Property Management Question

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From: Michael McDonald


I currently own 3 IP's, and have had them managed by real estate agents. I have not been particularly happy with their service.

Over the last week, I have been taking proposals from other potential property managers, and it's really hard working out who is any good.

From those who are experienced in having their properties managed, can you suggest anything in particular that I should be demanding from the property manager. Rather than trying to screw them on price, what "extra services" can I ask them to provide? Any suggestions would be greatly appreciated.

MicMac
 
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Reply: 1
From: Dale Gatherum-Goss


Hi

I take a different approach. I just bought the property manager a bottle of wine to say thank you for finding a tenant for my newest IP. I don't quibble over their fees and I encourage them to quickly fix anything that goes wrong. If they do, I reward them.

Yes, I could save a few dollars.

But, more importantly to me, they are looking after a valuable asset of mine and so I don't want them to effectively cost me money in lost rent ro a devalued property that has not been well looked after.

And, if I look after them, and the market does get tight, who will they look after first? Me, or someone who always grizzles and tries to screw them on their fees?

Just another thought, although, I have not answered your question.

Dale
 
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Reply: 1.1
From: J Parker


Michael,

Like you I have managers, two of whom I am not happy with either. I agree with Dale, in that good managers should be rewarded as their job ain't easy at times! With my most recent purchase, I was so impressed with the agent who sold me the house I bought her chocolates, flowers and wrote a beaming reference for both her and the principal of the agency. Ah, now if only she was the property manager!!

Alas the PM isn't anywhere near as efficient, and in fact has taken me for a ride with some undisclosed facts about my last tenants. I won't bore you with the details but suffice to say that I am now being very careful to correspond with her by e-mail and letter only, as she has a tendency to verbally say one thing and deliver another on paper!

The most important thing is communication. If they don't return your calls or e-mails promptly, then they're not doing their job. I also like to be informed of every inspection, so that I can be assured they are actually carried out. I try to attend them as well. I put special conditions in the MA (management agreement)some of which include:

1. Pets allowed only with written permission from the owner (note it stipulates owner only not the agent)
2. 3 mthly inspections to be followed up with phonecall or letter to owner. Owner to be notified prior to each inspection, as they may be attending.
3. Min of 6 mthly lease.

I also make sure that I am informed of any repairs over $100. I give the agent any numbers of tradesmen that I know or would use, as the ones they have on their books may not be available when your property needs them.

There are companies out there that handle property management only so you would think that they would be ideal, as they need the income from the fees, unlike some real estate agents who run them as an aside. However, any company is only as good as it's employees and it's finding the jewels out there that can be hard! Good luck with your quest!

Cheers, Jacque :)
 
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Reply: 1.1.1
From: Glenn Mott


Further to Jacquie's post, there is a lady by the name of Katrina who posts to this forum that runs a property management business (note, no sales).

I have sent and received a few emails with her and found her to be very knowledgeable, professional and happy to advise members of this forum.

Glenn
 
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Reply: 1.1.2
From: Manny B


Howdy,

what I would do is ask your potential property managers to give you some references of other landlords (who they manage properties for)... I would call a couple & assess whether it is worth wasting your time with them...

I must admit, it is hard to get a good property manager now days (I would rate mine as poor, but I know that it is the agency's fault), it isn't the employee's fault in most cases, as the agencies can have too many properties per employee to manage, making it impossible to get the job done properly (ie. return calls, inspections, tribunals, etc.)...

Cheers,

Manny.
 
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Reply: 1.1.2.1
From: Glenn Mott


Just for a bit of info, what are some of the rates being charged for property management in Australia?

The last manager I used would charge me:

1. Letting fee 8.5% of weekly rent multiplied by term of lease

2. Management fee 8.5%

3. Postage and petties $7.50 per month

4. All fid and bad taxes they incurred as a result of having my business

5. Property Condition Reports $120

6. Bond Inspection Reports $120

7. Inspections $60

8. End of year tax reports $100


After 3 years of this, one bill had over $400 worth of these fees and this prompted me to cancel the management authority, buy a copy of the Residential Tenancies Act and manage the property myself. 4 years on and I have had some ups and downs but am a much more informed investor.


Glenn
 
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Reply: 1.1.2.1.1
From: Glenn Mott


Oops,

Should have read a couple of other posts.

Try

JOANNA KARAVASILIS
Principal

rentals@rentalspecialists.com.au
www.rentalspecialists.com.au

Glenn
 
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Reply: 1.1.2.1.2
From: J Parker


Wow Glenn- there's quite some fees there! Depending on where you live, however, the fees can range quite a lot. For eg, the country town house is managed for a flat 6% fee- no first week's rent taken as a lease fee, all inspections free, petty paperwork fees of $3 a mth and that's pretty much it.

