During our Advanced Property Investment Blueprint evening a few of you mentioned that having bad tenants was one of your number one fears about investing in property. The key to not having to deal with bad tenants is selecting the right property manager and below we share some tips on making sure you select the correct property manager.
Spending over 4 years as a senior property manager I know how important it it to select the right property manager. Don’t be sucked in by discounted rates and give always – do your research! Compare a range of property managers across a number of fields. Here are some key questions to ask your potential property manager.
First and foremost – get an appraisal
Find out how much they think your property will rent for. Once received ask them how they came to this figure. They should have comparable properties in the rent roll or have carried out a local market comparison, make sure they have an understanding of the current market. Also do your own research – make sure they are not trying to ‘buy your listing’ by giving you a higher appraisal so you will sign with them then only have to lower the rent once your property has been sitting un-rented for weeks!
How many properties are in your rent roll and how many staff members manage them?
There are many answers to “how many properties can a property manager manage?” and they vary depending on a number of variables. The property managers experience, age of the properties and style of the properties (it’s a whole lot easier to manage a block of 6 apartments than 6 – 4 bedroom homes). But basically no single manager should be looking after more than 120 properties. The less properties to property manager the better.
How many of your tenants are in arrears and what is your policy / strategy for combating this?
Every property manager should know their rent roll’s arrears percentage. It should be reported on and discussed at weekly meetings. There should be a strict policy in place that once your tenant is in arrears it is acted on immediately. This can be via text or phone call but there must be an arrears strategy in place. Arrears should never be over 2.5%
How many routine inspections are carried out per year and how are they reported to me?
With the amount of technology around these days there is no reason why you should not be receiving photos of your property along with a routine inspection report. This should be done a minimum of 3 times per year with an option of a 4th if you would like to attend the property at a time that suits you. Any less than 3 or they will not send photos is just not good enough!
How do you screen your potential tenants?
Find out what questions they ask their potential tenants. What research do they do? Make sure they have access to TIKA (the Australia wide ‘bad tenant’ database) and that they do past rental reference checks. Remember that you have every right to know what they find out about them and make the final decision on whether they move in or not.
What sets you apart from the other property managers in your area. Why should I pick you?
Make them sell themselves – prove to you why they should get your business. They may have a system or function that you think is ideal for you. Some companies have a completely transparent online portal where you can see everything that is going on with your property (ie work orders for repairs or rent payments). That might be too much for some of you and would like to just get your rent money paid once a month and have the property manager deal with everything else. Make sure that their style or management works for you.
What are your fees?
Possibly the most crucial question for most of us. But don’t let this be a deciding factor. The difference in fees is generally 2% at the most and that is not a great deal in the grand scheme of things. This 2% difference can be easily lost if your property sits vacant because they do not have a good marketing strategy. Check ALL costs. They may have a low management fee but then charge you for a whole bunch of extras. Ask for every charge and compare to the other agencies you are reviewing. Each state / city / rural area is different. What might be a completely standard fee in one area may never be charged in another.
Ask for a discount
Don’t be scared to ask for a discount either. If you have found a company that you really like and they are a fair bit higher than the others on the management costs – mention it. Ask them if there is any area ie monthly stationary costs that they could waive to make you come over the line, most will have some wiggle room somewhere!
What style of management do they have?
Portfolio or task based. Will you deal with just the one manager for everything to do with your property or will each area (ie. arrears, maintenance, inspections) be handled by a different person. Is this important to you? Remember that the person you deal with initially will probably be the business development manager and not your actual property manager so do not choose a company based on the fact that you like their BDM as you will probably not hear from them again once you have signed up.
Overall choose the company that best suits your style as a property investor. Do your research, get a good deal and sign up with a company that is going to work for you. And if worst comes to worst and the company you signed up with turns out not to be for you – you can always change companies at any stage.
Just remember – the final decision is always yours, your property, you decide on who resides there. If you need any advice or to use any of our wonderful property managers please email us for more information at firstname.lastname@example.org