Settlement is coming up for my first IP and I'm unsure where to go from here. As it is my first IP, I don't yet feel confident enough to manage it myself so I will be turning to a real estate agent/rental management company to do it for me.
It is a new apartment complex and I have had an offer from the apartment's real estate agent to manage it but I figure I should go elsewhere as everyone else in the apartment will be most likely to hire them.
How much can I expect to be charged for an agent's services? Is it correct that I only pay if it gets rented out as they get paid a percentage of the rent? For this reason am I able to employ more than one agent and see who comes back with the best tenant/rent, or is this considered unethical?
Generally an agency agreement is done on an exclusive basis in order for them to procure the best tenant and to work in your best interests (would you compete for the sake of a couple of hundred dollars?). Interview a couple of property managers, find out how many properties that they have, the number of staff looking after those properties, how many vacant properties they have, how many similar vacant properties they have, how many they have in the block, the level of experience of the staff, where do you go if you don't get resolution of your issues with the property manager (ie who is their boss), what services do they provide to you, how do they choose their tenants etc.
Fees vary from state to state & property to property & the number of properties that you offer to them to manage. This is charged as a % of rent collected.
Thanks for that info, Scott!
I'll have to go speak to a few places next week and see what is out there.
Having the same property manager as the majority of others in the complex isn't necessarily a bad thing. My PPOR is a complex that has almost an identicle complex next door (same developer and settlement was 6 months apart) There is one property manager that was recommened to the buyers and many have gone through with that manager. I'm the chairman for the council of owners. Having one main property manager has made it quiet easy for us to ensure that lower quality tennants are dealt with quickly. We pushed to have a few breech notices issued for noise, using pool outside of operating hours, etc. This property manager is now quite aware that if tennants play up the council wants them dealt with. As a result this property manager is screening tennants quite well and laying downn the ground rules before they move in. Most of the issues we currently have are coming from units managed by REA who only have one or two in the complex
We use on site managers. When they are choosing your tenants they are also choosing their neighbours.
The way I see it is if at settlement time I follow the pack there are likely to be tens of apartments up for offer from the 'primary' property manager.
If I go with a manager who is managing less lots from the complex, there is a greater chance of a client being interested in my lot.
I guess demand plays a big part in it really… Thoughts?
You have a point, but I feel the market will determine how many tenants are available not a particular property manager.
Does the on site manager own the management rights for the complex? If so they have a vested interest in securing as many tenants as possible as this is how they secure their financial future.
If your tenant has an emergency problem with their apartment and the on site manager is also your property manager they may get a faster response to their problem, which may also save you agro.
These are just general thoughts. Why not give the OSM first chance to secure a tenant and if you are not happy try an outside agent.
Another similar complex settled around 2 months ago so for interests sake I might follow up with the agent who is managing that building and see how they have gone with getting tenants in.
What powers have I got to ensure that they don't provide me with inflated figures? For example, am I able to ask to see a current rental contract (with personal info blacked out) for a similar apartment to get an idea of how much they could get me for it?
Why not go to http://www.realestate.com and look up available rentals in your area to give you an idea of what you will be competing against.
I think asking a few agents in the area how the rental market is is a good idea. If you say you are looking to provide a rental property (no need to tell them at this stage where) and you want some recent information re the weekly rental anticipated, current vacancy rates, enquiry rates, length of leases being sought by tenants etc this should give you a good idea of what to expect.
Once you have this info you can decide what would make your property a priority for a tenant to rent – e.g. maybe consider a rental free period
Yes the PM may have 20 vacant properties on their books for that complex, but another may have 50 spread out between many complexes. When my complex settled the PM who had the majority of units available did a fairly large advertising compaign and most units were filled fairly quickly. What is more likely to be a factor is where your unit is positioned in the complex. Is it ground floor with a large couryard, top floor with views, near a noisy swimming pool or entrance gate, etc
Hi,
Also be aware of your responsibilities as a landlord as well as what the agent's/property managers responsibilites are. I've just recently changed property managers due to a whole host if issues with my previous one. Ranging from not replying to emails or phone calls, to not performing inspections, charging advertising fees without a change in tenancy, calling tradies in for simply things like changing batteries in smoke alarms, allowing tradies to perform renovations without my permission, the list is pretty long. Sorry to rant but if another investor can learn from my lesson then it's worth it.
Choose the property manager based on their focus on not just being able to collect the rent on time, look at what they are offering. Are they proactive, do they focus on customer service, are they professional in their dealings not only with you but also the tenant, do they have technology services offerings such as online statements, do they practise good record keeping etc.
You might find a property manager that is offering a cheap rate but if you dont have piece of mind that your hard earned investment is being managed properly then the extra few dollars for a more suitable manager might be worth it.Hope this helps and good luck
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