Capital cities tend to charge more, from what I've seen and you do have the right to negotiate. I would never pay for inspections, as I believe that they should form part of the PM's role. After all, they don't take that long and are necessary to ensure that the property is being looked after. Don't blame you for managing it yourself! Hope it continues to go well- I am on the verge of sacking one of my PMs as well and doing it on my own again. It's not that hard, if you have good tenants.
Cheers, Jacque :)
 
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Reply: 1.1.2.1.2.1
From: Kristine .


Howdy,

I'm a tad disturbed by some of the points raised here:

(a) The Residential Tenancies Act in Victoria limits property inspections to not more frequently than every six months. There are limited exceptions to this condition, but this is so the tenant has peaceful enjoyment of the property. Be too zealous about 'inspecting' them, and even the most mild mannered tenant may get a little testy. And who wants to be spending time at the Tribunal with you as the bad guy?

(b) I have never heard of any 'two year' period of renting giving someone an interest other than that of tenant in a property. Just about anyone with good reason, however, can apply to lodge a caveat over a title, which effectively means no further action can be taken with the title (transfers, mortgages, etc) without that person's interest being noted. Is the 'two year' thing hearsay or fact, and if fact, in which State does this apply?

(c) The Privacy Act came into action in December, 2001. Personally, I would be less than pleased to know the property manager, as representative of the agency to whom I pay a fee for confidential professional services, was handing out my personal details to prospective landlords. I would also not be happy to hear that any details of my properties (involving, as it does, the privacy of the tenants) would be used as a promotion in any way whatsoever.

(**) Yes, I know it's hard to get good help these days (!!!), but simply going to a few open for inspections for rental houses (if agents in your area do this), or driving past the rental list selection, or even asking for inspections yourself, and then judging the presentation of the properties, the conduct of the agent, how long the agency has been operating, length of service of the staff etc, plus use your own judgement.

And don't forget the 'thank you', 'cos property management is a thankless task whereby the harassed pm can end up somewhat resembling the ham in the sandwich.

Anyone wanting a good agent in the outer east of Melbourne? I'm happy to recommend Methven's in Croydon or Mooroolbark. In more than eight years, nothing has ever been too much trouble, and frankly I don't even remember how much they charge me (yes, it's all detailed on the monthly invoices and yearly summaries) 'cos you can't put a price on quality service.

Just my $00.01736 worth

Kristine
 
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Reply: 1.1.2.1.2.1.1
From: Susan Pope


Hi Michael,

Not sure which State your IPs are located.

We live in Perth and I'm sure we have the best r/e agents in existence!

These guys run a family business and have done things for us in the last 4 years such as:

1. got us new, rather than repaired, kitchen fittings (very difficult - but these guys are persistent) from the insurance company after burst water pipe damage had occurred, (of course after having immediately gone to photograph the damage as evidence!);

2. (from their own initiative) they water our garden whilst waiting for prospective tenants;

3. (from their own initiative) removed old curtains from the front of our property to help disguise the fact it was vacant;

4. happy to answer heaps of questions from me (and I ask plenty about r/e in general);

5. have amazing trades people contacts who do great work for very reasonable price;

7. worked co-operatively with bank valuer when we refinanced, pointing out renovation work etc;

8. offer a 24 hour service (because we all know when hot water systems break down don't we?); and

8. have the definite attitude of ensuring both tenant and landlord get good deal.

Not surprisingly, some of our current tenants have been with them for over 20 years. Even landlords who have become tenants have gone straight to these guys for a property to rent.

They don't seem to do regular inspections (on our properties anyway), but still have other methods of ensuring all is well particularly when a new tenant moves in.

Now maybe some of these "extras" wouldn't mean much to other r/e investors, but to me it all spells out these guys' attitude towards running the best business they can.

One thing to bear in mind though is that my hubby & I remember our tenants are our clients and we provide good value for their money (without going overboard).

R/e agents certainly are in a difficult situation with a landlord that doesn't have the right attitude towards their tenant.

Good luck Michael - keep hunting because r/e agents are definitely not all the same!

Regards,

Susan
 
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Reply: 1.1.2.1.1.1
From: Joanna K


Hi Glenn,

Thanks for the recommendation, however, I have just sold my business, and I am making my exit from the real estate industry (10 years was way too long).

Although, I would be happy to assist anyone who has any queries.

