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We give you the lowdown on why should you get a real estate agent to manage your property.
If you’ve been tuning in to investor stories on the Smart Property Investment Show, then you’re well-acquainted with awe-inspiring tales of investors finding success through the passive income from their rental properties.
However, if podcasts are not your thing (yet, hopefully!) but you’re in the real estate scene, there’s a high chance you’ve encountered stories of landlords who have chosen to build wealth by renting out their investment properties.
Of course, there is a lot of work that goes into becoming a successful landlord, but most property owners don’t go at it alone. Data from the Real Estate Institute of Australia (REIA) shows that more than half of Australian properties are managed by a property manager.
Some rental property owners choose to employ a real estate agent who specialises in property management to help them handle every task and responsibility that comes with being a landlord.
A property manager can ensure your property looks great, is in tip-top shape, and generates a steady stream of income. Another upside of this working arrangement is the personal benefits that come with it, such as taking a significant amount of stress and duty off your shoulders.
In this article, we dive into what property management is and why it may be time to call up your real estate agent to manage your property.
What is property management?
Property management refers to overseeing, controlling, maintenance, and handling the business operations of a real estate property. This can include residential and commercial real estate.
Oftentimes, property management is done by a third-party service provider. Rental property owners engage the services of a property management company or a real estate agency that also offers real estate management services.
As a third-service provider, property managers play a major role in managing your rental property.
A professional property manager is in charge of advertising the rental property, handling tenant inquiries, screening potential tenants, selecting suitable candidates, drawing up a lease agreement, conducting move-in inspections, moving the tenant(s) into the property, and collecting rental income – basically the whole nine yards.
Their responsibility also includes coordinating any maintenance issues, supplying the owner(s) with financial statements and any relevant information regarding the property.
Most importantly, they serve as the liaison between landlords and tenants. They are responsible for communicating any complaint or issues that a tenant may have regarding the property to the owner so that they can take appropriate actions to resolve it.
Can real estate agents manage your property?
Yes, real estate agents who specialise in property management can manage your rental property.
These are typically agents under real estate agencies that buy and sell properties while also offering property management as an additional service or a subsidiary business.
Many investors would hire a property manager this way out of convenience, especially if they bought the property from the same agency. These firms can also ensure you have a local presence, as they can help you get connected with the best tradespeople and professionals in the local real estate market.
What is the going rate for property management?
The management fee charged by real estate firms for property management services varies depending on where you live and the agency you choose.
As a general rule, property owners pay property managers a commission of between 7 per cent and 10 per cent of the weekly rent plus goods and services tax (GST).
But based on the average figures provided by online websites, commissions can go as low as 4 per cent in some areas and as high as 15 per cent in others.
However, the services included in this commission vary between agencies. With some agencies, this fee covers two annual property inspections, weekly rent collection, and maintenance (excluding insurance claims). With others, you’ll need to pay extra for some of those services.
It’s worth pointing out that the lower the commission fee percentage charged by your agent, the fewer services likely to be included as part of your package. Before selecting a property manager, find out exactly what services you are paying for and what will cost an additional fee.
Depending on the agency, landlords may need to pay additional fees to cover things like:
It’s advised to ask any prospective property manager for a full rundown of their commission and what it covers before you decide whether they’re right for you.
For more tips, read our guide on how to find the right property manager for you.
Why should you get a real estate agent to manage your property?
When you are first thinking about renting out your investment property, you may not see the full picture of the amount of work that can go into this.
Due to the wide range of work involved in being a real estate agent, they are familiar with almost all of the inner workings of the industry. This means that they are more than capable of providing a grounded and all-encompassing perspective and course of action on any situation that they may encounter when working as your property manager.
Additionally, the services that real estate agents provide when managing a rental property aren’t just convenient for you as a property owner, they’re also very valuable.
Here are some of the value-adds you can get by having a real estate agent manage your rental property.
1. They’ll find good tenants for your property
Tenant screening can be a complex process, and if you don’t have sufficient experience in the real estate industry, you might end up choosing a bad tenant.
An agent can help you find suitable renters to help you avoid periods of vacancy and income loss.
Experienced property managers are capable of implementing all the necessary marketing methods to make sure that your property will catch the attention of potential tenants.
And it’s not just about finding any tenants. Good property managers have a reliable and verified screening process that helps them select tenants who will:
A real estate agent that has been in the business for a long time will have seen what a bad tenant can ultimately do to a property when it comes to selling or buying.
