14 questions investors should ask when choosing a property manager
18 September 2018
By using these questions you can find the right property manager for you
As an investor, receiving the best possible return on investment for your property is often your number one priority. In order to do this, it pays to have a dedicated and professional property manager looking out for your portfolio.
Choosing a property manager can be a lengthy and difficult process. However, knowing the right questions to ask can go a long way to helping you hiring the right person for the job.
1. Does the agency specialise in property management?
Using an agency that specialises in property management can be of real benefit to you and your investment. Many agencies, particularly those that are franchised, can be more focussed on what is considered to be the more lucrative sales side of property.
As a result, property managers for these agencies can often lack the enthusiasm and thoroughness required to provide the best possible property management experience.
In an ideal situation the sales, administration, property management and leasing teams will work together as one cohesive unit. Through this an investor can gain all the information that is relevant to them, communicated without any hassles.
It is vital to any investor seeking the best possible return on investment that select an agency that provides comprehensive and caring property management for every client that they represent.
2. Are you the property manager that will be looking after my property? If not, who will?
In some instances, a business development manager may be the one to make initial contact and begin discussions with prospective investors about managing their portfolio. When meeting with anyone regarding your investment property, ensuring that you know exactly who will be looking after it is vital.
In real estate agencies, a business development manager has often come from property management or similar roles and worked their way up through the business. They can offer fantastic insight into the market and potential growth opportunities for your portfolio.
If they are not managing your property, organising a meeting with the person that is could be a good option as you can learn more about them.
3. How many years have you been working in real estate?
While inexperience is not necessarily a negative, having someone that has worked in the property management industry for a long time is a key indicator that they know what they are doing.
If a property manager has been in their role for a long time, it shows that this is a career for them. Being a property manager can be a very stressful job, with turnover normally being quite high though.
4. How are the financial aspects managed?
Knowing the financial side of how your property will be managed is very important. It should be clearly explained when and how rents are collected. With this, you should ask exactly when you can expect the rent in your bank account.
When talking about financials, also enquire about the full cost of management. There can be upfront as well as ongoing fees that you should be aware of.
5. How many years have you been with your current agency?
If a property manager has been at an agency for a long time, that can be an indicator that the agency has a stable environment. It can also show that they are a hard worker that has been retained for the work that they do.
However, each situation is different. Often it is best to judge a person on their individual achievements and attitudes.
6. How many properties do you manage? Your company?
Going with an agency that has a reputation for providing excellent property management services is a must for all investors. Finding an agency that will offer a personalised and comprehensive service to get you the best possible return on investment can be a key to achieving success.
Knowing the number of properties that a prospective property manager has in their portfolio is important as it can be a key indicator into how experienced they are and how efficiently they work.
Also knowing the total number of properties managed by the agency is an important piece of information. It can help you establish whether a company specialises in property management, is a boutique agency or a large franchise.
Typically, a company that specialises in property management is what investors looking for a property manager should go with as they have the experience and specialised skills to get a property to perform at its best.
7. How contactable are you when there’s a crisis at my property?
There is an old saying; when it rains, it pours. Sometimes chaos can strike and things can go wrong at the worst possible times. Understanding how responsive your prospective property manager will be in a crisis is a significant thing for an investor.
If issues are fixed quickly, renters will be happy and you can be protected from any further problems.
8. What happens if my property requires urgent maintenance?
Property management agencies will often have preferred partners that will perform maintenance in general or in emergency situations. They will organise quotes as well as potentially paying for any maintenance on your behalf, if you have authorised it.
Asking about price is also important. The more informed you are about the general processes and running of your investment property, the more comfortable you can feel with the person managing it.
9. What is your renter screening process?
One of the best ways to ensure that your investment provides a successful return is through having reliable occupants living there. Therefore, a property manager needs to have a comprehensive screening process for any potential occupiers of your investment.
There are many things that need to be done to ensure that the right renter is selected, for example, a property manager will:
Verify source of income
Check any previous rental history
Finding out the specifics of your prospective property management agency’s screening process can give an investor greater insight into the property management process. It can help develop the understanding that having a property manager saves you from all the hassles that come with owning an investment property.
10. What is your estimate of the rental potential of the property?
Knowing the ballpark rental return number that you will be receiving is a key park of owning an investment property. It can allow you to begin to budget where the extra income will be used; whether it is used to pay down your mortgage, make improvements to your investment or increasing upon your food budget.
Asking this question also allows you to test the knowledge of your prospective property manager. It is important to ask what the estimated rental returns are being based on. This can tell you how experienced they are and if they have comprehensive knowledge of the area.
11. How can you ensure the best returns from my property?
While rental yields and property performance are potentially the most important factors to an investor, any prospective property manager should offer a complete management service and be fully qualified and trained.
They should have excellent current and past knowledge of the performance of properties in the same suburb.
12. How familiar are you with current relevant legislation?
Having a property manager that is familiar with all current legislation is good for success as it will provide reassurance for you and stability for your investment. This quality in a property manager means that it is far less likely for there to be a breach in the law that would leave you vulnerable to legal action.
It can also protect your investment as they will have the appropriate knowledge of your rights as the owner of the property. Knowing how to evict renters that have damaged the property and make a claim on the bond is a key piece of knowledge that is heavily regulated.
Currently in Victoria the legislation surrounding residential tenancies is about to change. If your investment property is in Victoria, asking about these changes and how they may affect you and the return on investment your asset will generate should be a top priority.
13. How long are your properties usually vacant?
Asking this is important as it relates directly to the return on investment your property will generate.
As an investor, it is ideal for your property to be vacant for as little time as possible. Therefore, asking about the vacancy rate of the suburb your investment is in is something you can do to help your understanding grow.
A low vacancy rate is usually an indicator that there is strong demand for rental properties in the market. Properties in this situation will generally be snapped up quickly by prospective renters.
In this situation rents can potentially rise at a rapid rate and it can be very favourable for investors due to potential increases in return on investment.
A high vacancy rate can be a sign that rental demand has dropped off and therefore leaves a greater number of homes empty.
This is a situation that is favourable to renters as they may be offered incentives or lowered rents in order to entice them to rent a property.
14. How often will I get portfolio updates?
Getting regular updates about the performance of your property portfolio is an important part of the investment process.
Follow up this question by asking what the updates will contain. Receiving information regarding market performance, current rental yields and ways to improve rental return are just some of the pieces of information you need as an investor to understand your property’s performance.
Monthly, quarterly or every half year can be some of the preferred reporting periods when hearing from your property manager.
Before contacting any agency, do plenty of research to find the best fit for you. It is your investment and your financial future. You want it to be in the best possible hands.
In your experience, what are the important questions to ask a prospective property manager?