Benefits of Using a Property Manager

Do I need to engage a property management at this stage, you might be asking. The advantages of hiring a property manager are as follows:

• If the property is not something you want to focus your mental energy on, it helps take your mind off of it.
• Saves you a lot of time. Finding tenants, property upkeep, repairs, and chasing arrears all take more time than you might imagine. Consider this: Why would you leave a full-time job that pays several thousand dollars per month if you could employ a property manager to take care of your property for you at a cost of just a few hundred or a hundred dollars per month?
• You hire a professional to look after your property. Property managers can help you achieve better results by utilising their extensive local knowledge and industry expertise.
• They assist in lowering your risk. A capable property manager will lessen the possibility of protracted vacancies and plan ahead for your property's future.

We're not just saying that because it sounds good—having a professional's assistance makes managing investment properties so much simpler. We've put together a comparison of the benefits of hiring a property management, which you can see below.

Finding a dependable property manager

It can be challenging to separate the bad from the good when there are so many options available. Therefore, how can you locate a qualified property manager?

Before beginning your search for a property management, you should always know what you're looking for.

These are the four stages you should follow when looking for a new property management to make sure you pick someone who is capable and has your best interests at heart.

1: Decide on your criteria for selection

When looking for a professional property management company, the first thing you should do is make sure you fully understand your individual objectives and goals. Do you prefer to go with the option that will cost you the least amount of money and are you okay with being a part of the decision-making process? Do you want a property management company that would make it possible for you to forget about the residence altogether? Do you have a preference for someone who operates in a manner that is more traditional or do you favour those that embrace cutting-edge digital solutions? Before you get started looking, you need to give each of these some consideration.

Price, service level, and the capability of managing risks and achieving results should be the three main considerations.

There will be trade-offs between these aspects offered by several property managers. Some are really affordable choices, but they won't provide you with a comprehensive bundle. Others will do everything for you and concentrate on offering intensive personal care, but they will charge more.

It's important to remember that there are property managers available who can provide excellent service without charging you a fortune.

It has long been assumed that if you pay your property manager less than average, you must also receive below-average service. This is no longer fully accurate. In our "Property management myths debunked" section, we go into more detail about this fallacy.

2. Locate a group of property managers

Because you and your property manager will have a very similar connection, while you're looking for a property manager you should consider yourself in the position of an employer seeking for an employee.

You want a strong pool of property managers to pick from, just like employers want numerous applications for job opportunities to compare them.

Don't put all your eggs in one basket, as the saying goes! When choosing a property management for your property, make sure to keep your choices open. We advise having a pool of at least two to four potential property managers to pick from.

Finding a qualified property manager can be done with confidence by asking around. Speak with other real estate investors if you can to learn about their interactions with the various property managers.

If not, pretend you are a potential renter and look through rental ads online to determine which property managers in the neighbourhood of your property you believe do a good job marketing their properties to you.

3. Question your applicants

Inquire about their fee schedule, experience, portfolio of properties, specifics about how they intend to manage your property, and whether they will be working on your property directly while interviewing potential candidates for the position of property manager.

In order to demonstrate that you are knowledgeable and won't be easily taken advantage of, you should practise important and difficult interview questions that will test the property manager's market knowledge and talents.

You can download and use the finest interview questions for your property manager that we provided in one of our earlier posts under step #3.

It's time to make a decision when you've finished your interviews. A property manager should have a straightforward onboarding procedure when you let them know you're glad to have them on board, and you'll sign a property management contract.

4. Verify that you selected wisely

The crucial period is the first three months with a new property manager.

To make sure they are a good fit for you, make sure to follow up and do some regular inspections. It may be a clue that they are not delivering the services they have promised if you have to follow up with them frequently about assignments or if the renter contacts you frequently. If so, you ought to think about switching before you incur losses due to a property that is not well maintained.

You can read up on how to locate a suitable property manager if you'd like to understand more about this in detail.

How a competent property manager benefits you

So, what would be the perfect situation after hiring a property manager? If you chose a reputable property management, you may anticipate the following.

You can truly "set and forget" with the help of good property managers, who will take care of all maintenance issues with your rental property.

A competent landlord will:

• For your property, choose dependable tenants.
• Make it simple for you to quickly access documents and statements.
• Keep your property in excellent condition and well-maintained.
• Notify you of anything that needs your attention and refrain from bothering you with small decisions you'd rather ignore.
• Maintain the tenant's satisfaction by resolving ongoing difficulties.

