What should you do next now that you're the proud owner of a piece of property? Have you considered the operational facets of property management? By the end of this blog, you'll have the answers to the questions you have if you're conducting research to understand everything you need to manage your rental property.
You can choose whether to handle it yourself or give it to a reputable property manager by being aware of what their tasks and duties are.
Finding quality renters, increasing rental income, and maintaining the property in good condition are just a few of the many responsibilities that go under the umbrella of property management.
This includes keeping an eye on legal issues, financial issues, and even maintenance budgeting.
Once you have a firm understanding of what the responsibilities of the property manager are, you'll be able to make wise hiring decisions. This will undoubtedly save you a tonne of time, money, and unnecessary stress. However, if you decide to handle your rental property yourself, you'll at least have a list of factors to take into account.
Want to learn these? Read on.
What are the duties of a property manager?
Your property manager will act on your behalf according to the services outlined in your property management contract. Property management responsibilities and tasks typically include things like advertising your home, choosing qualified tenants, and managing your rental income and maintenance costs.
Having a professional manage your investment property is the goal of hiring a property manager. It's the most typical strategy used by owners of investment properties to lower risks, boost returns, and spend less time maintaining their homes.
What is a property management agency's responsibility?
The most fundamental duty of your property management company is to put your interests first when making choices regarding your home or apartment. The following are more precise functions and obligations of property managers:
Setting the rent
Making sure you get the most return on your investment in real estate is one of your property manager's key duties; by maximising your rental yield, you'll be able to enjoy bigger income inflows.
A property manager will appraise properties and research market rental rates to achieve this. This will stop you from charging exorbitant fees that make your rental home less appealing to potential tenants. Your house is more likely to remain vacant if you set the rent too high, which could cost you several weeks' worth of rental money. Of course, undercharging is equally undesirable.
Having a property manager has the advantage of sparing you the headache of determining unsuitable rental prices. They keep a close eye on the state of the market and provide you with timely recommendations on raising and lowering rental rates.
Collecting rent and chasing any arrears
An effective technique for collecting rent from renters will be made sure of by the property management. The property manager will also follow up if the renter is late with payments to make sure your rental money isn't unduly delayed.
Finding good tenants and long-term lease agreements
A property manager's duties include following up on arrears, but the goal is to address the issue before it worsens. A top-notch property manager will find you, trustworthy tenants, right away by using a strict tenant screening procedure.
Finding quality tenants was cited as one of the top three issues by 21% of owners in a study we conducted of 200 owners of investment properties. It's interesting to see that 11% more property owners were unhappy with their tenants.
Home managers, on the other hand, have the tools to get you excellent tenants who will care for your property and pay rent on time because they are experts in the field. In the second portion of this post, we'll go into greater detail on this.
Property preservation
To keep your home in peak condition and your tenants satisfied, part of owning an investment property entails routine maintenance and repairs. In addition to maintaining effective communication with your renter to make sure they are aware of these issues, a competent property manager will work with a network of reliable tradespeople to guarantee you are obtaining the best possible pricing.
Carrying out regular inspections
Regular property inspections will be performed, and a property manager will keep you informed with inspection results. When you're figuring out your maintenance budget, these can really assist you spot any impending short-term repairs and long-term capital bills that need to be addressed.
Making bill payments
A property manager can take care of all of your payments for the property. In addition to paying council rates and strata levies, this also entails paying utility and water bills. These expenses are frequently deducted from your rental income.
Administration
Being organised is essential to remain on top of all your real estate matters. A property manager will take care of documenting everything pertinent to your rental property for you, saving you a significant amount of time. This includes keeping records, upholding leases, paying for postage, giving tenants the key, and creating annual statements.
Communication
No landlord appreciates getting texts at 8:00 p.m. on a Sunday night about maintenance issues from renters. Owners may find it difficult to keep up with these kinds of conversations, but a property manager can assist.
An excellent property manager will maintain effective communication and be receptive to the needs of both tenants and owners. By investigating their complaints and issues, they will make sure that the tenants are satisfied.
They will cooperate with the demands of property owners as well. This can involve anything from learning the owner's prefered means of communication to doing maintenance fixes as previously agreed to, with or without the owner's consent. In the end, a property manager knows how much a property owner wants them to be proactive and make decisions on their behalf.
Get ready for courtroom proceedings
If there are issues with the tenants that cannot be handled through informal mediation, a property manager can represent you in court. They'll present proof to support your claim, including records of late payments, pictures of any property damage, receipts, copies of letters and other communications, and receipts. You can use this to strengthen your argument during the tribunal proceedings.
Keep abreast of tenancy laws
In the event that either side crosses the legal line anticipated from a landlord-tenant relationship, it is necessary to be aware of the most recent rules and regulations pertaining to rental property. Because of this, a property manager will keep the owner informed of any changes to the law pertaining to tenancies.
