Investor reveals top tips for better property management

You’ll hear all of this and more, in this bonus episode of The Smart Property Investment Show!

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Full transcript

Phil: G’day everyone, it's Phil Tarrant here, the host of the Smart Property Investment Show. Just thought I'd come back on air quickly and do a bonus episode with John Martinovic. John was on the show a couple days ago. If you haven't listened to it yet, I do recommend you go and check it out. He shared his journey from purchasing a small two-bedroom apartment into building quite a sizeable portfolio with an array of different properties from enterprise properties to off the plan properties, and securing properties for his super, so check it out. Some interesting stories.

But I've asked John to stick around and give me his inside running on how he manages his properties. So, as investors know, once you go into a period where you have multiple properties with multiple demands on them, managing starts becoming a little bit more onerous. So, John, how do you manage your portfolio? Are you a self-manager, or have you got property managers?

John: We partially self-manage in terms of you get your statements from your real estate and we put all in spreadsheets in terms of all of the incoming and outgoings, but day to day, we leave it up to property managers. It's hard when a large chunk of our portfolio is interstate, being in Melbourne, you just can't be there at a drop of a hat to do something. So, we rely on our property managers to be that first point of contact there. We've also established a team here in Sydney and in Melbourne in terms of electricians, plumbers, maintenance people as well. Typically, property managers, they'll just get anyone out there. They don't care what it cost you, they just want it fixed. Fair enough.

But these maintenance guys, they usually charge through the nose, and you just know what I'm talking about, all you see is a bill at the end of the day. We got stung once and that was it. I said, "Never again. We're gonna get our own team in each state and that way we know they're being honest, job is done properly, and it's reasonable."

Phil: And you probably, because you do a bit of it, you probably get preferential treatment in terms of getting it done quickly as well rather than sitting around and waiting for a trade which can sometimes take time.

John: Well, these guys know that, the guys we've got, if something happens, they're gonna be that first point of call. They never get paid and it's just, you're not relying on that property manager to send anyone out, that's just gonna slug you through the roof.

Phil: So, how do you find a good property manager? What's your tips?

John: We certainly ask questions about property managing in terms of the people that I get through. We don't let them have the final choice in a tenant. We say, "Okay, you can screen them, but we want to know more about these people. Their history, you know. Can they afford to pay rent, etc." So, we certainly want to have the final say in who goes into our properties.

Phil: And what makes a good property manager, though? So, do you haggle on price for them, so the percentage they take? Or do you more about the service of the property manager?

John: I don't mind paying for service and some of ours certainly do charge that, but when you're getting YouTube clips of inspections, when you're getting regular reports, when you're calling these guys and they answer straight away, to me, you can tell if a guy's passionate about their job and the ones that are just there and it's just a job. Okay. So.

Phil: Yeah, finding a good property manager is often hard.  Once you get a good one, you want to stick with them. Have you ever sacked a property manager? Have you switched property managers before?

John: We've been very close to moving to another agency, but then the agency pulled their head in and understood the size of our business and just how much our properties meant to us. I said, "Just as much as your business is a business to you, our properties are a business to us." So, you know, you’ve got to look after them. 

Phil: And do you find with your portfolio, do you use the same real estate branded office, or they're all very different? Like, it's like LJ Hooker or Century 21 or whoever? 

John: So, yeah, our NRAS – we don't have much say in who we use is, that's obviously on the consortium there. Some of the other properties, yeah, we stick to the one property manager from the one real estate. And then we've got some other independents, obviously, that are just good local people with local knowledge and so on.

Phil: How have you found those? Has that been a referral from the person you purchased the property from? Is it interconnected or is it completely separate? 

John: A couple have been referrals, correct. 

Phil: Yeah. And when you first chat with the property manager, when you purchase an investment property, what are those couple of questions you ask then to see whether they're right for you? 

John: I look at body language in terms of how much interest have they taken in our business and how passionate are they about what they do. That's the whole thing. 

Phil: That's a people thing you use, a lot of it's gut instinct. And what do people do really wrong that turns you straight off, do you reckon? Just dismissive, uncommitted? 

John: It's the simple things. Not answering calls, not returning emails. That's probably a big bugbear. And if something is an issue, if they haven't addressed to. That's again, I'll look them as probably as employees, and you just want things done.

Phil: So, what's the longest any of your properties have been vacant for, whether it's at sort of purchase or during a transition of tenants? Is there any long period of time?

John: We've been very, very fortunate. None of our properties have been vacant for more than a couple of weeks. 

Phil: Okay. 

John: And that probably sits in terms of buying in the right locations and buying … To us, it’s about buying quality over quantity. 

Phil: And do you have to spend a lot of money typically when you transition tenants? You normally do a good clean? Or have you done much in terms of renos to try and lift your prices up? 

John: So, when they're at the stage, we're looking at one that we'll look at doing that, but at this point in time, we haven't gone to that length. Again, just the age of the portfolio, they're relatively new. 

Phil: Good. John, mate, it's supposed to just be a real quick chat just to get your take on how you manage your properties. Is that part of your investment strategy that keeps you awake at night, sort of how you're gonna hold these assets and make sure you've got tenants in there? Or you're more of a want to keep growing, keep building sort of a guy? 

John: I just want to keep growing. I don't worry about tenant sort of things, again, because of where we buy and the type of properties we buy. We've not learned they're never gonna be empty for more than a couple of weeks, so we're comfortable in that degree. We're always getting quality tenants. Now it's all about how can we take the next step. 

Phil: And what you're speaking about there is really important. I'll conclude on it. It's about the fundamentals of the property, so buying the right properties in the right areas where you're not gonna be overpriced in terms of tenant appeal. So, you don't want to be buying a fancy penthouse in a place where most rent's sort of $350 a week. So, it's buying the right property in the right area for the right reason and if you get that right, typically you shouldn't have too much of a problem with tenants because it's rentable, right? And it's an important word to use. It's rentable. Someone leaves, you're gonna get someone there pretty quickly 'cause it's high demand. 

John: That's right.

Phil: So, make sure you get the basics right. John, thanks again, mate. 

John: Bye. 

Phil: Appreciate you coming in. Remember to check out smartpropertyinvestment.com.au and appreciate those reviews coming in iTunes. Keep them up. If you want to contact the team, [email protected]. They'll get back to you, and we'll see you again soon. Bye bye.

Disclaimer: The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs, and should not be relied upon. Before making any investment, insurance, tax, property, or financial planning decision, you should consult a licenced professional who can advise whether your decision is appropriate for you. Guests appearing on this podcast may have a commercial relationship with the companies mentioned.