All that should be required of you is making executive judgements regarding crucial choices and observing how the rental income enters your account each month.

Your investment property should not, however, require you to devote a lot of time or effort into it if you have a professional property management. Of course, this depends on how involved you want to be as a landlord.

What is the price of a property manager?

Typical monthly property management costs for a property manager range from $80-$250. But use caution when interpreting this.

It is challenging to provide an average pricing because the majority of property managers charge on the basis of a percentage of the rent. Given that, you shouldn't expect to spend more than a few hundred dollars per month. Once more, this is largely based on the degree of service they offer and the location of your house.

The monthly property management fee, however, does not provide you with all the information. While some property managers include these costs in their monthly fees, many may charge you extra for things like frequent inspections, doing property upkeep, and supplying annual statements. Therefore, you should anticipate spending more annually than just 12 times your monthly property management cost.

The kind of charge structure the property manager employs, as specified in your rental property management agreement, will determine the yearly cost. Property management costs are often either set as a percentage of the weekly rent or as a flat fee.

Here is a description of each choice:

1) Fees for property management depending on a percentage

The standard method of pricing property management services is to base fees on a percentage of rental income.

This percentage of the rent is exclusively used to cover the price of continuing, necessary property management services. Other services typically come at an extra expense.

The following are crucial ongoing property management services:

• Collecting rent and pursuing unpaid debts
• Coordinating and overseeing the payment of invoices, strata fees, council levies, and other expenses
• Arranging for property upkeep and repairs

The following services are frequently excluded from the specified percentage-based fee:

• Leasing fees = $1100 (usually 2 weeks of rent)
• Advertising/marketing fees = $300
• Inspection fees = $50
• Tribunal preparation fees vary greatly in price.
• Annual statement and other admin fees = $30
• Lease renewal fees = $550 (usually one week of rent)

Realistically, you'll end up paying $3716 in property management fees over the course of a year due to all the extra expenses and problems that arise.

These additional costs quickly build up, as you can see. For a long time, customers have frequently complained about not understanding their bills and being charged more than they expected.

The property management contract will always tell you the real cost you'll be responsible for.

2) A property management service with a flat price

In the present, a new, open, flat property management cost has begun to acquire acceptance.

But how does it improve?

The primary distinction is that flat fees are determined by the cost of the property manager's services, whereas percentage-based fees are determined by the rental return of your property. This makes it more equitable and prevents you from being penalised for owning valuable property or raising your rental return.

Why should you be paying different amounts when the actual labour cost of managing a $1000/week property and a $500/week property is nearly equal?

How is renting from a property manager like?

A property manager's main source of income is leasing. They bring knowledge and resources that, as a do-it-yourself landlord, you frequently wouldn't have to discover and keep decent tenants.

For a quick overview of how property managers can assist you in finding renters for your rental property:

• They will determine the rent and know how to market your property to the group of potential tenants you are after.
• Through a variety of media, they will expertly market your rental property. Unlike DIY property managers, property managers have exclusive access to Domain.com.au and Realestate.com.au. Additionally, landlords can make use of their social media accounts and tenant information.
• They will use a stringent screening procedure that includes reference and credit score checks before choosing the tenant. In order to reduce future tenant turnover, they can also make use of their experience to recognise how certain renters fit into various types of rental homes.
• By doing frequent inspections and being proactive with lease renewals, they will make sure you keep the renters who are being respectful of the property and paying rent on time.
• When problems emerge, they take care of them for you. Our involvement in conflict resolution is frequently requested by landlords of rental properties.

The main and most obvious advantage of utilising a property manager for leasing is that it saves you time and aids in maintaining an emotion-free and objective tenant selection process. Therefore, treating your property like a business is a terrific idea.

Management of properties and technology

The way property management and real estate, in general, are conducted is significantly impacted by technological advances. PropTech is the industry's term for new technological approaches to real estate and property.

The larger, more established property managers are hesitant to make considerable changes, as is typical in many industries. Smaller disruptors have begun to enter the property management market in order to offer better solutions and a more seamless customer experience through the use of cutting-edge hardware and software.

In property management, technology will never take the role of people. It merely serves to enhance channels of communication and lessen the manual, repetitive work that property managers must perform.

Let's go over the main advantages that landlords, tenants, and property owners are getting from the rise of technology and software in property management:

Advantages of software and technology for owners of investment properties

Technology should be leveraged in property management to provide more creative solutions and provide investors with better service.

