Choosing a Property Manager

From: Joanna K


Hello All,

I thought I'd offer some of my opinions in choosing a property manager.

If you're not happy with your current property manager, sack them! But, being totally honest with you, if they do not own the business or have an equity share in the business that is doing the property management for you, it is unlikely that they will really give a hoot!

When looking for a property manager you need to look out for the following things (this is a long list!):

a) the number of years experience the property manager has (note that I said property manager and not the agency!)

Don't go to an agency just because they have a brand name....it doesn't mean their service is going to be any better. Just to expand on this even further...most agencies have a sales department and a rental department. Generally speaking the business owner has a sales background and not a rental background. Now, most business owners look after the sales department because a) high income, b) high turnover and don't look after their rental department as much because a) low income b) high maintenance c) too difficult.

Because the rental department is such a headache the owner will basically leave everything to his/her staff member, who is happy to collect his/her $600 per week. As they do not suffer or benefit directly from the services they provide or don't provide to their landlords, so why should they give a real damn? They are just basically doing a job.

b) Do they give a money back guarantee?

This is a big call in the real estate industry, so if you find someone who does offer a money back guarantee, you can feel safe that they will do as they say and say as they do.

c) How long has the property manager been in that particular agency?

You want stability. You want someone who will learn your property inside and out. You want to pick up the phone and talk to that person today, and in six months time you want to be able to talk to that same person. Due to the stresses involved in property management the staff turnover tends to be quite high.

d) Is the property manager licenced? Or do they have just a certificate of registration?

Anyone can get a certificate of registration and claim to be a property manager or real estate agent. Seek out a licenced agent. They have met all the educational requirements and they have had a minimum of 2 years on the job training. Also, try to choose a mature property manager, don't go for someone less than 25. I know this is discriminatory, but the way it is, is the way it is. I don't want to offend, but someone older than 25 will (hopefully) have a higher perception of people and more finely tuned people skills, which is imperative.

e) Does the property manager give you a written proposal?

If they just look at your property and say, OK we'll put it on our books...they are not going to service your needs. Look for someone who has put in the time and effort to present a professional image to you. If they have made that effort, they will make to extra effort when looking after your property.

f) Can they give you references?

Insist on this!! Very few property managers get references or letters of recommendation.

g) Ask the property manager what they think of tenants!!

This sounds dumb I know. But one of the biggest lessons I learned when doing my training is that to get a good tenant and to get them to do what you want need to treat them well, not like they're the scum of the earth!

h) Look for other services they offer

They should be able to offer ancillary services such as assistance with finance or depreciation schedules...things of this nature

i) Are they close to your property?

Anything with in a 30minute travelling distance is good. Anything further than that is not really in your best interests

j) Make sure they have a pro-active approach

Basically this means that they actively do tenant reference checks, they do thorough ingoing and outgoing inspection reports, they do regular periodic inspections, (6 monthly is good - 3 monthly is too much), they do regular drive by inspections, that sort of thing. Make sure they invite you to attend each and every inspection. And regardless of whether or not you attend, you should always receive a written report!

One last thing....ask them how regularly they keep in contact with you. The worst complaint anyone has about property managers is lack of contact! A good property manager should be in contact with you one way or another at least every 3 months or so. This is a big ask, so it doesn't happen that often. I'd personally settle for being contacted every four months.




Kind regards
THE RENTAL SPECIALISTS

Joanna Karavasilis
Principal

www.rentalspecialists.com.au
rentals@rentalspecialists.com.au
 
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Reply: 1.1
From: GoAnna !


I think the three crucial points are

1. Whether Property Managers hand out keys or not. Walking around the property with prospective tenants means that they have a chance to promote the property as well as an opportunity get to know the tenant a little better. It is amazing what will come up in general chat that would never be written on an application form!

Often those property managers who just hand out keys don't even meet the tenants. The receptionist hands out keys and takes the application form. Not much point in having a qualified and experienced property manager when their receptionist is doing the work

2. Attitude to tenants. 110% agree with Joanna. Tenants who are treated with respect tend to respond in kind. This means you also need to do your part and respond to tenants needs.

3. Communication. You need to know if the rent is late and why, if a tenant is unhappy and why etc. Without communication small hicups can turn into major dramas.

