Given the many aspects that go into building a successful property investment portfolio, including planning around risk mitigation, finance and of course, asset acquisition and management, it’s advisable to surround yourself with a team of experts who can provide guidance and support along your journey.
Importantly, you’ll need to identify and engage industry professionals who understand the mechanics of residential real estate as an investment vehicle.
Post-property purchase, when you’ve invested hundreds of thousands of dollars in your future nest egg, the person you most rely on will be your property manager.
Although some investors think anyone can be a property manager (even them!), there’s actually an art to effectively juggling market conditions, and landlord and tenant expectations. It requires a certain skillset that not everyone has.
How your property is managed will correlate directly to the cash flow position and long-term sustainability of your entire asset base.
Most investors rely on their rental income to meet the monthly repayments and general holding costs associated with their investment property. Therefore, what you require from your property manager is pretty straightforward: the best possible rate of market rent to ensure your property remains tenanted, with minimal vacancy periods and maximum yields.
To achieve this, you’ll need to identify and engage a property manager who possesses four key traits.
Think about how frequently your property manager is required to speak with you, your tenants and prospective tenants. Often money or emotions will be involved too so they need to know how to tread firmly but fairly at the same time.
You want a good negotiator who remains composed in the face of a potential crisis. Think excellent problem solvers.
It takes more than time to make a good property manager. It also takes a depth of knowledge.
Ask your property manager about the most difficult tenant situations they’ve had to deal with during their career and how they’ve tackled tricky scenarios. Life experience and empathy – the two things that make a good communicator, can’t be learnt from a book.
How does your property manager keep track of upcoming inspections and rent reviews, and communicate with regard to maintenance items that require attention?
Many specialist property management agencies now offer more personalised services, recognising that the needs of overseas property investors, for instance, will be different to those of the landlord who lives around the corner.
Good property managers will have set processes in place to effectively look after your asset, whilst remaining flexible enough to recognise that property is not a ‘one size fits all’ proposition.
The best property managers know their local area inside and out. Not only can they rattle off median rents, but they'll also know the services and amenities in that suburb that are most likely to appeal to prospective tenants. Knowledge about local schools, shopping centres, public transport and parks will help your property manager sell the benefits of living in your property.
Compare their empirical knowledge of the neighbourhood with online statistical reports, to get a better insight as to how well versed they are on where your rental property should sit within the market at any given time.
Here are twelve questions you should ask when qualifying your property manager:
How do you find, assess and choose tenants?
How long does the tenant selection process generally take?
What’s the average turnaround time to lease a property in this area?
What is your office’s current vacancy rate?
How do you handle rental arrears?
How do you handle urgent and non-urgent repairs and maintenance requests?
How often do you conduct inspections and how will I be informed as to the outcomes?
How do I receive my statements and funds?
How often will you be in touch with me and in what ways will I hear from you?
Who will manage my property when you are sick or on holidays?
How do you handle rent increases and how frequently do you evaluate rents?
What are your fees and charges?
Remember, you need a combination of happy tenants, a comfortable rental property maintained to a high standard and regular reviews of your rental position in order to consolidate your net returns. And you need those returns to sustain your investment.
Find out more about how Little Real Estate’s property management services can help you get the most of your property.