Let’s start with the bottom line: is your investment growing more because of the expertise of your property management company?
We all know it’s a good idea to have an investment property, just as we know we should spread our investment risk by diversifying, but it’s fair to say there’s more to managing property than collecting rent and organising maintenance.
The basic expectation for a landlord paying management fees should be a relationship with their property manager or the principal of the business and a business plan for how their investment property can grow in capital value for them.
Some basic elements of this could include:
- an annual routine inspection,
- a negotiation for the renewal of the tenancy agreement,
- an annual rent review,
- a recommendation for maintenance (scheduled, non-urgent and improvements).
But the value-added elements come in the form of the extra services they can incorporate into the management of the property. Obviously a property manager can’t do everything but they’re good at coordinating all the services you need for the total management for your investment.
I’m sure you can’t argue that if property management included depreciation advice or information pertaining to competitive mortgage appraisals and an annual review for making maintenance and improvement suggestions to increase the capital value of the property, they’d be worth the management fees. And then some.
A property management fee for the average rental property is most commonly less than a monthly mobile phone bill. It’s certainly important to shop around, but I’m not talking about shopping around for a difference of half a per cent, I’m talking about quality of service over and above market expectations, and the agency’s dedication to increasing the capital value of your property.
We all know someone who’s been burnt by a property manager who never fulfilled their promises. From not knowing the garage door was broken, to “the tenants vacated last week”, it seems everyone has a story. The good news is that this industry is in a time of reinvention and sub par service won’t be tolerated in the future.
But here’s the catch; you need to set the expectations for what you want for the management of your property. What’s the value of having an expert manage your investment and advising you on how to improve it? What are your requirements in order to feel that this service is being delivered?
When you know these answers here are some questions to ask your property manager:
1. Do you use a rent payment system?
2. Can I nominate when I can receive my funds?
3. When can I inspect my property?
4. Can I set a range of preferences for the life of the management?
5. What are the recommendations for the growth of the asset?
You can be sure your property manager is doing a lot of work, you just need to make sure it’s the kind you need!
Emily Sim is the brains behind property management online community – www.apmasphere.com. With a career that includes senior roles at McGrath Partners and the Ray White Group, Emily is dedicated to finding new ways to deliver wealth to property investors. Email: firstname.lastname@example.org