We are relocating overseas in June 05 and plan to rent out our newly renovated house (Brisbane). We have spent the last 12 months renovating the house to a high standard (thinking we would be living in it ourselves).
We have never had an investment property and would like some tips on:
1.questions to ask potential PMs to sort the good from the average, and
2.any special conditions which should be included in the lease.
We are a little nervous about renting our home and any tips you can give will be most appreciated!Thanks
Darren & KerriI can understand why you are nervous renting out your home.
here are some questions you could ask. Just check out this link:
http://www.rentingmelbourne.com.au/html/s02_article/article_view.asp?art_id=109
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auHi Darren and Kerri,
Thanks for your post.
Questions to ask property managers
I think there are two aspects that you want to find out about:
A. Experience: I have found the best property manager I have ever used wasn’t straight out of school, but was a ‘crusty’ lady who, after many years experience, had heard and seen every tenant trick in the book. Despite her awkward manner though, she had a very fair heart and was proactive in supporting good tenants through proper management of the property and the landlord. Experience is worth its weight in gold.
To find out what experience a rental manager brings to the table you just need to ask. Actually, it would be wise to interview them like you would a potential employee. You may also like to think up some case scenarios as a test to see what they would do.
For example, you might ask: “A tenant has fallen behind in their rent to the tune of three weeks. They promise that they will come in and pay in full at the end of the current week. What would you do in this situation?”
A good reply would cover two aspects:
1. The tenant shouldn’t be 3 weeks behind in the first place.
2. There needs to be some kind of payment plan (in writing) to catch up the arrears rather than hoping for a full payment.
3. At what point do eviction proceedings begin?
B. Cost
You also want to know how much the services are going to cost, and not just the ‘obvious’ expense of general management fee (usually a % of rent). Other fees to watch out for include letting fees, tribunal fees, inspection fees, statement fees etc. etc.
Special Conditions
Really, the sky is the limit here provided you do not contravene tenancy laws. Common special conditions include:
> Pets
> Noise
> When rent is to be paid (usually 7 days in advance)
> Need to have carpets cleaned
> Persons (not on the lease) that are able to reside in the property
> Costs to be paid for early termination of the lease (such as advertising etc.)
> Agreed rental increasesIf anyone usues other special conditions or has other comments then please reply to this post as it is an excellent discussion starter.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hiya Darren and Kerri,
I think you are significantly exposed at the moment in your current situation w.r.t. choosing a good PM. Having travelled down this road before, my comments are meant to be realistic…not to fluff you up.
I believe this question of locating a “good” PM as opposed to “an also ran, or bottom feeder”, to be identical to asking how one locates ;
1. A good accountant
2. A sympathetic, knowledgable doctor
3. An efficient, reliable mechanic
4. An independent financial adviser
5. A savvy and shrewd solicitorThe extremely difficult portion is once you probe the particular service provider with your blunt question – are you specifically knowledgable enough in that particular discipline…whatever it may be…to actually disect the answer and quickly establish where that service provider should be placed in their industry’s pecking order ??
If you put it on a scale, graphing inside industry knowledge (in this particular case PM’s)…you are currently at about 5% and probably climbing rapidly…the really bad PM is at about 80%…the good one is at 95%. I fail to see how someone at the 5% level could ever possibly determine which one was good and which one was a nightmare. I believe that situation is relevant for selecting all of the above industry practitioners, not just PM’s. Until you gain knowledge and experience in the industry that you asking about…you simply won’t know.
The PM’s that you may interview will have been asked all of these questions and then some…and will have all of the stock standard answers that sound good to potential Landlords ready to go straight off the cuff…or if they don’t, their Principal or triennial cert. holder certainly will.
By the very fact that you are asking “How do I know which one is good ?”…the answer is you won’t…and it will be completely pot luck, despite the blunt questions.
A personal recommendation from a friend / relative may be the only tangible aspect you could rely upon until you have more experience in sorting the “wheat from the chaff”. Of course, the person providing the recommendation may have had an easy run and consider the PM to be ‘nice’ and a good manager, but may never have had to truly test their skills.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Darren and Kerri
Though I agree with Dazzling there are two techniques that might help besides actually learning how to do it yourself.
1) Ask for references i.e. two landlords and two tenants who you can talk with about the PM – and then talk with them.
2) Sit in a real estate office of a candidate manager and listen- you can look at pictures of houses or read brochures or whatever but there is a good chance you will hear a PM on the phone and you will get some idea of how they deal with situations.Info on being a landlord can be found at
http://www.reiq.com.au/
And you may care to give astorb a look at
http://www.astorb.com.au/advice.htmlCheers
[grin]
PS I’d also think seriously about getting Landlord insurance.Battleships,
I think # 2 is excellent if possible…you’ll definitely get the real picture if you can actually get access to them…they could be out the back in a normal office structure – where this won’t work. Unless they are right out the front where you are standing – you wont know.
In regards to # 1 – who exactly are you asking for references ?? Surely not the PM you are trying to assess. You definitely wont get a realistic picture with the PM offering referees – they aren’t exactly going to direct you to one of their many dissatisfied customers, be they LL’s or tenants ?? This won’t work.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Hi Darren and Kerri and Dazzling
I think asking for references , yes from the PM, is a worthwhile way to add some information to your decision making process. as Dazzling quite rightly pointed out you are not going to get the dissatisfied as referees. However, what if the PM can’t give you “set up” references- that is telling you that they are likely to be unprepared in other ways as well. What if the tenant referees say ” they are wonderful- so understanding when we don’t pay the rent”. These things won’t come out in a standard format – you can however gain insight by getting the referees talking and listening hard to what they are saying and especially what they are not prepared to say.
If you have the confidence you can try this one- first get them talking with set questions( eg what are PM’s strengths and weaknesses) then general stuff, then when you think you have all the info you are likely to get say “Thankyou very much for your help. I have made extensive notes of our conversation and I will be relying on your advice in making my decision. Is there anything you would like to add?” If they have been honest and open this is unlikely to phase them, if they are pathological liars it is not likely to phase them. However, if they are somewhere in the middle, here is where you are likely to get a slightly fuller story and a bit of qualifying about what has previously been said.
On a different note:-
If you name your suburb there may be someone on this forum who is willing to give you a recommendation.Cheers
[biggrin]Thanks for your comments and ideas everyone. We are located in Morningside Brisbane, if anyone has any leads on good PM or info on the PM fees they are being charged in a similar area. Also, what should we be looking for with Landlords Insurance? Cover..Costs..
Have a wonderful week!Thanks
Darren & KerriIn addition to all the good advice above – ask them what their vacancy rate is like on the properties they manage, and how long it usually takes them to let a property like yours out.
If they can’t/won’t be specific with this, then I don’t know that I would trust them. Also make sure they see you write this down, and guage personal body language to see if they appear to be lying.
Make sure when you sign with the PM, it will be that PM (who you have checked out) dealing with your property and not a junior beneath them.
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