Because of their background, these agents can easily identify red flags about a potential tenant. If you allow an experienced real estate agent to handle the tenant screening, you are also avoiding rental scams that are directed at property owners.
If you’re a landlord looking for good renters, don’t forget to check out our step-by-step guide to screening tenants.
2. Help deal with any legal issues and facilitate mediation (if needed)
One of the first reasons why you should consider hiring a real estate agent that specialises in property management is that they help provide a legal buffer between you and your tenant.
If there are any problems with late payments or damaged property, the agent deals with these issues so that you can avoid any unpleasant confrontations between the two parties.
Each Australian state has its laws and regulations that can affect a landlord. It’s expected that fully licensed real estate agents working as property managers know all the ins and outs of your state’s laws that relate to rental properties. This means that they can give proper advice about your landlord rights and, in the process, protect you from potential lawsuits and vulnerabilities.
The eviction process is another important aspect that a property manager will handle. There are strict laws that regulate this process, and doing it the wrong way can be a big mistake.
Aside from knowing the law, a good property manager aims at making the best out of bad situations. Not having to handle a potential eviction yourself is a very compelling reason to hire a specialist.
Additionally, property managers will check in using various means, including phone interviews, regular inspections, and surveys. This enables them to become the go-to person for both parties, resolving conflict positively and may help keep the issue from getting to the courtroom.
3. Take care of all the paperwork
There’s an astounding amount of paperwork that can be involved with managing a rental property. This can include property rules and regulations, lease agreements and contracts with tradies for repairs and maintenance, and more.
Having a good property manager can help you keep files well organised, ensuring that nothing slips through the cracks. This also ensures tax time won’t be so stressful for you!
4. Provide great insights into the local neighbourhood/area
There are many benefits in choosing a local real estate agent with a strong working knowledge of your area as your property manager.
With their knowledge of the local market, your agent will be able to inform potential tenants of all of the relevant information they need regarding the property and the surrounding neighbourhood.
They can also closely track rental prices, vacancy rates, valuations, and have in-depth knowledge of the local market that will help them provide the best advice when it comes to your investment.
This information can help you make informed decisions, such as when you should raise or lower the rent, when you should do repairs, or what renovations or upgrades are currently attracting tenants in your area.
If you want to do your homework and make sure your rental price is at par with other properties in your area, make sure to check Smart Property Investment’s Suburb Search page.
5. Lower repair and maintenance expenses
Good maintenance of your property will not only keep your tenants happy but also preserve the value of your real estate investment.
By hiring a real estate agent that specialises in property management, you gain access to professional maintenance and a network of licensed, insured, and bonded contractors. These contractors have been vetted for quality work and good pricing, which can save you a lot of money compared to hiring someone that you have no experience working with.
Additionally, a property manager will also be able to get discounts on account of their great volume of managed properties.
6. Increase and maintain the value of your rental property
An experienced property manager will tell you that the secret to maintaining and boosting the value of your property lies in preventive maintenance. By identifying and repairing any maintenance issues early on, property investors can avoid larger and more expensive problems.
This involves regular maintenance checks and inspections, a written maintenance schedule, and detailed documentation. A property manager may also offer you valuable feedback and suggestions on upgrades and modifications that tenants may be looking for.
To get you started, we’ve listed down easy and cost-efficient renovations to boost your rental returns.
7. Personal benefits
Last but not least, hiring a property manager will give you personal benefits that can’t be measured in numbers.
Having a helping hand will mean less stress, as you won’t have to deal with late-night emergencies, evictions, chasing down rent, damages, paperwork, having to find contractors, and other tedious and time-consuming tasks.
It also gives you more freedom. If you hire a property manager, you can travel without having to worry about your tenants not being able to reach you. This also means you can live wherever you want and you can invest in other properties.
Hiring a property manager will also free up more time for property investors. This time could be better spent doing other things than micromanaging a rental property. Not to mention that you will also have more time to spend with your family and friends.
Are you on a mission to kick start your property investment journey this year? If you’re a first-time buyer looking to enter the real estate market, check out Smart Property Investment’s brand-new white paper, Why 2022 is the right year to invest for beginners.
If you want to learn more about the latest industry expert insights on the property market, check out our amazing podcasts. Also, make sure to check our News Section for the latest property market reports, insights, news, and useful tips and strategies for investors.
An investment property refers to a land, condo unit or building purchased to earn profit through rentals or capital appreciation.
An investment property refers to a land, condo unit, or building purchased to earn profit through rentals or capital appreciation.
A real estate agent is a licensed professional authorised to act as a representative for buyers or sellers in a property transaction.