First Property Manager

I'm about to rent my first I.P out and i'm wondering whats the best way to go about getting a Property Manager? Do they need to find you tenants before you sign a contract with them? Could I have a few different PM's trying to get tenants? Can anyone shed some light about the best way to go or give me a link to a relevent thread.
Thanks!
Bayside
 
hi bayside.
In the past I have gotten recommendations from friends/other investors, and then spent a day interviewing.

and by that I mean interviewing as if they were going for a job, I want to see the person in charge of the day to day of my property, I want to know how much they charge and what they DO for me for that money.

What lists they use to reference bad tennants? how do they do payments to me? have they been in the job for more than 5 mins. How many property managers work there, how is the office set up? do I have one person in charge of my house, or do they all take calls as they come in?

How soon will they contact me if the tennant falls in arrears? how do they manage that situation? do they do soppy phone calls, (that never get returned) or do they get off their butt and knock the door?

I'll set aside a day, and interview anywhere from 3-6 prop managers. Now I've never had to go the road of "first to get me a good tennant wins" as finding tennants has never been a problem.

Its like buying a TV or a car, or what not... you have to feel like you connect and like and feel comfortable with your PM, and of course, you need to know that they know what they are doing.

Nothing like a face to face interview to sort the kids from the real ones......

Just my 2c
Luvvit
 
Oh sorry

I forgot, the cheapest PM aint always the best.. bet some forumites could tell some diabolical stories about cheap PM's..

My PM in Western Sydney wasn't anywhere near the cheapest, but so far, I've had nooooo complaints. As in many things in life, you get what you pay for......


Luvvit....
 
One hint - when you sign the PM agreement, make sure the "notice to terminate" period is changed to one month or less. Most have 3 months as standard, but that is far too long if the PM is not performing.
Marg
 
luvvit has given you good advice re interviewing, and not just going for the cheapest. Though I confess I'm not as diligent as luvvit - I only interview until I find one I "click" with and that's usually only one or two, after I've whittled them down via phone call. Also Marg's suggestion re ability to change PMs is sound.

I'd also ring up the agency - or get a friend to ring - and pretend to be a prospective tenant, and see what level of service you get.
 
Oh sorry

As in many things in life, you get what you pay for......
Luvvit....

Not necessarily. There have been a few posts on here about PM prices with people saying exactly that. Things like "they must be no good if you're only paying that" etc.

Also people only tend to value things that cost. A seminar may be free and a few people turn up. Make it $50 and you get more people. If it's free it mustn't be any good.

One PM quoted me 7%. I stated I was only paying 5.5% with my other PM. He immediately said OK 5.5% then. I have been extremely happy with both.

The test is when things go wrong. Anyone can accept money from a paying tenant.

It's like travel insurance, you only know how good the company is when you need to make a claim.
 
There is more to property management than taking money from a tenant.

I would be very weary of a property manager that is too quick to drop prices. How are they going to be acting for you to maximise the performance of your property?

Even if you pay a pm $5 per week extra and they only get you $5 per week more in rent it is not equal. The pm fees are tax deductable and the $5 per week extra in rent increases your financial servicebility, that means being able to buy more properties.

I would caution away from cheap agents. They should only be accepting 5.5% contracts if the rent is over $1000 per week!!!! If not then they are losing money, the business is unsustainable in the long run so either rent rolls will need to be sold or the property manager gets too burned out because too many 5.5% contracts would need to be bought in just to support her salary!

Let alone that of the receptionist, office assistant etc.

The only reason why they would accept low management fees is to turn them into sales commissions later on. This alterior motive does not equal good service.
 
I think they get paid ok even at 5% say on a $280 pw place they get about $760 per year a PM probably earns 50k a year plus costs so maybe 70k all up this means they have to look after say 100 properties to cover there wages and make a profit for the company. Now assuming 80% of tennants are good and 30% are long term this doesnt leave them with that much work to do.

Back to the topic though we called all PMs in the area we were renting out as it is a lower soci ecenomic area I wanted a agency with good street frontage in the main shoping area as these areas get a lot of walk ins. Id check if they allow Bpay what the extra charges are if any, some charge extra if they have to go to tribunal etc.

My one bit of advice would be to take control of it if the rent is late get on the phone straight away and harrass them to harass the tenant. When it is up for renewel check the rents in the area yourself dont just rely on them to do it for you.
 
Hello, I would strongly suggest that a mature aged person who knows how to deal with sticky situations goes a long way.

When we first started in IP's in 2003, one criterion we had to select the PM was to get them to submit their procedures applicable to the whole PM process. Some gave no response, some gave vague response, but the PM who now still has the job had policies in place. This means that if the mature aged lady we have leave / retire/ etc, the next incumbent should :)confused:) follow the exact same protocol for PM duties.
 
There is more to property management than taking money from a tenant.

I would be very weary of a property manager that is too quick to drop prices. How are they going to be acting for you to maximise the performance of your property?

Even if you pay a pm $5 per week extra and they only get you $5 per week more in rent it is not equal. The pm fees are tax deductable and the $5 per week extra in rent increases your financial servicebility, that means being able to buy more properties.

I would caution away from cheap agents. They should only be accepting 5.5% contracts if the rent is over $1000 per week!!!! If not then they are losing money, the business is unsustainable in the long run so either rent rolls will need to be sold or the property manager gets too burned out because too many 5.5% contracts would need to be bought in just to support her salary!

Let alone that of the receptionist, office assistant etc.

