Evaluating Your Current Property Manager
What you value in a property manager will undoubtedly vary across different investors, however there are some fundamental jobs all property managers should be strong at.
Here is a look at some key measures to determine if you and your property manager are a perfect fit.
Do the properties they manage match your property?
A good starting point is to assess whether your property manager is skilled at managing your type of property. For example, if your property is suited to student accommodation, you wouldn’t want your property manager to be a specialist in high-end McMansions! And vice versa – if you’re targeting families, you wouldn’t want someone who is only skilled in small apartment management.
How do you get on?
While you don’t need to be best friends with your property manager, you want to make sure you get along. If you both dread talking to each other, no skill or service will help transform this relationship.
Is your property manager licensed or certified?
Is your property manager licensed or certified as a property manager in their state or territory? This is vitally important and something you should check.
How effectively are they managing their workload?
There is no magic number with regards to how many properties is too many for a property manager to have in their portfolio, as some may be stretched managing 50 while others are all over 150. It really comes down to their skills and how good they are at juggling multiple tasks at the same time.
To assess your property manager, think about how stressed they are. Are they unapproachable, slow to return calls and emails, or seem rushed when you talk to them? These are signs they may be working beyond their capacity.
How regularly do they conduct inspections?
Regular inspections are key to ensuring your property is being looked after. Your property manager should inspect your property at the very minimum once every year, while generally biannually is preferred, and provide you with a report.
What is their eviction rate like?
If their average eviction rate is more than 5% it may show that there is an issue with their tenant screening process. Without proper screening, you may find yourself in a situation where a criminal moves into your rental property or you have a tenant that is unable to pay the rent.
What is their average bond refund?
If their average bond refund is less than 10%, this is another indicator that their tenant screening process isn’t very good, or they are particularly ruthless with regards to bond refunds.
While it is always good to have a property manager committed to ensuring you get sufficient recompense for any damage that has been sustained while a tenant has been living in your property, there are two dangers to having a ‘bond-happy’ property manager:
You run the risk of a bond being unjustly kept by the agent, which could result in tribunal or legal action by the tenant
Your property could gain a reputation for people not receiving their bond back, which could impact future rental vacancy times.
Do they conduct an annual rental review?
As you likely know, markets can fluctuate greatly over a 12-month period, and ensuring you charging the right rent is important. Consider whether your property manager is being proactive, and conducting annual rental reviews and proposing rent adjustments where appropriate.
Is your rent received on time?
Good property managers work to ensure your tenants pay their rent on time. Consistent rent collection directly affects your cash flow, and in most cases loan repayments.
Is your current property manager effectively managing this each month? Are they enforcing lease policies if payments aren’t received? If not, then it may be time to find another property manager. LJ Hooker has an excellent track record in ensuring rent is received in full and on time, as we know how important this is to our clients.
Poor maintenance performance
As a starting point, if your property manager is failing to address maintenance requirements as detailed in your rental agreement, or if the property is not maintained to ensure a safe and healthy environment, your tenants may have the right to break the lease without penalty, leaving you out of pocket and in search of new tenants.
Secondly if they fail to address urgent maintenance issues as directed by yourself, you could lose thousands of dollars in repair costs because of their lack of action.
Limited service offering
Some property management companies provide a limited range of services and, while they may then also charge less, this isn’t the best service model. Some management companies only manage rental payments and certain maintenance tasks and leave the advertising, tenant screening, inspections and rental appraisals up to the landlord.
Best-of-breed property management includes the full list of responsibilities detailed above and, considering their expenses are often tax deductible, if your current property manager isn’t providing these services it may be time to make a switch.
Lack of property management expertise
Does your property manager have the experience to attract and screen potential tenants, do thorough reference checks, and review potential tenants’ rental history?
Experienced property managers, like the ones working at LJ Hooker, see hundreds of rental applications every month, and are experienced at attracting and identifying the best tenants. While you have the final say as to who rents your property, if your property manager lacks these important skills and you’re finding the quality of tenants put forward to you for consideration aren’t appropriate, it may be time to look for a more experienced management team.
Do they inform you of legislative changes?
Is your property manager up to date with the constantly changing legal requirements? Are they attending training and education programs to stay across any legal changes and advising you as to how this may affect you and your property?
If they are not up-skilling themselves and communicating with you regularly, it may be time to change teams.