Should I have a property manager..

Hi John,

This is a situation I will find myself in a bit later once I make my first purchase. My personal view is that time is your most valuable asset. By buying the services of a property manager you are infact buying yourself time that would otherwise be spent dealing with the tenant, fixing toilets etc..etc.. If you get a property manager, you’re diverting a small % of your monthly rent to have all the affairs of the property managed so you are free to look for bigger and better deals. On the other hand you could save yourself a little money and manage your properties yourself.

If you do plan to manage the properties yourself to save yourself the money then I would strongly suggest that you invest the time to learn how to be a property manager and speak to others who manage properties themselves to hear how they’re going, what troubles they’ve had, issues they’ve had to deal with etc. Perhaps there are others here who can give their input on how they’ve gone managing their own properties. []

Regards,
Brett

John, being a former Property Manager I can strongly recommend having the property managed by someone else as it frees up your time and is TAX DEDUCTABLE. The key points are: do you have the time to learn the RTA Act and manage the property professionally? If you decide to have the property managed, MAKE SURE YOU SHOP AROUND AND INTERVIEW POTENTIAL MANAGERS EXTENSIVELY including finding out the support network for the rental department within the office itself i.e. does the principal support the rental department and is your manager a manager or a receptionist/manager – avoid the latter!!! Too many real estate offices put a junior in without training and without any idea what they are supposed to be doing. Laws have tightened up now on the training but only for new managers.

When my husband and I start investing early next year (finalizing the building of our home first to get the equity) I will manage the properties myself in the beginning as I know the RTA Act back to front but once we get above about 10-20 (depending on time available) I will then likely hand over the management.

As always the choice is yours, there are always pro’s & con’s. Goodluck!

As discussed the options are relatively straight forward:

1. Spend a small % of your cashflow on getting proffesional property management so that you have more time to look for bigger and better deals.

2. Manage the properties yourself, increase your cashflow a little bit but spend more time dealing with tennants, problems, learning how to effecitvely manage etc.

So lets assume that want to go down the track of getting professional property management. Where do we begin? What issues/criteria should be covered in meetings with potential managers?

Here is a small list of issues which I think you should make sure your property manager has the capacity to deal with, perhaps others would like to add their own issues so we can put together a comprehensive list for people to use in the future as a reference.

They should:

* Advertise the property to prospective tenants in an efficient manner to minimise property vacancy and personally interview and reference check all prospective tennants.

* Have all Tenancy Agreements in writing, incorporating all the terms and conditions of the Tenancy.

* Lodge the rental bond with the appropriate agency.

* Have the tenant sign a written report on the condition of the property prior to tenancy.

* Provide a monthly statement with rental monies.

* Notify owners about necessary and prevenative mainenance.

* Conduct a routine inspection of the premises every six months and provide written report over 12 months (unless one is needed sooner).

* Have a team of maintenance contractors on immediate notice.

* Inspect all major maintenance work prior to payment.

* Pay property accounts and statutory charges as directed, including water rates, council rates, body corporate fees, public lighting, insurances etc.

* Provide effective follow-up of rental arrears.

* Prepare applications and serve notice to the Tenant and the Residential Tenancy Tribunal in compliance with relevant legislation and/or the Tenancy agreement.

There’s a bit there to think about, but looking it over I think I will be more than happy to have a proffesional deal with all that.

Regards,
Brett

John,

If you are worried about performance of property manager’s, why not approach them with a contract between you and them based on performance? A little like a Key Performance Indicator (KPI). Perhaps you could have it corresponding to the vacancy factor on your properties. Eg: Say you are prepared to pay 10% for 100% tennancy, 9% for 95% like a sliding scale.

I haven’t done it myself but it just came to me whilst reading your post. Food for thought though. If the agent was serious and committed, then they may be happy to go by it….

Regards.
Matt