The only reason why they would accept low management fees is to turn them into sales commissions later on. This alterior motive does not equal good service.

Thank you. That is what I was talking about. Those who assume it's cheap so it's no good.
I am of the belief that a good PM will do a good job. Money doesn't factor into it. A hopeless PM won't think "OH I better actually do something seeing that they are paying me more" Get a PM based on the PM NOT on how much they cost.

As I said- the test is when things go wrong. I've had a few problems and they have been dealt with quickly and efficiently.If I paid an extra 1.5% it wouldn't have been any different.
Maybe where you have IP's costs are more expensive. But in Sydney 5.5% is fair.
I'll ask for that on my next IP too. Rents have gone up so agents are getting more money for doing the same job.
 
I think they get paid ok even at 5% say on a $280 pw place they get about $760 per year a PM probably earns 50k a year plus costs so maybe 70k all up this means they have to look after say 100 properties to cover there wages and make a profit for the company. Now assuming 80% of tennants are good and 30% are long term this doesnt leave them with that much work to do.

This is funny! I challenge you to put this business model into practice! 100 x $760 year contracts and one property manager on a $50K salary! That's an absolute recipe for disaster! I certainly wouldnt be investing in this business!!! Not much work :rolleyes: Try it!
 
I have a list of questions you might find handy when interviewing potential PM's. It's over at invested.com.au under Articles. Happy reading and best of luck securing a great PM- they're a rare breed!
 
I would be very weary of a property manager that is too quick to drop prices. How are they going to be acting for you to maximise the performance of your property?

Guess you were feeling a little weary when you wrote this Xenia ;):D

But I agree- you do indeed need to be wary of PM's constantly price-dropping. Mind you, it never hurts to ask, and 9/10 when I've asked I get a discount.
 
One hint - when you sign the PM agreement, make sure the "notice to terminate" period is changed to one month or less. Most have 3 months as standard, but that is far too long if the PM is not performing.
Marg

Clause 4.2 of PAMD Form 20a (Appointment of Agent - Letting And Property Management) states in the case of a Continuing Appointment the notice period "must not be less than 30 days".

That sounds to me like anything less that 30 days would not be allowed even if the PM was in agreement.

Any comments?
 
If they are good they should guarantee their services, so if you are not happy with them for what ever reason, you can terminate the contract.
Make sure they are well organised and smart enough to deal with those good tenants who for whatever reason turn bad. A bit hard on first interview, but if they seem a bit slow, don't bother with them.
 
If they are good they should guarantee their services, so if you are not happy with them for what ever reason, you can terminate the contract.

Yes! I agree! Good property managers will have a service gaurantee.

Jacque can you check the spelling for garantee for me? ;)

It's never been a strength for me, that's why I stuck to science there were more numbers than letters :)
 
Sound good or bad? Anything i'm missing?

MANAGEMENT FEE LETTING FEE
7.0 % of rental collected plus GST 2 weeks rent plus GST


SERVICES INCLUDED:
Erecting a ‘For Lease’ signboard on your property (subject to authorisation)
Conducting open for inspection appointments at your property
Conducting an unlimited number of personally escorted inspections of your property with prospective tenants
Extensive marketing of your property through our 22 office network
The development of descriptive copy for marketing your property
Internet listing of your property including photographs on the following websites:
- mpreharcourts.com.au

- realestate.com.au

- property.com.au

- realestateview.com.au

· Thorough screening of prospective tenants

· Preparation of a detailed Ingoing Property Condition Report including digital photos

· The supervision of the signing of all tenancy documentation by tenants

· The collection, banking and processing of all initial payments by tenants

· The lodgement of the Rental Bond with the Residential Tenancies Bond Authority

· Preparation of Outgoing Property Condition Report

· The processing of the tenant’s Rental Bond after vacating

· Arranging any necessary repairs or cleaning after the tenant

· Periodic inspection report twice per year (first one at 3 months)

· Yearly rent reviews (subject to market conditions)

· Organising repairs and maintenance to your property after authorisation by you

· Rent collection, receipting and banking

· Electronic banking of the rent collected into your account (monthly)

· Payment of all your property outgoings (if requested)

· Rent arrears control (as required)

· Tenancy Database Rental Checks

· Landlord Protection Insurance

· Insurance Claims

· Tribunal Attendance

· Digital Photographs with every condition report









LETTING & MANAGEMENT COSTS



The cost involved in the letting and collection of rental monies are as follows:

Letting Fee.
Equivalent to 2 week’s rental + GST to be retained once the property has been let and monies receipted.

Advertising Costs (included in the letting fee).
All advertising costs incurred in securing a tenancy are included in the letting fee.

Management Fee.
7% of all monies collected.

GST charges


Statement Fee $2.75


Re Leasing fee to same tenant $66.00


Credit check (National Tenancies Database) $15.00 per applicant
Landlord Insurance claims – preparing and submitting landlord insurance claims $120.00 (landlord insurance rental protection only)




VCAT Related Charges:

Application fee for a hearing (Stamp Duty)

Serving Notices upon a tenant by registered post

Attendance at Residential Tenancies Tribunal hearings

Obtaining a Warrant of Possession (Government fee)


$35.20

$5.00 inc GST

$66.00 per hour inc GST



$70.40
 
I would be more concerned about the PM who overquotes the property. They'll say anything to get a listing and chances are your property will stay vacant (no income for you) until you decide to reduce the rent to match the true market value. If you get one of these PM's they'll be more talk than action. Quality vs Quantity afterall!
 
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