new resident managers?

[WASP]

A month or so ago we received documents from our resident managers in a Brisbane townhouse complex.

The documentation was in relation to an extension of the management rights. We agreed but disagreed with the assignment condition.

We have just recently received a letter stating that due to health issues the current resident managers have sold their management rights (new managers take over on the 30th October).

The current managers have raised the issue of us ticking the “I disagree with the assignment clause” of the Appointment of agent- letting & property management agreement

They have now asked that if we agree, can we sign the attached form; this is apparently the simplest way, otherwise the new managers will have top organise for us to complete a new agreement (if we agree to that I guess).

They will apparently not be able to release any funds to us from their trust account until the agreement is assigned to them or a new agreement is signed

Any thoughts on the above scenario?

We had a few, such as

The complex needs the resident managers, however we may be able to find a better letting agents such as Rental Express (or others)

Or in these type of complexes is it better to go with the residents managers (they will look after their managed units first, others secondary)?

 

[WASP]

Any thoughts?

 

[Sandie]

A few years ago, we did a couple of years as resident managers in two different complexes.

Whether it's better to stay with the resident managers I would think depends on their performance.

When we did ours, we would rarely have a unit vacant for more than a few days, if that. We were on the spot and used to get a lot of prospective tenants walking in from the sign outside. We were proactive in getting the best possible rental and also maintained a very high standard with the units and ensured exiting tenants left their unit in good condition. I would imagine that standards would vary, so not saying that all resident managers operate in the same way.

In our second complex, there were a handful of units managed by outside agents. On several occasions, the tenants of those units would come and ask if we could look after them as opposed to the outside agent. Of course, we couldn't help unless the owner wanted it.

Resident managers usually have a heavy financial commitment when they purchase the management rights and are often heavily mortgaged, so it is in their best financial interest to do a good job. However, not all will necessarily do the right thing or perhaps are not up to the job, so I think it is something to weigh up for yourself.

If I were in your shoes, I would be looking closely at what the managers are doing. If you are happy with their performance, it's probably a good thing to stay with them. A good resident manager will usually know what's going on around the place as he/she lives there too.

Management rights can be quite stressful so the turnover rate can be high causing some frustrations for LLs. To the best of my knowledge, the process of assignment with a new resident manager is standard and there are legal issues without it being signed.

Not sure if that's any help but if you have any other questions, I will do my best to help.

Sandie

 

[JDM]

The situation regarding the assignment clause does appear to be quite standard given that the current management are required to be assigned to the new Managers to continue managing your property. As you mentioned, this gives you two options:

Agree with the assignment clause/sign a new agreement with the new Managers - On-Site Managers are often going to provide a superior service in managing the properties within that complex. It is very easy to see why having such a heavy financial investment in the complex coupled with living on site will lead to great results in the majority of situations.

Another benefit of on-site managers are that they are on the pulse of the market rents within the complex to the dollar. An outside agent may not be aware that the one next door rented for $400 last week with a couple that missed out who would snap up your property in a heartbeat.

Use an outside agent - It's always great to have this option to fall back upon should the on-site management fail to perform to your satisfaction. A local agent can still have an intimate knowledge with the area and possibly the specific complex. The benefits of an outside agent is the ability to direct potential tenants between properties allowing a greater potential tenant pool.

Another benefit of using a secondary agent is that many on-site managers do not utilise advertising tools such as realestate.com relying on their A-frames. Although this may work, it is missing a great amount of potential tenants and can increase vacancy rates.

I would personally assign my management to the new managers and keep a close eye on their performance with a view to reassesing in 12 months time.

Joel McAndrew
McAndrew Properties