GoAnna !
"Obstacles are those frightful things you see when you take your eyes off your goal."
-Henry Ford
 
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Reply: 2.1
From: J Parker


Thanks Joanne!
There is some great advice here for all of us who are unhappy with their current managers. Another thing I'd like to add is that managers contact you about ANY repairs, not just the ones that cost under $200. I've heard stories of landlords being charged for a locksmith to come out and change the locks over when all that was missing was a spare key to the front door (which the agent had mislaid but the landlord had another!)
Cheers, Jacque :)
 
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Reply: 3
From: Simon St John


Great post (although an advert?) with lots of great advice. I certainly agree with respecting the tenant. Always wondered why most agents treat tenants like #$%&* when tenants often become buyers in the future.

I have often wondered why an agency specialising in IP Management/Rental ONLY hadn't happened earlier.

Is anyone aware of it in Melbourne?

If not, is that a business opportunity or what?

Simon
 
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Reply: 3.1
From: Paul Zagoridis


Another great sharing of information and experience. Thanks Joanna.

I just want to say our anti-spamming ethic does not normally stretch to a signature tacked on to such an informative post.

Many forum members in the past gave freely on "inside" information while letting us know of the services they provide.

Paul Zag
Dreamspinner
Oz Film Biz is still wasting space at ...
http://wealthesteem.dyndns.org/
 
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Reply: 3.1.1
From: Chris Legg


Is there any problem with changing a property manager if the tenant is in arrears?

Lifes a beach at Caves

Chris
 
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Reply: 3.1.1.1
From: Michael Croft


You still have to give notice to your existing manager and you may end up another 30 days in arrears before the hand over. That said a new broom does sweep clean.

On selection of property mangers; try to ascertain how many properties the individual PM is responsible for. I used to manage just over 200 with a full time PA and it was way too many even with outstanding systems.

The fewer the better in my opinion which is agin the business imperative of more = better income to the agency. Watch out for service apartment managers they take a lot more work so the number they manage should be considerably less.

Michael Croft
 
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Reply: 3.1.1.1.1
From: Michael Croft


Perhaps Joanna could give us an idea of what the current numbers are per PM with secretarial back up only.

The rule of thumb used to be for standard residential properties 100 per full time PM. Some of the boutique agencies used to make a thing of only running 50 per PM but then they charged as much as 10% for a single IP.

All things being equal (and they seldom are) I would choose the motivated PM meeting the previous posts criteria with the least number of properties under management. The attention to detail and customer service improves proportionately the fewer the properties they are responsible for.

Michael Croft
 
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Reply: 3.2
From: Joanna K


This is a multi-part message in MIME format.

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Simon,

Definately not an advertisement - I'm just about to make my exit out of =the industry and head full time into property development. Must there =be an alterior motive for someone wanting to assist someone else?

Property managers generally treat tenants the way they do because the =owner of the agency doesn't care about property management, so why =should the property manager? You are right, tenants become buyers in =the future. I feel that alot of Principals forget this.

There is definately opportunities for specialists property management =offices! So anyone thinking of this type of venture - go for it!

Kind regards

Joanna Karavasilis
Principal
THE RENTAL SPECIALISTS

PH: 02 9599 3363
FAX: 02 9599 3447
EMAIL: rentals@rentalspecialists.com.au
WEB: www.rentalspecialists.com.au


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Simon,

Definately not an advertisement - I'm =just about to
make my exit out of the industry and head full time into property
development. Must there be an alterior motive for someone wanting =to
assist someone else?

Property managers generally treat =tenants the way
they do because the owner of the agency doesn't care about property =management,
so why should the property manager? You are right, tenants become =buyers
in the future. I feel that alot of Principals forget =this.

There is definately opportunities for =specialists
property management offices! So anyone thinking of this type of =venture -
go for it!

Kind regards

Joanna Karavasilis
Principal
THE RENTAL SPECIALISTS

PH: 02 9599 3363
FAX: 02 9599 3447
EMAIL: rentals@rentalspecialist=s.com.au
WEB: www.rentalspecialists.com.au=


------=_NextPart_000_002E_01C1A580.94F89300--
 
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Reply: 3.1.1.1.1.1
From: Joanna K


Hello,

Yes, you still do need to give your property manager the required notice as stipulated in the agency agreement. The other alternative would be to pay them the management fee they would otherwise be entitled to in lieu of the notice required.

Changing agents should in no way affect the tenant, but Michael, you are correct in saying that the current agent could slacken off even more after learning that the business is lost.

In my opinion a good property manager should be able to manage about 100 properties very well with only secretarial back up. However, most agencies overload their property managers. One particular agency I worked for had 1 junior property manager and 1 secretary for 400 properties, and in their second office had 1 property manager who was also the secretary for 250 properties.

