Last week, I shared the first three of my ‘Top Ten Biggest Mistakes Made by Landlords’.
One of the things that I’ve had many property owners admit to me is that they aren’t as discerning about which agency they’ll choose to manage their investment property compared to which agent they’ll choose to sell their property.
The reality is that when something goes horribly wrong (and you’d be surprised how often they can go wrong if the right systems and procedures aren’t put into place and followed), it can cost landlords tens of thousands of dollars.
Since we’ve commenced ‘Innov8 Property’ almost four years ago, we’re fortunate that we haven’t had to proceed to Court on behalf of our Landlords for any matter at all and I’d like to think it’s because we have excellent staff that follow systems diligently.
In previous roles at other real estate companies, I have attended Court hearings and when doing so, I was always amazed at how a Magistrate would consistently side with a tenant even when they were clearly in the wrong.
The perception portrayed by the tenant is that it’s the ‘Big bad greedy landlord’ and ‘Real estate agency’ VS the ‘Poor little tenant’ and to some degree, the Magistrates do tend to take a view of it this way as well.
A friend of mine that has a property managed on the Gold Coast was telling me he owns an investment property where the tenant was falling behind with the rent for a period of months…and apparently it was due to this tenant losing their job.
He felt for the tenant and allowed them to stay and pay half of the weekly rent until they were able to secure a job with the agreement that the arrears would be paid back gradually once the tenant secured a new job.
Four months into this agreement and the tenant’s payments were becoming less frequent and often, there was no payment at all.
The Property Manager discovered that the tenant had obtained a new job but failed to inform the Property Manager about it.
At this point, the tenant was almost three months behind in rent and still not even paying the full amount let alone any arrears.
The Property Manager conducted a routine inspection and the property had undergone significant damage with holes in the walls, several internal doors ripped off their hinges and the electric glass/ceramic cooktop was smashed and completely beyond repair…and keep in mind that this was a tenant with excellent references when they first moved into the home.
The matter proceeded to Court as the owner wanted to have the tenant removed from the home given they had virtually ceased all communication with the Property Manager.
The tenant attended Court and told the Magistrate that someone had ‘broken in’ and created the damage.
The Magistrate ordered that the tenant was to stay for another two months and bring the arrears up to date as well as pay the agreed weekly rent…so the conclusion was that the owner couldn’t actually get the tenant out despite not having paid a cent of rent for a month, being three months behind and living in the property where there was significant damage that would have likely cost more to fix than the 4 weeks’ Bond that the agency was holding.
What frustrated my friend is that when the Property manager went to Court on his behalf, they requested the tenant to agree to have the damaged items repaired and the tenant wouldn’t even agree to it yet was allowed to stay for at least another two months.
Anyway, back to the topic…here’s the next few “Biggest Mistakes That Landlords Make” when choosing a Property Manager…
- Not Analysing The Quality of Marketing – When you sell a property, it’s pretty well accepted that any agent should produce a high quality of marketing that includes professional photos, well-written copy and advertisements that will ensure that you reach the optimum number of suitable buyers…but when you rent out your property, it’s amazing to see how little of this theory is adopted today. Many Property managers still take photos with their Smart phones (and many times, the lights aren’t even turned on inside the home), the copy is no more than a number of bullet points and the adverts are small and not prominently placed. You’d be amazed to see the difference in the number of applicants (which in turn gives the owner more choice about the quality of tenant that they can choose to live in their property and the weekly amount that the tenant ends up paying) when the property is professionally advertised. Presuming that marketing quality doesn’t matter is a big mistake so make sure you research the marketing of a rental agent before you decide to engage them.
- Staff Turnover – A Property Manager’s job is certainly not easy. Whether you’re dealing with landlords that don’t necessarily want to pay for maintenance that they should pay for, tenants that might be breaching the conditions of their lease, tradespeople that might not have completed a job in a timely manner or any other issue that may arise. The bottom line is that Property Managers spend much of their time dealing with problems…and the profession can burn out a lot of people…particularly if the Property Manager is shouldering a larger workload than they should be. If Property Managers turn over with regularity, it can be a recipe for disaster as it’s hard for a new Property Manager to get to know the ins and outs of every property, every tenant, every landlord…so things can be missed, a Property’s condition can deteriorate if not monitored closely, etc. If I’m ever asked to appraise an investment property that might be managed through another agent, I always ask the landlord “Do you have a specific person that I should talk to about gaining access to view the property?”…and the most common response I receive is “Gee they’ve turned over so many staff in recent times, I wouldn’t have a clue who is handling things to be honest”. This is definitely not a recipe for thorough management of your property and whilst it is hard to determine, there’s nothing wrong with asking an agency how long all of their Property Management staff have been with the company.
Next week, we’ll explore a few more important factors when considering who should manage your investment property.
Until then…Happy Renting, Happy Listing & Happy Selling.