Finding the right property management company is crucial, particularly if you have several investment properties or live in a different area to the properties you own.
A good property manager can save you time, stress, and money by taking care of all the little things that you might not have the bandwidth or expertise to deal with.
However, not all management companies are created equal. A bad manager may not respond to your calls, fail to maintain your property, or leave it untenanted, putting a serious dent in your cash flow.
So how do you pick a good property manager? What are their obligations to you? And what do you do if it isn’t working?
It’s your property manager’s responsibility to market your property to attract tenants and set the rental rate to help you maximise your monthly income. They collect rent, screen occupants, and handle tenancy issues so you don’t need to be involved in the day-to-day. It’s their role to organise repairs and maintenance and help ensure your property is legally compliant.
What to expect
It’s also their job to carry out routine inspections, address any issues directly with tenants and ensure they are resolved. Fees vary from state to state, but in general property managers charge an initial fee of 1-4 weeks rent and a management fee of 5 – 10% of the monthly rent.
A great property manager will go above and beyond what they are obliged to do. They will keep your financial goals in mind and look at ways to maximize your returns and streamline operations for efficiency.
They will have their fingers on the pulse of their local market and will be able to suggest rent increases at the right time.
They will also take a holistic approach to repairs and maintenance and look to reduce the number of tradie callouts by having multiple jobs done at once, or identifying problems early which could be far more expensive to fix down the track.
A bad manager may do the bare minimum, including approving band-aid repairs over and over again on something that needs to be replaced, or neglecting to do rent assessments on your properties and allowing you to fall behind what similar properties are earning.
What to look for
When selecting a property manager, try to pick someone with local knowledge and a portfolio similar to your own. Look at their current rental listings to see how they market their properties and check online reviews for managers with good reputations.
Ask them how they handle problem tenants, how often they conduct inspections and how often they will be in contact with you. Communication with your property manager is key, and if you find them hard to get a hold of, check on your property as it may not be getting the attention it needs or something might be wrong.
Another important consideration is that many traditional property managers are attached to selling agencies, reporting to a sale-based principal. In a set-up like this, it can mean the people managing your properties are the most junior in their company and are simply ‘doing time’ while they work towards becoming a selling agent.
If you can find a company with a sole focus on property management, or at least with a management arm of their business, you will know their whole job is to focus on landlords and their rentals.
Don’t be afraid to switch
If your property manager is not up to scratch and you wish to change, the process is relatively straightforward. Often, the new managers will even handle the change for you.
First, check your required notice period and put your intention to terminate in writing. There is a common misconception that you are “locked in” with your property manager for the term of the lease, which isn’t the case.
Next, check for any hidden fees in your contract. Ideally, check the terms and conditions before signing up with a property management company as some will charge for early termination. Lastly, request all records of leases, security deposits, income and expenses and make sure your tenants are informed well in advance to ensure a smooth transition.