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For those who choose to use the services of a property manager, finding the right one can make or break your investment strategy. Here are our tips on how you can choose the best for you.
When you’ve put in a lot of money on the line to buy an investment property, you’ll want to make sure that it will be properly managed.
And while there is the option of managing the property yourself, many property investors choose to seek the services of a licenced and professional property manager to minimise stress and boost profits.
A good property manager can be an invaluable asset for your investment property strategy. Aside from taking care of day-to-day responsibilities associated with managing a property, they can help you in screening tenants, maximise rental income, and increase the value of your rental property.
A high-performing and experienced property manager is also knowledgeable in tenancy and property laws. They can help reduce your legwork by taking care of the needed paperwork and maintaining financial records to keep you on the right side of the law.
But how do you choose the right property manager? Here’s what you should look for and what questions you can ask during the screening process.
Tips for finding a good property manager
1. Check local candidates
Before you look at prospective property managers in other places, it’s a good idea to check the local scene first. After all, local knowledge is crucial in the real estate industry.
A local property manager can give you a big advantage, as they know the ins and outs of the local property markets. This is especially important if you don’t live near your property, as they can attend to emergencies when you’re unavailable. They also have the necessary knowledge and connections with contractors, tradespeople, and other real estate professionals in the area.
2. Rely on word of mouth or referrals
One of the best ways to find the right property manager is through word of mouth and referrals/feedback based on the experience of other customers.
If you have a real estate agent, you can ask them if they can refer any good property managers.
If not, you can also ask colleagues or acquaintances that have investments in the same area if they have any property managers they can refer.
If another landlord referred you to a prospective property manager, you can ask the following questions:
3. Check customer reviews
If you can’t get it by word of mouth, check online for customer reviews and testimonials on prospective property management companies. By checking the review of other clients or property owners, you get an honest opinion of their track record.
You can check through Google map reviews, real estate websites ( e.g. Realestate.com.au, Productreview.com.au, and Domain are some examples), and their social media sites (e.g. Facebook or Linkedin).
Just remember to take each review with a grain of salt and be vigilant in sorting out real reviews from ones that are paid for by the agency or are made up by irate clients.
4. Ask about their qualifications and experience
A property management company or a reputable property manager may sound spectacular on their website or brochure, but you’ll need to ask a range of questions to get past the glitz and glamor of their marketing and PR campaigns.
First off, you need to make sure that your property manager or the firm they’re working for has the legal requirements needed to operate (licences, certification, etc).
Next, you should check their experience as property managers. Generally, experts advise against working with a property management company that is newly established and doesn’t have any experience. And while big management companies have years and even decades of experience, it can be difficult to get in touch with them and take care of your concerns if they see you as just another number, resulting in poor service.
Asking the following questions will give you a good idea about their experience as property managers. Their answers to the questions should match up with the responses from their references.
Ideally, you want and expect straightforward and honest answers to these questions. If you are sensing evasiveness or hesitation when they are answering these questions, it’s not a good sign. Answers to these questions can also help you discern the depth of their knowledge and their commitment to giving a good service.
5. Ask about their services
Not all property managers are created the same, which means not all of them will offer the same services.
A good property manager should be upfront about their services. To make sure you know exactly what you’ll be getting for your money, you can ask them how they would conduct the following tasks/responsibilities:
You can give example scenarios and see if their answers are reasonable and if they match your expectations from a property manager.
6. Check their fee structure
Fees for property management vary between states and territories, and sometimes between suburbs.
The standard charges in Australia are typically between 7 to 10 per cent of your rental income (depending on the location). Other fees can also be charged for other services on top of the property management fees, such as lease preparation and letting fees.
While it feels like a hefty amount, the time savings, rental yields, lower vacancy rates, and other benefits can be well worth the investment. Additionally, property management fees are tax-deductible.
Also note that any expenses associated with an investment are always going to be an important consideration, but it’s not the only factor you should take into account.
With this said, pick the best manager, not the cheapest. You are not doing yourself (or your bank account) any favor by choosing the cheapest property manager available if you end up with rental arrears, destructive tenants, or a poorly managed property in the long run.
Pick someone who you feel has the skills, experience, and personality to manage a rental property well.
A property manager acts as the mediator or middleman between you and your tenants. This is why it’s important that the property manager can quickly and effectively communicate with you at all times.
The property manager should be prompt in getting back to you and proactively keep you updated. Whether it be to inform you of necessary repairs, provide you with a choice of tenants, or simply check in to see if there’s anything more they can do for you, having a good line of communication with your property manager is important. They should also be skilled in handling unpleasant confrontations, tenant complaints, and late payments.
By being up to date with how the property is managed, it can also help you to build a good relationship with your tenants, since their concerns or issues are promptly addressed.
8. Check the terms of the property management contract
After a long search, you’ve found the perfect property manager. Congratulations! However, you need to sign a property management contract first.
The property management agreement (also known as real estate management agreements and management agency agreements) is a legally binding agreement between a property manager and owner which outlines the terms and conditions in the relationship.
You can think of it as your property manager’s employment agreement. It’s important to note that you’re required to sign one by law if you decide to take on a property manager.
The drawn up agreement must be a valid, fair, and comprehensive contract that will ensure that the rights and interests of the involved parties are addressed. Like all legal documents, it’s best to consult with a legal professional and to negotiate terms before signing.
Good property management is just one of the ways to maintain a successful rental portfolio. Learn more about other factors that influence total returns and the overall health of a rental property portfolio.
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An investment property refers to a land, condo unit or building purchased to earn profit through rentals or capital appreciation.
A management agreement is a contract with the owner of an income-generating property and an individual or entity that will manage the property.
A rental property refers to homes or apartments used as dwellings for tenants.