A property manager is an important member of your A-Team. They will control whether or not your property performs well, so it is essential that you choose the right property manager for your investment property.
Besides maximising your rental returns, there are many tasks involved in managing a property; from tenant selection to property inspections and dealing with tenant complaints. A property manager saves you time and gives you the freedom to concentrate on other things – such as building your property portfolio.
Property management companies will vary in terms of their management fees and management contract terms. It is not always best to choose the cheapest, because they may not be the most suitable or the most experienced.
Here are some tips on how to choose the right property manager.
1. Interview Questions
Make sure to take the time to interview your potential property manager. Ask relevant questions such as:
- How many properties do you manage?
- How often do you conduct property inspections?
- What is your management fee?
- How do you follow up on late rental payments?
- What are any additional costs (such as advertising and letting fee)?
- What is your complaint process?
- How do you manage vacancies?
- How do you select tenants?
2. Rent Roll
It is essential that your property manager has an efficient rent roll. If they manage too many properties, there is a good chance your property will not be inspected regularly or your tenants maintenance issues will go unattended, simply because the manager does not have the time. Each property needs 68 hours of management hours per year, which means the managers rent roll should not exceed 80 properties.
3. Management Contract
Your management agreement must be competitive in terms of management fees. The current standard rates vary between 6% and 11%. The contract must also be flexible, which means the minimum termination period. You need to be able to change managers within a short period of time if it doesn’t work out with your existing property manager. Currently the standard termination period is between 30 and 90 days in writing, or earlier if there has been a breach of contract.
4. Tenant Screening
It is your property managers role to list your property for rent and hold open home inspections. Your manager will collect tenant applications and screen all applicants to make sure they are trustworthy. This will reduce your chances of experiencing property damage and missed rental payments. Potential tenants are checked against a national tenancy database and screened by checking employment, references and previous rental records.
5. Managers Experience
Check that your manager has the necessary experience and skills to manage your property and maximise your rental return. All issues must be attended to in a timely manner with regular communication between the manager, tenants and the owner. There must be an efficient rental collection process, preferably with direct debit to avoid missed rent payments. Rent must be reviewed at the end of each lease, to be in line with the market. Property inspections must be carried out regularly to ensure your property is compliant with safety regulations and is well maintained. Experienced managers can effectively handle tenant complaints and proactively minimise vacancies for your property.
There are many tasks involved in property management, so it is important to choose a good, experienced manager for your investment property. Remember to do your interviews and if you need advice, our team here at JR Prosperity Partners can help you choose the right property manager. Contact us today on 1300 522 562.