With regards to fees, these days, in Sydney, some agencies will go as low as 4%, but it begs the question, what sort of service will you receive for that sort of money?

I used to give all my prospective landlords a "management pack", but am reluctant to post up on the forum. I have, however, attached part of it, which includes the services that we provided for the landlord at no extra cost. Hopefully it will give you some idea of what services to ask for when scouting around for a property manager.



Kind regards
THE RENTAL SPECIALISTS

JOANNA KARAVASILIS
Principal

rentals@rentalspecialists.com.au
www.rentalspecialists.com.au
 
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Reply: 1.1.2.1.2.1.1.1
From: Lucinda Hudson


Hi Susan

I am in Perth and looking for a good PM - who are they?

Lucinda
 
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Reply: 1.1.2.1.2.1.1.1.1
From: Michael McDonald


You guys are fantastic. Thank you ever so much for all your input. It is much appreciated.

MicMac
 
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Reply: 1.1.2.1.2.1.1.1.1.1
From: Stirling Reid


Regarding low management fees, I have a unit in Hordern Tower, Pitt St in Sydney.
The Property Management supports itself with just one building of 400 units. Mind you the overheads are low, no cars required just use lift, they know exactly what appliances and carpets are in each unit. They also source a lot of their tenants from within the building, ie a company moves an employee into a company paid furnished unit. After one year they move to a cheaper unfurnished 1BR then 12 months later move up to a 2BR.
So far back to back tenancies with 0% vacancy. Low overheads equal low management fee.

Stirling
 
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Reply: 1.1.2.1.2.1.1.1.1.1.1
From: Kevin Forster



My only concern with using a property manager that is not a member of the REIA is that you have very limited recourse if something goes wrong.

At least with a property manager that is a member of the REIA or state associations that they have a charter of conduct, rules, etc.

I only say that due to a memorable experience with a property rental company (ie only manages rental properties).

The story is that I bought a property with tenants with a lease until Sept 02. Spoke to the tenants who said they'd like to stay on after Sept 02 as it was close to their work, etc. Checked with the existing managing agent (rental company), "Good Tenants, always pay rent on time, etc". Arranged for my current managing agent to take over the property. One week after settlement, my managing agent went around to find out why the tenants weren't paid up and found the place abandoned.

My agent spoke to the tenants and found out that they had been served with a warrant to vacate on settlement date. The previous managing agent denies that this occurred. His word/their word scenario so you'll never get the truth.

If the previous agent was a member of the REIV or REIA then I would have some recourse about non-disclosure of the warrant hanging over the tenants heads (Good tenants don't have warrants hanging over them). The other thing is the timing of serving the warrant (settlement date). If he had waited one more day, the problem becomes my managing agents and my problem.

Any man and his dog can set up a property managing company, follow the state's tenancy laws and still be legal. If something goes wrong, you are probably looking at a court battle for compensation. At least with agents that are a member with one of the RE associations that they have a well documented charter to follow. Breaching an association's charter can carry some hefty penalties.

Some of these property managing companies should become RE association members for landlord peace of mind.

I'm just chalking this up to another experience in IP investing.

Kevin
 
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Reply: 1.1.2.1.2.1.1.1.1.1.1.1
From: Susan Pope


Hi Lucinda,

Great to hear from another "Perth-ite". Please email me directly - I'll be happy to pass on the PM's contact details to you.

Regards

Susan
 
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Reply: 1.1.2.1.2.1.1.1.1.1.1.2
From: Joanna K


On 4/24/02 5:45:00 PM, Kevin Forster wrote:

>Any man and his dog can set up
>a property managing company,
>follow the state's tenancy
>laws and still be legal. If
>something goes wrong, you are
>probably looking at a court
>battle for compensation. At
>least with agents that are a
>member with one of the RE
>associations that they have a
>well documented charter to
>follow. Breaching an
>association's charter can
>carry some hefty penalties.
>
>Some of these property
>managing companies should
>become RE association members
>for landlord peace of mind.
>
>I'm just chalking this up to
>another experience in IP
>investing.
>
>Kevin



Kevin,

In Sydney, a property manager must be a licenced real estate agent to set up a property management company. A property management company is considered exactly the same as a normal real estate agency.

As far at the REI goes, they only provide a code of conduct - as far as I know, they do not have the power to fine and/or disipline members in any way except for removing them from their membership. As far as I know, only the Department of Fair Trading has this ability.

Just my 2c.


Kind regards
THE RENTAL SPECIALISTS

JOANNA KARAVASILIS
Principal

rentals@rentalspecialists.com.au
www.rentalspecialists.com.au
 
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