout the course of the tenancy. A detailed inspection report, with photographs, assists greatly in monitoring any major changes during the tenancy, concerns regarding upkeep or maintenance and general peace of mind.
3- Reference checks – Prevention is better than a cure. A Property Manager that takes the time to reference check a tenant application can save themselves (and you) months, if not years, or stress. Preventing a rotten tenant from moving in in the first place is pivotal to a seamless and peaceful tenancy.
4- Trustworthy tradespeople – A good Property Management team will go to lengths to ensure they are recommending quality tradespeople to carry out works on your property. Ensuring the work is quality and done correctly the first time will save you money in the long run with repeated call outs and less risk for further damage.
Now that you’re equipped with helpful info on how to ensure you have a tip-top Property Manager on your side, we’re willing to bet your tenancies to come will be far less tiresome, or costly.