Property ManagementChoosing a property manager can be a daunting task, especially if you’ve never rented a property before. In order to find the right property manager, you need to ask the right questions.
1. Are you the property manager who’ll be looking after my property? And if not, who will be?
Sometimes, a business development manager or manager will facilitate the initial discussions with you about managing your property. When you meet with them, you want to make sure that you know exactly who will be looking after your property and to arrange to meet with, or learn more about, that person prior to committing to the agency.
The other question associated with this one is: ‘How long have you/they been with the agency?’
You should be looking for a property manager that has demonstrated longevity in their role which proves that this is a career for them. Due to the stresses of property management, staff turnover is high – you want to try to ensure that you will be talking to the same person in six months’ time.
Be sure to ask the property manager the following questions: - How many years have you been working in real estate? - How many years have you been with your current agency? - How can you demonstrate your knowledge of the current rental market in my area?
2. How many properties do you personally (as well as the company) currently manage?
Naturally you will want to go with an agency that has a reputation for being great property managers. But you need to ensure that they are not too overloaded to look after your property carefully.
As a general rule, you don’t want your property manager to be currently looking after more than about 120 properties. If the agency has 450 properties on their rent roll, they should ideally have three or four property managers to cover these.
3. How many tenants on your books are currently in arrears and what action do you take if a tenant is behind in rent?
The agent should outline the company policy for ensuring that you will be paid what your tenant owes you. Ask them: - How often will money be paid into my account? - How do you collect the rent from the tenant? - Do you enforce late fees? Your property manager should also provide you with a clear outline of their policy for what happens when a tenant falls into arrears.
4. What happens if my property needs some urgent maintenance?
Many agencies will have a list of preferred contractors that deal with emergency situations at your property and they’ll organise quotes and co-ordinate required works to a pre-arranged financial limit. Some agencies will also offer the service to pay all property bills on your behalf if required. Make sure to discuss this with your agent to ensure that you are comfortable with the process.
Be sure to raise the following in conversation with your property manager: - Are you able to pay for property bills on my behalf if required? - When will you contact me if there is a maintenance request?
5. What methods would you use to market my property and attract tenants?
This is an important question to ask. The last thing you want is the agent handing out your keys to prospective tenants and allowing them to view your property on their own. Instead, your property manager should be present at the property whenever a prospective client is inspecting the property. They should have a database of quality tenants looking for a home and/or a clear marketing strategy in order to find quality tenants for you. Ask your agent how many days they are available/planning to show the property to interested tenants and how they intend to advertise your property. Remember that many prospective tenants work during business hours and need to inspect on the weekend. A good agent will be available for open-house inspections on the weekends and after standard business hours.
Some examples of what you are looking for: - Online listings on websites such as realestate.com.au and domain.com.au - A professional ‘For Lease’ sign at the front of your property - Email blast to past and current rental database - Advertising within their agency
Here are some important questions you don’t want to forget to ask: - Do you hand out keys to prospective tenants or attend each property inspection? - Do you have staff available to show my property to prospective tenants six days a week?
6. How do you screen tenants?
It should go without saying that a property manager will do their best to personally analyse potential tenants. The screening process needs to include the use of a subscription to a major tenancy database. Assuming they are present when the interested tenants inspect the property, this is a great starting point for them to assess their suitability.
When interviewing your prospective property manager on their screening process, make sure they address the following question:
Do you have a system for checking prospective tenants regarding credit worthiness, past rental history and current employment?
7. How many inspections do you carry out per year? And what is the cost?
How often your agent can carry out inspections depends on the legislation for your state, but you want to ensure that they are complying with the maximum allowed. Ask what sort of report you will receive and whether there is an additional cost or if it is built into your management fee.
If you have any special requests of your tenants, either inside or outside of the house, you need to make sure to include these in the tenancy agreement.
Start by asking these questions: - How often does current legislation dictate that you can inspect the property? - Will you provide me with property inspection reports? - What other forms of communication can I expect from you? Will I receive: Monthly statements? Email updates? General market information? Maintenance issues? Rent reviews? Lease renewals? Warning about when tenants are vacating?
8. What is the full cost of management? Please detail all possible costs and fees, and indicate whether these fees include GST?
Unlike the fees associated with selling a property, there are many ongoing fees that are presented when appointing a property manager. The three basic upfront fees you will incur are: - A Management fee (a commission percentage of the weekly rental figure) - A Letting fee (often one or two weeks’ rent) - An Administration fee (usually a monthly fee for administration) Ask the Agency what the management fee includes, as it will often include advertising of your property to find a tenant, your inspections, reports and organisation of maintenance quotes – and remember that these fees are always negotiable.
9. What is your estimate of the weekly rental potential of the property?
When your property manager answers this question, you should follow it up with; ’What are you basing this on?’ The agent will need to demonstrate a good understanding of similar properties in your area and rents that they are achieving – from both their agency and others.
Be sure to ask: - On what are you basing your estimated figure? - What are tenants in similar buildings in the area currently paying?
10. How can you ensure the best returns from my property? And what else can you do that another property manager can’t?
Property management is not just about collecting the rent: it is a comprehensive management service which should be provided by a trained property manager. You want to find out what differentiates this property manager from his/her competition and what his/her strengths are.