Many people who are new to real estate investment, or have found themselves owning property perhaps unexpectedly, often believe that all property management services are the same. This misconception, which isn’t entirely their fault, comes from lack of communication from their property managers and a limited understanding of what effective property management SHOULD be and what it SHOULD involve.
It’s a common and easy mistake for property owners to compare property managers based solely on their management fees. However, this approach can be detrimental in the long term. Handing over a property worth $600,000, $900,000 or more is a big deal. It is like handing over $800,000 in a suitcase to your property manager and saying, “Here, look after this for me.” Not many people give over large sums of money like that for someone else to look after. Which is exactly why it is so important that the person or the company looking after your property treats your investment property with the respect it deserves.
Tips for the astute property investor
1. Choose a Property Manager who puts people first
People value personal connections. A key factor is establishing a good communication flow between the agent, property owner, and renter. If you’re uncomfortable with your Property Manager, you should listen to your gut. Not only does your Property Manager need to earn your cognitive trust (be competent) but they also have to earn your affective trust (trust they are good people with values that align with yours).
Experience in building relationships with diverse people is crucial. Be wary if, after meeting with senior staff, you’re handed off to a junior for daily operations. Know who’ll be directly managing your property and their experience in handling varied situations. Ask them for an example of a difficult conversation that they have had in the past 6 months and the outcome. Property Management is certainly not all pearls and roses; tough discussions are part of the job.
Establishing that relationship really well at the beginning of a tenancy is vital; it will hold you in good stead throughout the tenancy and reduce the risk of the property being damaged, or the tenants not reporting any damage, or not paying the rent. Or if they are enabled to pay rent, tenants should feel comfortable discussing problems with their property manager. Without proper experience and communication, this can be difficult to achieve.
Your $800,000 property deserves proper care. Mismanagement shouldn’t lead to its devaluation. Effective property management should see your investment grow, not decline.
2. Choose a Property Manager Who Respects Both You and the Renters
We often have renters who are pleasantly surprised when we engage in conversations with them and show genuine interest in them as people during rental inspections. For us, this approach is normal, as it SHOULD be, but unfortunately, it’s not always the norm.
Building on the previous point, treating all parties with respect is a key way to achieve positive outcomes. Whenever we take over new management, we always schedule a short visit with the renter to introduce ourselves in person. This can make a HUGE difference.
If issues arise at the property, whether it’s damage or a need to draw from the bond, having this mutual respect between all parties certainly assists the process. This also means not consistently hiding behind emails and actually picking up the phone to talk to other parties. Ensuring that your actions align with your words is important.
3. Choose a Property Manager Who is Across ALL Components, Not Simply Receiving the Rent
Managing a property from end to end is a significant responsibility. A professional and competent property manager, adept at handling everything from start to finish, is truly worth their weight in gold. This includes inspecting the property to ensure it’s safe and compliant for renters, marketing the property effectively, and implementing strategies for the highest returns, which only scratch the surface.
On top of that, we need to add meeting and greeting potential renters, sorting through applications and background checks, while simultaneously managing the exit of current renters to ensure they leave the property as they found it and processing bond refunds. Then there are the hours spent taking detailed notes and hundreds of images for the entry inspection report and the handover appointment. This role involves A LOT of juggling and meticulous work to maintain high standards, as any shortcomings in pre entry preparations will come back to bite you upon renter exit if it isn’t completed thoroughly.
To put it simply, there are pre- and post-renter responsibilities (as detailed above, and more) and then there’s the ongoing management of the property. This includes attending to maintenance and repairs, identifying potential issues during inspections (like water damage), keeping track of rental payments, and managing trust accounting and disbursements to owners. Considering this could be one of your biggest assets, this is a big responsibility.
The barriers to entering the real estate profession are fairly low. Until recently, all that was required to “manage” clients’ valuable assets was completing a three week online certificate. Be mindful of who you are actually working with and the skills and experience they bring to the table.
4. Self Management vs Agency Management
One of the major challenges in managing your own property is maintaining detachment. When it’s your own property, staying unemotional about any issues that arise can be difficult. For example, we recently had a situation where a landlord was overseas, and their renters, who had been behind on rent a few times, were questioning the balance due before moving out. Handling such conversations and auditing financials with thorough records is risky if you’re doing it yourself, especially if the renter is someone you know. The last thing you want is to find yourself in a VCAT case, representing yourself, particularly if there’s a personal connection with the renter. Legislation is constantly changing and if you are not across this, then you run the risk of thousands of dollars worth of fines for the property not having the electricals compliant for example.
There are both pros and cons to agency and self-management. Here are a few additional areas to consider:
- Marketing on large real estate portals and accessing professional marketing images can be more expensive when self-representing.
- A good property manager will conduct regular inspections, looking for any property damage, not just from renters but also general damage, such as water damage, which could become costly if not addressed early.
- Overseeing maintenance and problems. The role of the property manager is not only to identify any potential issues, but also to work through resolving them. Coordinating quotes, managing trades, and handling invoicing are all part of the responsibility.
- A professional property manager should also have a strategy for maximising the rental yield of the property.
- Property managers are equipped with emergency strategies for urgent repairs, legally required to be actioned in a very short timeframe. If a water pipe bursts at 1 am on a Sunday, they handle it, not you.
As mentioned earlier, when you hand over your investment, the goal is for it to increase in value. A professional and competent property manager should be an asset to your rental portfolio, not a liability, and certainly not detrimental to its value or costs.
In summary, while the term ‘property management’ suggests a focus on the physical property, equal importance should be placed on managing relationships. The landlord, renters, and agency together play a crucial role in maintaining investment properties in good order. Considering market variability, an investment property should grow in value, and with a professional and competent property manager, this is precisely what a property owner should expect.
Trust your investment with Kardinia Property, where we treat your property as if it were our own. Contact us today to experience property management as it should be – smart, efficient, and always putting your needs first.