Landlords Guide to finding a great Property Manager
Finding a competent Property Manager is a matter of knowing the right questions to ask.
You’re on the lookout for a good partner who will look after your needs, attend to the small details and generally have your best interests at heart. What you don’t want is indifference, unreturned calls and problems swept under the carpet.
So how do you find that special person – a good Property Manager?
Landlords should interview at least three property managers before making a choice – and fees shouldn’t be the main criteria.
You want the best one, not the cheapest one. Make your selection based on who you think is going to give the best service.
If you don’t have a good impression after speaking with them, don’t go with them just because they’re cheaper. For an investment, usually of at least half a million dollars, you should be picking the best person who you feel is the most professional agent to manage the property.
It is recommended that you ask some key questions first.
A property manager can’t competently manage more than 100 properties. If a real estate agency has 800 properties they need eight property managers. If they have four or five it’s not going to work for you.
If people are managing more than 150 you’ll find that they don’t have enough time in the day to service their clients.
Another question that should be high on a landlord’s list is how long your prospective manager has been doing this type of work. Too many property managers are 17 or 18 years old and just out of high school having done a certificate course online. Being a property manager is a really horrible job when all they get is tenants who complain and landlords who won’t fix things. No one ever rings to say they’re doing a fantastic job. Look for managers with 5 to 10 years or more experience. They’re generally 40 to 50 year old women and men who actually enjoy the job. They have their heads screwed on and the can sniff a bad tenant at ten paces.
Other questions to ask prospective property managers include: how are tenants selected and screened; and how often are inspection reports done? Ask management agencies if they have a tenant database. If they do, how many tenants are on it and how will the agency use that database to find the best tenants for your property. Property owners should ask to see the manager’s check list for screening tenants and the tenant application forms used.
Once the tenants are ensconced, the industry standard is that inspections of premises are usually carried out after 3 months, and then at 6 monthly intervals but some managers extend this to 12 months. 12 months is too long. During this time some necessary maintenance, such as clearing leaves from gutters can be neglected. Asking managers how they deal with repairs and if they have a good relationship with tradespeople who offer discount rates.
Another note of caution is how much leeway should landlords give managers in authorising repairs? We suggest a fairly short leash. Don’t let the property manager spend more than $200 without asking permission.
QUESTIONS TO ASK YOUR PROPERTY MANAGER
1. Arnold Property has a dedicated rental department and has a team of 8 staff members.
Many agencies see property management as a poor “sister” to the more glamorous sales department and some even leave the Property management of client’s assets to the front desk staff and receptionist. Arnold Property has a dedicated property management department.
2. Is a director/owner of the agency involved in the day-to-day management of the property management department? Yes, Steve is the Senior Property Consultant and Michelle is a Trust Accountant and a Property Manager.
3. How many years has the Property Manager been working in real estate? Steve Arnold has been working in Real Estate for 25 years.
4. Does the Property Manager give you a written proposal? Arnold Property will always give you a written proposal.
5. What geographic area does the property management service cover? Arnold property manage properties in Newcastle Lake Macquarie and the Hunter.
6. Does the Property Manager just hand out keys or do they attend the property with prospective tenants?
If they hand out keys and let the tenant inspect the property on their own too many things can go wrong with this approach and the security of your property could be at risk. This never happens at Arnold Property.
7. How many properties do the managers look after?
The property managers who look after too many properties may not have the time to devote attention to your property. Some busy agencies have 250 properties per property manager which is far too many to give your property individual attention. Our ratio is around 100 per property manager.
8. Do you have staff available to show my property to prospective tenants 6 days a week?
The hectic pace of life and advertising of rental properties on the internet 24 hours a day means a good Property Manager must be available to show prospective tenants you property when it suits the tenant.
9. Do you have a system of checking prospective tenant’s credits worthiness, rental history, and their current employment?
Ensure that your property manager subscribes to a major tenancy database and screens all prospective tenants carefully we subscribe to TICA. RP Data is also a useful Software Program used by Arnold Property.
10. Do you have a system that daily checks rental arrears and takes the appropriate action immediately?
A good Property Manager who uses electronic funds transfer for rent collections and up-to-date computer systems should be able to monitor rental arrears daily and minimise late rental payments by regular communication with tenants. Arnold Property has 2-3 reports per week.
11. Are you a member of the Real Estate Institute NSW and are you a Property Management Specialist? Be wary of any Agent who is not a member of the Real Estate Institute of NSW. Arnold Property is the only Accredited Property Specialist in Newcastle.
Fees and structure
Fees for Property Management vary between states and sometimes between suburbs. However standard charges in Australia are generally between five and ten per cent of a property’s rent with other services such as lease preparation and letting fees build on top of that. Landlords should not base their choice of manager on a fee difference of the $5 a week.
There are budget- cutting agencies out there and they are budget–cutting for a reason. People need to ask “are there any hidden extras”. Those agencies generally are inexperienced and have to cut fees to win business.
These extras can include lease renewal fees, statements postage and sundries, and inspection fees.
HOW TO CHANGE MANAGERS
Like all relationships, the one between landlord and manager doesn’t always run smoothly – and sometimes the landlord wants “out”
Many landlords are under the false impression that when they sign a 12 month tenancy agreement with a tenant that they have also signed an Exclusive Property Management Agreement. As a result many landlords wait until the end of the 12 months to change managers when in fact they can change as soon and the Exclusive Property Management Agreement has expired. The standard agreement is a 30, 60 or 90 day authority but 30 days is probably the most common. Once this Exclusive Property Management Agreement designed to cover the letting period has expired – the process of changing managers is simple.
All you have to do is sign an authority with a new agent who will inform the previous agent that they have taken over property management. The new agent will send over a standard fax to the previous agent advising that they have taken over the property management. On behalf of the landlord and to have the file ready for collection within 48 hours. This notice in writing voids the previous authority. This procedure avoids awkward conversations between The Landlord and former Property Manager.