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. We buy ugly houses Grand Prairie.

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?

Property investment performance review

Before you can create a strategy to maximize your property investment returns, you need to understand how it’s currently performing. Are you generating the right rental income, are you claiming all the right tax deductions, what’s the condition of your property, is there an opportunity to improve rental yield through renovations and have you protected your asset?

Here are 5 ways to help you review your property’s current performance, to ensure the foundations are in place to create a high performing strategy.

Are you charging the right rent?

Are you getting the right rent? This is fundamental to the success of your investment and it’s important to review this each year.

Your property manager will provide you with the best indication of what your rental income should be and also advise you on when you should be increasing the rent and by how much. Remember, you want to make sure that the rent you are asking for is competitive in the market so that you attract good tenants while also getting a strong rental return.

It’s also important to do your own research of the market, to get an understanding of how much similar properties are renting for in your area. Ljhooker.com.au is a great starting point to do your research. When looking at comparable properties look for the same suburb, the same sized house/unit in a similar condition with similar amenities and land size. If you find you’re under charging talk to your property manager to see what they think as they live and breathe the local market and perhaps look to increase your rent or look to adjust it once the current lease has ended.

What is the condition of your investment?

Not surprisingly the condition of your investment can have a big impact on the quality of the tenants you attract, how much rent you can charge and whether your tenants are keen to resign the lease.

Before knocking down any walls, consider what potential tenants are looking for and what is in demand in your local area. For example, if you’re targeting students, perhaps creating a study area would be appealing with some additional built in storage. If you’re targeting family renters, perhaps consider small renovations that increase the overall functionality of the property.

Updating old appliances such as dishwashers, installing air conditioning units, fresh blinds and curtains can all add to the appeal of the property. We cover this off in more detail in the next chapter.

Investment Loan review

The lending market is highly competitive and new products and packages are constantly being released. Talk to your home loan consultant to see if you can reduce the interest or fees you are paying. Compare this to competitive home loan rates and see if they are better and ask your lender if they can at least match the interest rate of the other lenders. If they can’t perhaps consider moving your business. But keep in mind any loan switching and set up fees as these can be quite hefty.

Are you claiming all your expenses?

A key bonus of owning an investment is the ability to claim your expenses, so making sure you’re claiming all of them should a be a priority for both you and your accountant.

Are you insured?

Insurance on rental property’s goes beyond insuring the building against fire or natural disaster. Landlord insurance is an important part of helping protect your investment portfolio. If you don’t have this already, it is definitely worth exploring.