You’ve just bought your first investment property and a burning question on your mind is whether or not property management is worth the cost? In this article, we run through all the key points you need to know and decide whether property management is for you.
What do property managers do?
This will depend on the service level you require. The Let-Only service entails helping find you a tenant for your property. The Fully Managed service covers the overall maintenance and management, such as collecting rents to dealing with the tenant’s upkeep demands to take all the stress away from the landlord.
Lease vacant units
One key focus for a Property Management company is to find a tenant for your unit. As a landlord, knowing where to find a tenant and making sure they’re the right one can be a real headache. Are you prepared to do viewings on your property 7 days a week? Do you have access to referencing tools to ensure the tenant is viable?
Property management companies are there to make sure that you have a tenant in your property as soon as possible to avoid any unnecessary void periods and maximise your investment. They will oversee the move out and move in process, which can be the costliest and time-consuming aspect of a rental property. It involves far more work and is covered by a lot more legislation than the average person thinks.
As a landlord, you may not be able to meet with the tenant or want to deal with ensuring you get your rent on time. Property managers will ensure rent is collected on time. They also will issue monthly statements to landlords, making sure that all the correct paperwork is submitted.
Should you reside overseas, there are further tax implications to be aware of. The correct Property Management company will make you aware of your legal obligations in order for you to stay compliant.
Maintenance and inspections
Property managers are the frontline of communication with the tenants. If they do their job correctly, you shouldn’t have to worry about the tenants’ needs and demands at all. They field phone calls, answer emails, collect tenant feedback all to make sure that the tenant is happy.
If something goes wrong property managers will send someone to look at the problem and issue quotes to discuss the correct repair options for the landlord. Interim inspections will be carried out throughout the year. This way they can check up on the property to ensure it is being maintained in line with the agreed lease.
As a landlord, are you aware of the eviction process? Do you know how much notice you must give and what grounds you may have for eviction? These are just an example of the legal questions which can cause a lot of headaches as a landlord. That’s why property managers are there. They will manage the eviction process, ensuring the correct jurisdictions take place and legally you are in the best hands.
The advantages of a property manager
Local market knowledge
Property managers will know their rental market inside and out. A key service is knowing exactly how much a unit will be able to rent for. They will also have the knowledge to hand about local amenities, building amenities and the area; this enables them to answer any questions a prospective tenant may have and sell your property to a targeted audience. This all-round knowledge is how the right Property Management company will rent your property to the best tenant for the highest rent and shortest void period.
Network and experience
Not only can it be difficult finding the right pedigree of contractors to complete work in office hours, finding reliable contractors out of hours is even more difficult! When choosing a Property Management Team, ensure they have a 24/7 helpline for tenants with a firm base of out of hours contractors.
Hands free investment
Anyone you know who has a property investment doesn’t want to feel like they’re on call 24/7. However, the sad reality is that tenants will call on weekends or at 3am even if it is just about a lightbulb. The freedom that a property manager gives you is that they will take care of this responsibility on your behalf.
The costs of property management will vary between everyone you ask. That being said, there should only be two main costs. Monthly management fee and the new tenant finder fee. Be careful when looking at these fees because some will appear much lower than others but have hidden costs involved. Always check if there are any additional costs for services not covered by these fees that are essential to the tenancy; such as deposit registration and inventories.
New tenant finder fee
As mentioned above, a lot of the initial work lies in the process of finding the right tenant for your property. Property managers charge for their services in marketing the property online and ensuring that they find you the right tenant as soon as possible. Most will charge a onetime fee for this service.
Monthly management fee
This fee is to cover the costs of all other services mentioned such as leasing with the tenant, maintenance requests, eviction services and so on. These fees will be a proportion of the monthly rent achieved, but it ranges from anywhere between 6 – 15% depending on the property and location.
How to hire the right one?
Property management may sound like the answer to your investments needs, but how do you hire the right team and what should you look out for?
Local property management agencies
Local property management companies will be the best positioned to manage your property. Researching who is known and preferred in the area usually speaks value. You should get referrals from local organizations who can tell you who are the best value property managers in the area.
Review the legal contracts
It is important to identify exactly what the costs are for the property management services and exactly what you’re getting. Some property managers will have hidden fees within the contract such as deposit protection fees or for visiting the property. It is vital that you know exactly what is covered in your contract.
All this being said hopefully you have a better understanding of how property management can serve you. Many landlords, like myself, simply do not have the time to manage their own rentals. Property managers are there to work for you and should be highly considered if you’re looking to make property investing much more hands free.
For more information on property management please get in contact.