A tech-savvy property manager benefits property owners by:

Streamlined communication channels

A benefit of using apps, portals, and software is that it makes getting in touch with your property manager easier to do.

Better record-keeping with all your documents in one place

All of us have been guilty of deleting emails that we believed we would never need again only to anxiously search for them six months later. Fortunately, technology can be useful by enabling instant access to your records and statements.

24/7 accessibility to your investment property via the dashboard or online property management platform

Some real estate investors are reluctant to hire property managers because they fear losing control or being kept in the dark about what is happening with the property. Without knocking on the door to take a peek around, technology allows you to get a sense of how the property is doing.

Reduced costs

Software and technology are crucial tools for lowering operational costs. You will pay less each month for property management as a consequence, without having to give up any service. It is accomplished by automating the tedious, laborious chores that traditional property managers must perform by hand, like completing annual statements and drafting repair request forms, among other things.

Since time is money, the property management business can charge less when these activities can be completed automatically. The property manager can focus their attention on areas of the home that require special attention.

Using analytics and data

Property managers that are tech-savvy tend to be data-driven. Using software and technology also offers the added advantage of disclosing crucial facts and insights that support decision-making.

Benefits of software and technology for tenants

Tenants benefit from improved communication as a result of the disruptions caused by technology and software in property management (when done right).

With a lot of back and forth and a mixture of text messages, phone conversations, and emails, managing the holy trinity of the property owner, property manager, and tenant has historically been challenging.

Tenants can now pay their rent, report problems or request maintenance much more easily thanks to apps and websites, as well as generally get in touch with someone when they need assistance.

Technology has also made it possible for smarter solutions in property management. For instance, it can be useful to perform 3D virtual inspections when a pandemic affects the entire world. However, the main consumer issue that technology and software have assisted in resolving is communication, which is the point that we want to make.

How can you tell if a property manager is computer literate?

Saying you use technology and have glitzy applications and portals is one thing, but as a property owner, you want to see how that actually works. Ask a potential property management how their digital solutions function and how it will help you as an owner if you're speaking with them. A better method to determine whether their digital solutions will be helpful or just a novelty that causes problems is whether they offer a way for you to try them out.

Property management myths busted

Investment property owners often have preconceived notions and opinions about property managers that aren't always accurate because property management has been carried out in the same manner for so long. While some of these fallacies have long been accurate, there are plenty of solutions available in 2020 that demonstrate the contrary.

"Only when a contract expires or my renter is vacating may I switch property managers."

During the course of the contract with a property manager, landlords are typically free to switch real estate agents. Most of the time, you only have to give a notice period—which can be any length—to end your rental management arrangement.

"For the highest quality of service, my property manager must reside close to my property."

The fact that your real estate agent's office being close to your home is not a disadvantage, but it also does not guarantee that your rental will receive the attention it requires.

With the use of technology in property management, your property manager's abilities are more likely to determine whether you receive the service for which you are paying. Assume they have a reliable service model, straightforward procedures, and a straightforward yet efficient method of communication. In such situation, they're more likely than any other local property management to keep your property operating efficiently.

Because of this, rather than looking at the location of an agent's offices, you should focus more on how much of an agent's attention they give to property management and how much they invest in their procedures when looking for a reputable property manager.

"I will receive better service if I pay more."

When it came to traditional property managers, the belief that "what you pay for is what you get" was usually true. These days, not so much!

This is where the new model property managers come into the picture. By changing up the recipe and doing property management differently, some property managers can offer a low price without sacrificing service.

"For me and my tenants, having a single property manager is the ideal experience."

This fallacy is a result of a persistent problem experienced by owners of investment properties. You're not having a nice time if it takes days to hear back and you still haven't had the broken pipe you specified needed to be fixed fixed.

After these experiences, all that a property owner really wants to know is that their property manager will be accessible and fully focused on their property.

There is a reason why the average NPS rating for the property management sector is as dismal as -35. The "one single property manager" strategy has always been employed by the traditional property manager, and while it has been very successful, the customer has not had a positive experience. This is why:

• One property manager would normally have to individually oversee 150 properties under the old property management paradigm. They simply can't give your rental the required attention because they are overworked.
• The average property manager only holds the position for roughly six to nine months due to the extremely high turnover rate of this profession. As a result, when your property manager quits, you get a replacement who has no clue of who you are, what has happened to your property, or what is currently happening.

