I’ve been guilty of focussing more on the topic of selling real estate rather than the topic of managing your investment properties in the past…
Over the last few weeks, I’ve received quite a few e-mails from our subscribers that are asking some very detailed questions about Property Managers and the investment properties that they own.
I’m answering many of them personally and there’s a few that have common themes so I thought it might be prudent to share some of this information with you.
Hence over the next few weeks, I’ll be sharing my ‘Top 10 Mistakes Made by Landlords’…
Let’s get into it…
- Choosing A Property Manager that Charges the Lowest Fees – Likewise when selling a property, it’s easy to assume that every Property Management company is going to perform the same job and obtain the same outcome…but sometimes, “You get for what you pay for”…as the old saying goes. There’s plenty that goes into being an effective Property Manager and optimising your income whilst minimizing your risk and you’d be surprised how many horror stories we hear…and when something goes wrong, the costs can be horrific. Everyone wants a good deal and no-one wants to pay unnecessary fees that they don’t have to pay but often when a Real Estate Company is charging a heavily discounted fee, you tend to attract a heavily discounted service and inexperienced staff that are managing too many properties and simply don’t know what they’re doing. And this leads me on to the second point…
- Not Establishing How Many Properties Or How Much Work That Your Property Manager Is Handling – Property Management companies generally work in one of two ways – they either run a ‘Portfolio’ based system where a single Property Manager is responsible for a certain number of properties and single-handedly takes care of every aspect of these properties…whether it be entry condition reports, exit condition reports, routine inspections, rent arrears, maintenance, inspections and open homes, processing rental applications, disbursement of monies etc. Sometimes this Property manager may have an assistant but like sales, it pays to know who the assistant is (and determine their level of competence) as you don’t want a junior handling crucial aspects of the process that could cost you money. The other method of managing properties is to run a ‘Task’ based system where one person might handle all of the Entry and Exit condition reports, someone else might handle all of the routine inspections and maintenance, someone different could be responsible for overseeing the marketing and inspections as well as processing rental applications etc. This system can work well but the risk is that everyone points the finger at another person if something goes wrong and Landlords can become frustrated that they’re dealing with many different people in the rental team when they’d rather just have one point of contact that they speak with on a regular basis. If you’re about to engage a Property Manager, the first piece of advice would be to ask them what system they use and determine of this will work for you.
- Know The Extra Fees & Costs That Might Be In The Fine Print – Sometimes a Property Management company might charge a low Management Fee but the additional fees and charges might be considerably higher and if so, you might not be receiving the fantastic low rate that you think you’re getting. If there’s extra costs involved, it pays to compare the costs of one agency from another and I recently had a client tell me that her previous Property Manager cost her an extra $700 per year despite having a management rate with this same agency that was almost 2% below the rate that we were offering. The difference – the extra fees that this agency was charging were extreme…but marketing the “Low” rate was an effective way to attract new business.
Next week…we’ll explore some more big mistakes that many Property Investors make and from our research, we’ve concluded that more than 70% of Landlords don’t do enough research to avoid making at least five of these ten mistakes when engaging a Property Manager.
Until then…Happy Renting, Happy Listing & Happy Selling.