Whether you are a first-time landlord or a seasoned property investor building your portfolio, one of the key questions to be asked is, should you engage the services of a professional property manager?
As investment decisions are based on numbers, rental return and yields, many new property investors think they will save significantly by managing their rentals themselves. However what they don’t consider is the personal cost and the potential risks that may arise from managing your portfolio alone.
What are the benefits of property managers?
A good property manager knows the current rental market in your area, thus, they will be able to advertise the property in a manner that will attract high-quality tenants. They will field the enquiries, do the credit checks, and contact employers and previous landlords for references. Any adverse feedback is duly noted and new candidates considered. An experienced property manager will have good instincts for selecting the right tenants and keep the landlord informed.
What are their responsibilities?
Once the right tenants are secured, the paperwork completed and bond lodged the property manager does a full inspection of the property prior to the tenant moving in. They will generally arrange for a meth test so there is a baseline reading for the property, cut additional sets of keys and respond to any queries the tenant may have when they move in.
From here on in the tenant has the property manager’s phone number, not yours, so they deal with the maintenance issues and the late night call outs when water pipes burst. They will also undertake quarterly property inspections with photos of every aspect of the property so you quickly get a feel for how well the property is being cleaned and maintained. It’s also important to know whether additional people are staying, additional pets are on site and whether the tenants are smoking inside.
One of their key functions is to collect the rent weekly and account for all maintenance costs. They also undertake regular rent reviews and issue tenants with the correct notice for any rental increases. More importantly, they have systems in place that will immediately flag any late or missed payments. This is crucial in order to ensure the tenant does not get behind in rent. Usually, they would immediately issue a 14-day notice and if necessary represent you at the tenancy tribunal. If the correct processes are not followed the tribunal will not rule in the landlord’s favour.
Managing a rental property is no easy task to take on yourself. If you don’t screen the prospective tenants correctly you can end up with undesirables who may have been blacklisted by rental agencies. If they don’t pay their rent, the 90 days’ notice period is a very long time and the damage they can do can be very costly. Not to mention the requirement by most insurance companies to have quarterly inspections done.
Is it worth it?
Of course, a property manager comes at a cost of a small percentage of the weekly rental, however, the additional rent they achieve through regular rent reviews more than covers the cost. For the landlord to personally issue a notice of a rent increase may invariably lead to a sob story playing on emotions and result in the landlord backing down.
To get too emotionally involved in your tenant’s lives and financial woes is not good business practice when there’s a mortgage to pay. Genuinely good tenants need to be looked after but there are many who try it on and are looking for the vulnerable landlord.
When looking for a property manager speak to other investors to see who they recommend. Meet with several and don’t be afraid to ask tough questions and ascertain which individual property managers are the best. Good service comes at a cost but the risk of not using a good
property manager can be far higher.
If you have any queries regarding property managers we are more than happy to sit down with you to help you understand what your requirements may be.
We pride ourselves on helping Kiwis find the best possible outcomes as they progress through their property journey. So feel free to talk to one of our experienced and friendly advisers and we’ll help you find the best option for you.
CONTACT SALLY TODAY
027 579 5033
09 834 8682