How to handle several rental homes

Making another investment is frequently the logical next step following a profitable one!

Owning a rising investment property comes with a significant rise in complexity, despite the growth in rental revenue and financial gains being quite alluring. You can have to deal with properties that are spread out geographically, several sets of local state rules, etc. depending on how you structured your property portfolio.

The fact that many property owners hire a property manager is mostly due to the intricacy of the situation. Finding the ideal solution is challenging because many property managers are concentrated in a single region.

The difficulties of utilising one property manager or several while self-managing a number of properties are covered in the next section.

Self-managing several properties presents challenges

If you already own an investment property, you are aware of how much effort it is to maintain just one.

Once you increase the number of properties you own, your list of obligations as a property owner grows even longer and more time-consuming. More characteristics imply:

• You need to locate more renters to fill the vacancies.
• There should be more tenants to interact with regarding property care.
• To remain current on numerous local regulations and ordinances
• Performing more inspections, pursuing more rental arrears, and spending more time on your tax returns
• Several trips by automobile between the properties. If the rents are in different cities, things get much more problematic.

It takes a lot of effort to juggle this with a full-time work. Some multi-property owners leave their jobs to work as landlords full-time, while others hire a property manager.

Whether your properties are close together or far away, and whether you like to be in charge yourself, all of this relies on your scenario. However, for the majority of owners, we do not advise self-managing several properties.

It is a wise investment to keep your full-time employment because a property manager just costs a few hundred dollars a month.

Using various property managers for every residence

To gain local market expertise and suitable care for their property, people mostly choose localised property managers. It makes natural that a less experienced real estate agent would take a more hands-on approach to managing your rental.

Unfortunately, being close to your home is not always a reliable sign of whether or not a property manager will provide value for your money.

A real estate agent's level of service is more dependent on:

• Whether or not they prioritise property management as a primary function
• If they make improvements to their systems and procedures
• Their approach to customer service, commitment to each client, and whether they look for creative solutions to improve the client experience

Additionally, using numerous property managers has a number of drawbacks, including:

• Several channels of communication. Knowing who said what and where might be challenging.
• With numerous annual statements that each disclose things differently, tax season becomes a headache.
• It can be challenging to understand what you're paying for due to various service types and charge structures.

Overall, employing numerous property managers is an option if you must have localised experience, but it is not one we advise.

Having a single property manager take care of several investment properties

The most crucial thing is to maintain control over your properties, and the easiest way to do so is to have all of your rentals under one real estate agent's care. We advise employing a single property manager for all of your properties because of this.

However, if your portfolio of properties is spread across several different cities or states, there are several legitimate reasons to be wary of utilising a single property manager:

• It's possible that the property manager is overworked or oversees too many properties.
• You can miss out on regional expertise.

We can promise that if you do your research, you'll find a property manager who is worth their salary and will handle all of your properties as if they were just one.

Summary

The annual rent your home brings in is its nett rental yield. After deducting maintenance expenses, you calculate it as a percentage of the property's worth. A reasonable rental income in the Australian real estate market will fall between 3-5% depending on whether you own a suburban or a rural home. Australians are spending more time at home as a result of the current work-from-home craze. Your rental yield can be significantly impacted by even the smallest modifications.

Here are some low-cost improvements you can make to the building to raise its value. The rental revenue of your property can be increased brilliantly by converting unused space into storage space. You can raise the rent by up to $20 a week if you instal a contemporary bathroom. Some home upgrades will qualify for tax deductions and offer a higher return on investment. Renters are drawn to homes with solar panels.

Solar panels will increase the sale price by up to $10,000 when it comes time to sell. Renters who live in a safe, well-equipped house may qualify for a discount on their contents insurance. Landlord-tenant interactions are no exception. Lack of communication is the main reason why most relationships fall apart. Happy renters lead to shorter vacancies, which means you have a reliable revenue stream for longer stretches of the year and don't have to deal with the inconvenience of advertising your property every six months.

A study found that 44 percent of tenants found their property managers to be unresponsive. Tenants value acknowledgement and responsiveness to let them know that something will be done about the problem. Maintaining a positive landlord-tenant relationship requires striking a balance between being approachable and professional. Tenants don't seek for property managers who are overly amiable or who they can go out drinking with. Instead, someone they can trust will uphold their limits while being strong and courteous. A professional property manager makes tenants feel at ease and confident in approaching them with any problems.