Most people think they have a grasp on what a Property Manager does. If you ask a landlord, they might say: ‘find a tenant, collect the rent and email me a statement’.
The truth is, if your Property Manager is an experienced professional; they do a lot more than that.
When you engage a Property Manager, you are putting a great deal of trust in their experience and their ability to chart the course of your investment. There is a variety of areas where a property manager can dictate how profitable your investment is today and down the track. To name but a few of their required areas of expertise:
1. Making decisions about signing a lease. You should always consider the expiry date. You do not have to sign a 6 or 12 month lease. Your Property Manager should be advising you on the market/seasonal trends and when it will best suit you and your investment for the lease to expire. For example, if a new client comes to us with a vacant property in Winter, the first thing we would do, is discuss a lease term that would see the expiry in February (8 month lease) or Spring (15 month lease). Seasons largely impact tenant selection and the rent achieved. Whether we are negotiating a rent increase or re-leasing a property, we want to dictate the timing to benefit you, not continue the status quo. Re-leasing in winter means lower rent, higher vacancy and fewer tenants to choose from.
2. Improving the property. Sometimes as Investors, we think we know what needs to be done to improve our property. In fact, if your Property Manager is experienced, they should easily be able to tell you what needs to be done to make the property more desirable, ergo a higher rent and more money in your pocket. They are in the best position to paint a picture of the demographic attracted to your property and what it’s currently lacking. A good example in an apartment (without giving away all our secrets) could be transitioning a linen cupboard into an internal laundry. Obviously this depends on where the laundry is located.
3. When to inspect the property. Most Property Managers would know that according to NSW legislation, a rental property must be inspected at least once every 12 months. After a new tenant moves in, how long before the property is inspected? As a matter of procedure, we inspect within the first 3 to 4 months. By that time, the tenant has settled in and it’s evident what type of tenant we are dealing with. If they need guidance on appropriate cleaning or garden maintenance, we tackle it head on. We don’t wait until 10-months into a 12-month lease, passing on the rectification costs to the owner and calling it ‘general maintenance.’ Additionally, basic repairs that perhaps a previous tenant overlooked are rectified to avoid costly issues down the track.
4. Property Managers are a readily accessible wealth of information. Generally they manage over 100 properties and if they have over 10 years’ experience, they should have witnessed all facets of the business, from visiting the Tribunal to having a Sherriff change the locks. Given this, they should be in a position to ensure you consider the extra measures investors can take to secure their investment. If you currently use a property manager, they should be talking to you about 3 external services available:
- Landlord Insurance – This is vital. Be sure to check your excess and check if there is condition in the fine print about expired leases. Some policies will not pay out, if your lease has expired
- Smoke Alarms – In an apartment, you are not covered by the Strata’s annual fire check. You must seek individual certification of your alarms in accordance with the Residential Tenancy Act 2010.
- Depreciation reports – Investing in real estate is all about deductions. This is not just reserved for new apartments and houses. Make sure you invest in a depreciation report and reap the benefits for years to come.
The main questions to consider are:
1. Does your Property Manager add value?
2. Does your Property Manager give you confidence that there is someone on the ground delicately balancing the needs of the tenant within your capital constraints?