How to: Choose the best property manager
Property management is a skill that not everyone has, and if you’re looking for the best professional to take care of your investment property then you’re going to want to ensure you’re leaving it in the best hands possible.
We have written article, after article about the importance of getting the right property manager and the benefits they can have for your overall investment strategy. But when it comes to actually finding them… that can be another story.
There are a number of qualities that excellent property management professionals have. Observer Cameron McEvoy previously provided us these six things to look for. These included the right type of testimonials, and he also suggests letting the agent know that you're going to be interviewing a number of different property managers.
Here are some more crucial skills you must be looking out for.
Communication
Arguably one of the most important qualities in a good property manager is the ability to effectively communicate. Think about the number of situations in which the property manager is likely to be required to speak to your tenants, and to yourself, and keep everyone onside. You’re looking for a good negotiator, who is on your side, but can be both polite and firm.
Remember that you want them to be able to solve problems without needing them to go to Tribunal, so they need to be good at calming down conflict, however when it is unavoidable they need to be able to present a factual case, clearly and appropriately.
This is also largely about personality – are they likeable? Are they reliable? If they say they will call you, then you want them to be calling. Reliability is absolutely crucial for both your ease and the happiness of your tenant. Remember that your tenant is important, and your property manager should work for you, while caring about the safety and comfort of your tenant.
Experience
The amount of experience that your property manager has comes down to your comfort level, however it’s worth remembering that ‘years’ of experience isn’t necessarily the same as the depth of experience that other property managers have.
Ask probing questions about their most difficult experiences with tenants and how they managed to fix the issue (see over page for some good questions to ask when you’re interviewing).
Property Observer notes that one particular agency prefers to hire those with more ‘life experience’ than property management experience, arguing that the laws and systems can be taught but that it’s much harder to train someone to be good with people and to empathise.
Despite this, it’s unlikely you will want a rookie in charge of your property. Ensure you ask who will specifically be managing your investment, as often you will speak to a company principal or director, only to later find the property managed by another staff member.
Fees
There’s a reason this isn’t top of the list and that’s because it shouldn’t be the main focus. At the same time, you will want to ensure that they are being competitive – ask each about their fees and specifically what this includes. Regularly, it will be an all-inclusive fee, however it’s always worth double checking.
If a property manager is providing an exceptionally low rate, remember the "too good to be true" rule of thumb. Generally, expect to get what you pay for. Here, Leah Calnan explains what you might lose out on if you rely on the lowest rate.
Systems
If the agency doesn’t have a dedicated property management department then you need to be asking some rigorous questions about how they will adequately cater to your investment property and your tenants.
Ask them about how they keep track of when inspections are meant to take place, and get them to talk you through the processes that they have in place. What checklists and record-keeping systems or software do they have? For instance, some franchised agencies photocopy all of the keys and items they provide the tenant upon signing of the lease and payment of the bond so that they know specifically what they should be getting back. Similarly, another franchise provides a "welcome pack" to all tenants with extra copies of their business card, information about the property and similar within. Some smaller offices do not offer these things, however ensure personal service to both the tenants and the investors.
Find out what the emergency and back-up plans are. What happens if your property manager is sick or leaves?
Many investors also want a personalized service that caters to them, and this should be able to be provided. For overseas investors, or those with larger portfolios, they may be happy to provide automatic authorization for expenses under a nominal amount, such as $100. However, other investors, particularly new investors, will often want to be asked about every dollar spent.
The best property managers will be open to this type of flexibility in their service offering and are even likely to ask you these questions ahead of time.
Don’t necessarily believe that because a real estate agent is under a branded franchise that they will be better than a boutique agency. They should all be assessed on their own merits. While franchises usually have fairly rigorous systems in place, you may find that the flexibility of a boutique agency suits you more.
Market knowledge
The best property managers know their areas inside and out, and are able to quickly advise on how much rent you can achieve, vacancies in the area and if there are any quick fix-ups that you can do to increase your rent. Compare the responses you receive from the property manager with statistics and online listings.
Good property managers should also be proactive in reminding you when leases are coming to a close, and letting you know that your rent may be able to be increased a certain amount. Ask if there are any specific alerts provided by property managers.
Turn over page for questions to ask.
Questions to ask when you're looking for the best property manager
When you're picking the best property manager, you'll want to approach it as though it is a job interview. Have some questions noted down (print this page if you need to) and ensure to add in areas that are of particular concern to you and your property. For instance, if you are in a cyclone or bushfire-prone area, then you may want to specifically ask about this aspect. Or, if your property has a pool, then you might want to ask about how this should be maintained, and whose responsibility it is.
Ask as much now to save yourself grief down the track. Here are some questions to get you started:
What is the leasing process, and how do you find and choose tenants?
How long does tenant selection take?
What is the average amount of time it takes to lease out a property in this area?
How do you verify tenant information?
What is your current vacancy rate? (Note: This is different to the area’s vacancy rate)
How do you handle rent arrears?
How do you manage a rent increase?
How often are inspections undertaken, and what information will I be provided?
In a situation where a tenant is complaining about maintenance, what would you do? (Be specific here in providing a situation)
How will I receive statements and funds?
Do you have any online portals that I can use to check rent and information about the property?
How often will I hear from you, and in what form?
What number of properties are you currently managing, and what is your maximum?
Source: Forbes Realty, REINSW
You will also want to collect some different paperwork and examples of what to expect through the process.
Here are some pieces of information you might like to collect, and compare, between property managers:
- References, both written and numbers to call of investors with larger portfolios using the company.
- Online listings (find these yourself) of rentals they are advertising. Check them for accuracy, presentation and spelling.
- An inspection report – check to see how thorough this is.
- A rental appraisal including comparatives.
- Check the comments in online forums, if any, about the agency or property manager.
- Ensure they have a real estate agent licence.
Finally, there’s the option of heading to one of their open homes posing as a prospective ‘tenant’. How do they present the property, and treat those looking around?
What are the most important factors to you when choosing a property manager?