Should You Appoint A Property Manager?
Purchasing an investment property is an exciting time. You’ve done your research, weighed up the options and negotiated the purchase price to secure your investment.
Now it's time to find a tenant and have your property start earning an income, after all that’s the point of an investment property, right?
With so much effort and diligence put into the purchasing of a suitable property, it's amazing how some landlords take their foot off the pedal when it comes to maintaining their investment moving forward.
So what is the best way to maintain your investment so it's deriving an optimal return for you?
Do you manage the property yourself or consider having an agency manage the home on your behalf, knowing that they will be taking a slice of the income cake for doing so?
Many people go down the path of self-managing which can be a cost-effective decision - if they are lucky enough to secure great tenants who maintain the property internally and externally, always pay rent on time and treat the property as if it was their own home. But the fact is many tenants are generally good but not perfect.
Then there are the trouble tenants who are always in arrears, have little or no regard for the cleanliness of the home and don’t report maintenance as it arises. These types of tenants, if you are unlucky enough to allow one to rent your home, are not only stressful to deal with in the short-term but in the long run will end up costing the landlord far more in repairs, maintenance and lost rent than employing a professional to manage the property.
Having seen many self-managed homes over the last 25 years of my career I can vouch for the benefits of using a qualified and licensed property manager with some of the main benefits being:
The agent acts as a conduit between landlord and tenant creating a buffer which can be particularly effective when negotiating rents or following through with breaches of the Residential Tenancy Act. The property manager will also have the responsibility of attending to tedious tasks such as home opens, out of hours or weekend viewings and emergency calls.
Generally, a better quality of tenant can be secured by completing screening procedures that self-managed owners may not be able to do. A good agency will have access to the NTD or National Tenancy Database which keeps a record of all 'blacklisted' tenants and information as to why they have a mark against their name. Issues can be identified early on by completing full background checks including work references, personal references, previous rental references and proof of income. If a prospective tenant rates poorly in these areas the decision can be made early on as to whether or not they might be considered 'high risk'.
Running into legal problems are less likely as a licensed agent should know the state legislation back to front and know when and how to implement the same. A property manager will draw up a legally binding lease and explain to both the tenant and the landlord their obligations under the contract.
Greater knowledge of the rental market also means that a property manager will know accurate rental rates for homes in a particular suburb or area and will know what weekly rate can be asked for a property, without demanding too much and turning prospective renters away.
Shorter vacancy periods can be achieved through effective agency marketing on the right websites for maximum exposure, highlighting specific benefits of the home and local area. A good property manager will advise landlords on how to best to prepare the property for lease and organise professional photography so the property is presented at its best.
Effective rent collection is a high priority for a managing agent, not only to keep their owners happy and fulfill their management obligations but to ensure there is constant cashflow. If a tenant is behind in rent it is the property managers duty to recoup funds, which will involve following strict guidelines under the Residential Tenancy Act for breaching and then terminating the tenant if it comes to that point.
Maintenance costs can be reduced when the managing agent identifies problems or issues early on. Routine inspections conducted by the property manager are a good opportunity to inspect the home internally and pick up on repairs that the tenants may not be aware of or reported themselves. A property manager will also have access to numerous trades that they use regularly meaning the cost of repairs is generally cheaper and the work more reliable.
Other benefits include less stress, from not having to personally be involved with the day to day management of the property, peace of mind knowing that the home is being managed by a professional and that all legal documentation is in place to protect the landlord.
Overall an experienced property manager will identify any red flags early and deal with the issue at hand forthwith. This is imperative to ensure that the property is maintained and producing a solid income for the life of its ownership.