The Experts

How to find a good property manager

Just as buying a property is a great investment, hiring a good property manager is also an investment. For a small fee, which is fully tax deductible, a professional property manager can have a huge impact on the rental yields and long term capital gain of your investment asset.

A good property manager will be proactive. Remember, you’re paying them to do much more than collect rent and organise small repairs. They should be keenly interested in your property and provide you with expert personalised service.

With more investors returning to the market, I thought we should have a look at this issue now. I’m expecting investor activity to be strong next year as fewer first homebuyers will be competing with investors for properties under $500,000. New RP Data figures show rental yields are likely to rise along with interest rates and declining first home buyer activity, meaning greater rental demand and higher rental yields next year.

This article is especially relevant to new investors or those unhappy with their property managers. Firstly, I can tell you that the benefits of having a good property manager far outweigh the costs. You can manage your investments yourself but my bet is you’ll quickly discover the time and stress involved with this is not worth the minor savings.

Top 10 reasons for using a property manager

They will provide unbiased advice on how to get the most out of your investment.
They will maximise your rental returns and watch the market for opportunities.
They will make sure your property is properly maintained and insured.
They can manage all your outgoings, such as paying strata levies, and can provide detailed end of financial year reports for your accountant.
They take care of unpleasant tasks such as raising the rent and enforcing rules.
They will conduct regular inspections to ensure your tenants are looking after your property.
They are skilled at picking good tenants – those who will stay long term and not cause problems. Most managers have large tenant databases to fast-track the re-letting process.
They know what décor and fixtures appeal to tenants and can suggest renovations and upgrades to your property to attract premium rents. Small upgrades such as installing a dishwasher can tangibly impact your rental returns.
They usually have discount deals with trusted tradespeople, hence reducing your maintenance and repair costs.
Property managers can often be a conduit to future investment properties.

So, how do you pick a good property manager? It’s similar to picking a good sales agent – you want the best one, not the cheapest one. Make your selection based on the property manager who you think is going to give you the best service. I suggest interviewing at least three property managers before making a choice.

Top 15 key questions to ask prospective property managers

How long have you worked in property management?
Tell me about the local rental market now and where it’s heading in the near future.
How did you determine the rental value of my property? Can you show me some comparable rental properties?
What is the process for selecting and screening new tenants? Can you show me your checklist and tenant application form?
How will your agency promote/market my rental property when it is vacant?
Do you take professional photographs and use professional copywriters to create attractive advertising?
Do you or does your agency have a tenant database? If so, how many tenants are on it and how will you use the database to find the best tenants for my property?
What is the process for dealing with rental arrears? (They should be chasing the tenant daily when they are late with rent.)
How often do you carry out inspections? (Should be after the first three months and every six months thereafter).
How detailed are your inspection reports? (Many agents provide photographs these days in addition to a written report.)
What is the process for dealing with repairs? Do you have good relationships with tradespeople and do they offer discounted rates?
How often will you review my rental returns? What is the process for lease renewals and rental reviews with existing tenants?
What is the process for vacating tenants and final inspections to ensure my property is in excellent order to re-let?
Do you have any testimonials from current landlords? Can I speak to any of them?
What are your management fees? Are there any other fees?

Listen to your instincts when you interview property managers. You’re about to put a highly valuable asset of yours in their hands so don’t take this decision lightly. Managing your investment carefully and following these tips will go a long way to delivering you excellent returns for your property asset. Happy investing!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published: Tuesday, November 17, 2009