Gee, I wonder why the service was so terrible??

This is the case with alot of agencies!

Property management is a headache, and just something to pay the bills for most agencies.

From an landlords point of view I can understand the desire to look for an agency that only has a small rent roll, but then I ask the question how good are they if they don't have many clients? Yes, it may be a conscious choice on behalf of the agency owner, but the question still lingers.


Kind regards
THE RENTAL SPECIALISTS

Joanna Karavasilis
Principal

www.rentalspecialists.com.au
rentals@rentalspecialists.com.au
 
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Reply: 3.2.1
From: Joanna K


Oh, By the way,

I forgot to mention...if you are looking at changing agents whilst the property is vacant it is common practice for the agency to let the landlord go with out the required notice. All you need to is tell your current agent that the property has been leased by someone else.


Kind regards
THE RENTAL SPECIALISTS

Joanna Karavasilis
Principal

www.rentalspecialists.com.au
rentals@rentalspecialists.com.au
 
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Reply: 3.2.1.1
From: Kevin Forster



I think that if you're looking at property investing as a business then you should act like a business owner when dealing with businesses.

When we were looking for a property manager for our IPs we put it out for tender. We contacted the various real estate agencies, told them our requirements and then asked them to submit a quote within 2 weeks. What was to be included in the quote was the % of gross rent for admin, letting fees, what was covered by the admin fees, other fees not covered but would be regular occurrences, what tribunal costs are, etc. Also to be included was the level of service such as inspections, notice of rental defaults plus any other services that they provided that we hadn't thought of. This then formed the basis of a SLA (service level agreement)- those in IT will recognise these.

The results - some didn't reply, some sent us some advertising material, a couple sent us some very professionally done letters and material, and 2 even followed with phone calls to see if we got the information and to find out if they were competitive in pricing. We could then make a decision from the information and we've been happy with the property manager since.

I think if the property manager knows that you're professional then they will deal with you as a professional and you will probably get better treatment than someone that simply just rings around. After all they had to work to get your business.

Just my thoughts

Kevin
 
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Choosing your Team

Reply: 3.2.1.1.1
From: Michael G


Kevin,

That sounds good, could we ask you post here the text from that letter, a template if you like of what you wrote.

It sounds great.

I've done various mailouts in the past, and its interesting the range of responses you get, some down right rude to other exceptionally thoughtful responses.

Feedback like that always tells me that there is actually very little competition in any industry really, especially service orientated ones, because even if there are thousands, of agents, managers, solicitors, etc, very few actually practice good service.

Just another thought, the ones that provide the good service are the ones that are going to maximise your profits, eg a property manager, if two investors buy the same type of house in the same area, there could be a big difference in returns because;

Imagine the poor investor;

- goes to a bank to get a loan, and gets a high interest rate with fees
- uses average accountant pays full tax.
- uses accountant to get depreciation done.
- saves on inspections
- buys above market
- find cheap but nasty property manager, fails to have property rented for 1st 2 months
- property manager fails to collect rent on time and misses some tenant damage
- uses bad agent to sell house, fails to sell home above market
- accountant fails to advise client on potential ways to save tax

Imagine the good investor;

- uses broker to find right loan and saves on rates and fees
- uses a property tax specialist and saves $$$ on tax every year
- uses quantity surveyor to get maximum depreciation
- saves by using inspectors to point out potentially costly repairs, even uses reports to negotiate price down
- buys below market with good research
- finds excellent property manager, and tenant signed prior to settlement
- property manager collects rent on time and ensures tenants pay for all damages
- uses great agent who sells above market to a heart buyer
- accountant advises client when to sell to maximise tax savings

Just a thought...

Michael G

p.s. if anyone would like to add to this list please do
 
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Choosing your Team

Reply: 3.2.1.1.1.1
From: Sergey Golovin


Well-said Michael,
You have covered pretty much all of it.
One more thing I would add - networking?

Serge.
 
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Reply: 3.3
From: Andrew Scott


Ernest Trebilcocks (on Toorak Rd) advertise themselves as exclusively property management, no sales. I've never used them, so I can't speak for their service.

Various people have mentioned that 50-100 properties / manager are good figures. I don't think, of the 6-7 property managers I've spoken to, that any of them had fewer than 150 properties that they were looking after. One or two had near to 300!

Maybe these companies in inner-Melbourne underemploy property managers as a standard practice..

Andrew Scott
 
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