If you're planning on managing your property yourself, you should be aware of the common pitfalls too that you will need to avoid.
How to find a professional property manager
When searching for a property manager, check if the company specialises in property management, sales, or both, and if they have a specific property management department.
Always ask for testimonials and references from existing customers and speak to at least four property managers for a balanced comparison before you make your decision.
Here are some other factors to bear in mind:
1) Market knowledge
Your property manager should have good market knowledge and coverage.
They should be able to advise you on:
- How much rent you can achieve.
- Improvements you could make to your property to increase your rent.
- Current vacancy rates and demographics of the area.
A good property manager should also be able to give you alerts on when your lease is coming to end or is up for renewal, so you can plan for this in good time to help drive up rents and boost your cashflow.
Other things you’ll want to check is if there is staff dedicated to property management and their time working in the market. This will give a good indication of their levels of experience.
Consider asking questions about how they have dealt with difficult tenants in the past and issues they have had to resolve.
Also find out who specifically will be managing your property investment and how and when they will be in contact with you
3) 7 questions to ask a property manager
Ask the right questions to help you make a better decision when selecting a property manager. Consider the following:
- How many tenants on the rent roll are in arrears?
- How often are disbursements made to owners?
- How often have they found malicious damage with tenants?
- How often have they been to a tribunal?
- Will you advise me of repairs and maintenance that my property needs?
- What is your process of reviewing potential tenants?
- Can you give me a written comparison of rental values in the market?
Ask each property manager the fees they will be charging and what specifically they cover.
The service offered by property managers will vary from company to company, and can include sourcing tenants, ongoing management of the property and monthly statement fees.
5) Systems and processes
Find out what systems and processes are in place for dealing with various situations and if the property manager is happy to discuss their goals and plans.
Find out how you will receive your rental statements and what key performance indicators (KPI’s) are in place.
If they are unwilling to talk about their plans or KPI’s, they may either be inadequate or have none in place.
DIY property management
Managing your own property instead of using a professional property manager can save you 5-9% of your rental income in property management fees, but you’ll need to be aware of the legal implications, tenancy legislation and paper work to avoid the common pitfalls.
1) Sourcing and placing tenants
Professional property managers have access to potential tenants which come through their website or office.
To advertise your property, place adverts in as many online websites and newspapers in your area as you can to maximise your chances of find a good tenant.
Many DIY property managers fail to adequately check a tenant’s history.
Tenants inquiring about renting your property may have a bad rental history and have chosen your listing with the expectation that you won’t look into their history unlike a professional property manager.
2) No lease contract
A lease contract is legally enforceable and contains information on the agreement between the tenant and property manager. This includes the amount of rent to pay, length of the lease and the condition the property should be left in upon vacating.
3) Not asking for a bond
A bond is security deposit which is held in the event that the tenant causes damage to the property or fails to pay all the rent owed by the time they vacate.
4) Not filling out a condition report
The condition report is to describe the condition of the property and the contents within. It is for the protection of both tenant and property manager.
5) Not complying with tenancy laws
Each state has different tenancy laws. If you don’t comply with them you may be issued fines.
6) 7 questions to ask yourself before becoming a DIY property manager
- Do I have access to quality, reliable tradespeople as part of my property investing team?
- Do I know the current rental and vacancy rates of the market?
- Am I happy with the tenant having my phone number and being on call for any issues with the property?
- Am I available to supervise tradespeople where required, often at short notice?
- Is the cost of my time worth the property management savings I will achieve?
- Do I understand tenancy legislation?
- How much will I save, by managing the property myself?