How to choose the best property manager for your investment property
Choosing the right property manager is important. Property managers are meant to make your life easier, and help manage your property in a way that is the most efficient for you. We recommend using a property manager for your investment property to help you reduce the chance of vacancy rates of your property, bring in higher quality tenants and keep them happy, reduce costly and time consuming problems, and prevent minor disputes becoming a costly liability for you. A competent property manager will not only save you time, but they can add significant value to your investment. After all, your property should generate the best return on investment possible, with the least amount of effort required on your behalf.
So, where do you start when you’re looking for a property manager? We’ve put together a list of questions you should ask to ensure you find the best property management agency for your investment property.
What kind of experience do they have?
It goes without saying that an experienced property manager will be more likely to professionally handle the range of situations likely to be thrown at them when dealing with tenants. An experienced property manager has likely dealt with thousands of tenant applications, maintenance issues, and rent collections, as well as being well versed in the latest tenant/landlord laws. This is key in ensuring you are protecting yourself and your asset from potential liability issues.
Who will actually be managing your property?
Whilst you may find a real estate agency with a great reputation, it is essential to know which individual will be actually in charge of managing your property. What are they like as a person? The best property manager will have stellar communication skills, be great with people, and well organised. How many other properties do they manage? In Australia, a real estate agent may be in charge of anywhere from 80-150 rental properties. If they are overloaded or inexperienced, you don’t want your property to fall by the wayside. In addition, real estate agencies typically have a high staff turnover, particularly of rental property managers. If your agent leaves, who will take over the management of your investment property?
You may also want to ask how much support the individual agents have in the office. Ideally, the team will be composed of experts in leasing, sales, financing, administration, to ensure you can receive full service from one firm. How is the team structured? Who will be responsible for rent collection and arrears management, maintenance, and inspections?
How much is their fee?
A typical industry fee can range anywhere from 5 to 10 percent of the annual rent. Make sure you clarify exactly how this is determined – the fee should be based on rent collected, as opposed to rent due, to protect yourself from paying fees in case of a vacancy. It is important to know what the fee actually includes – a low fee might look attractive, but can indicate hidden costs. It can be expected that property managers will charge a letting fee (the cost of finding the tenants) of two weeks rent. However, they can often charge additional services on top of the expected fee, such as advertising the property, placing new tenants, evictions, and conducting inspections.
Another interesting question to ask if how the rental value of the property determined? You should have done your own market research prior to buying the property, however it is still useful to ask your prospective property manager if they can show you how other properties in the area are valued, and re-evaluate this valuation on an annual basis.
What is their day to day management style?
Once you’ve narrowed down your options, we recommend asking prospective agents to tell you more about their management style and processes. Such questions may include:
- How does the agency market their vacant properties?
- What goes into the tenant screening process to ensure the tenant is appropriate for the rental property?
- How are tenant troubles dealt with? What is the process for resolving tenant issues or removing delinquent tenants?
- How many inspections are conducted each year?
- How are maintenance issues dealt with? Will the agent notify you if there is a maintenance request?
- What is the process for dealing with emergencies within the property?
- How are property bills and expenses handled? Are you able to set a predetermined expenditure limit on expenses?
- Does the fee include landlord insurance, and if not, do they have a recommended provider?
- How often is rent collected from the tenant, and how often is the money paid into your account? What action is taken if the tenant is late with their rental payments?
- What types of communication will you receive from your agent, and how frequent will those communications be?
In our opinion, expert management of your rental property can make the difference between a high yield or not, save you time and hassle, and help shield you from liability issues, which is why we think they are worth their management fee. However, regardless of whether you are trying to decide between self-management or outsourcing to an agent, or are looking to change property managers, we recommend using the above questions as a guide to ensuring you get the best possible outcome for your investment property.
Still not sure? We work with some great property managers that we would be happy to recommend for you. Get in touch with us at firstname.lastname@example.org, or fill out this contact form and we will get back to you.