Ensure that you have faith in the calibre of their services
Even if not all property managers are able to offer this, the top property managers unquestionably include it in their list of obligations. An excellent property manager will ensure that you are informed of everything that is happening with your property, not only when something goes wrong.
To assist with this, you may want to seek a property manager who focuses on managing long-term residential homes as opposed to one who also handles managing short-term rental properties and/or sales.
By doing this, you'll be collaborating with a professional who is more likely to invest their resources in honing a certain skill set. Their insights will result in higher-calibre choices and affordable costs for your investment property!
How can you determine whether and how much your prefered property manager charges for each of these services?
If you have trouble finding one online, you can start by looking for a list of duties for the property manager on their website. If not, they should be willing to speak with you over the phone or arrange a meeting.
There are a few things to consider when thinking about how to select decent property management if you decide to do this. These include, but are not limited to, knowing what to ask a property manager during an interview, confirming that they have adequate experience, and determining whether or not they are consistently looking for ways to improve.
Everything you need to know about tenants and occupancy
How does a property manager find new tenants?
A good property manager will take various efforts to make sure you locate the best tenant for your home, including promoting and accepting applications. These consist of:
- Organising real estate photography - Professional photos that are shot in accordance with industry standards serve to highlight the greatest features of your rental property. This could increase its appeal and increase the demand from prospective tenants for your rental property.
- Creating walkthrough videos and floorplans - These provide potential tenants an idea of what your property has to offer. A market-focused, technologically advanced property management may even provide 3D virtual inspections that let potential tenants tour the property from the comfort of their own homes. Additionally, it avoids the inconvenience of scheduling property viewings for potential tenants while the existing tenants are still dwelling there.
- Advertising your property - Online advertisements and physical lease signage at the property are both essential components of a successful marketing effort. Many property managers will obtain you premium ad places on well-known real estate websites like realestate.com.au and domain.com.au in addition to posting online listings on their own websites and free listing websites. Due to its wide reach, this improves views and potential queries for your property.
- Running open homes - In order to determine whether a prospective tenant is fit, a skilled property manager will speak with them during an open house and get to know them personally. To find out if the potential buyers are interested, they next collect feedback and conduct follow-up. If so, they proceed to the following phase, which is interviewing prospective tenants.
What should I look for in a tenant and how should I screen them?
Make sure to enquire about a prospective tenant's employment, monthly income, and credit rating while doing a tenant screening.
Find out how many individuals will be using the property in a similar manner. Ask them why they are relocating, if they have any pets, and if they smoke. Make sure they provide references so you can verify their responses with their former landlords. This is also a good idea.
If you decided to engage with property management instead, you should read up on how they select the best tenant for your property to gain a better understanding of how they evaluate tenants.
This includes screening tenant applications against rental databases to separate the qualified applicants from the unqualified ones. The verification process also includes contacting their references, meeting with them one-on-one, and checking their employment histories.
Everything you need to know about finances and fees
What is covered by costs for property management?
The majority of property managers impose a location-specific percentage-based fee. You could anticipate paying an average of 5.5 to 6 percent if you live in Sydney or Melbourne. The cost is now averaging around 9 percent if you reside in Brisbane.
Although some property manager costs are all-inclusive, many others will charge you extra for services like lease renewals, administration, and tribunal preparation. There is, however, no hard and fast rule dictating what is and isn't included in this fee.
However, generally speaking, the ongoing management fee will cover things like maintaining the property, collecting rent, pursuing unpaid bills, and strata, water, and council rates.
Remember, it can be challenging to feel confident you're paying a decent amount due to the opaqueness around prices in property management. Choose property management who is open and honest about their fees.
Property management costs that are unclear to property owners and overly complicated have long been a problem in the industry.
What are the value add-ons to expect from property managers?
Value additions will vary from manager to manager, but collaborating with a responsible property management who has expertise in long-term residential properties can be beneficial. This not only guarantees that they are primarily focused on your sort of rental property, but also increases the likelihood that they have the resources to further enhance the services they offer to owners.
How Hard is it to Change From a Bad Property Manager?
You're not alone if you're unhappy with your current property manager and are wondering how to switch to a different management company. Despite the fact that 53% of Australian investors are dissatisfied with their property management, many of them do nothing about it. Why is that?
There are many misconceptions about when and how to switch property managers, which causes owners to grit their teeth and put up with subpar service while counting down the days until their contract expires or their tenants vacate.
In this post, we dispel the most widespread misconceptions about changing property managers and provide advice on how to handle a subpar management. If you belong to the 53 percent, it's crucial to know what switching options are within your reach.
Myths relating to transferring property managers
Myth No. 1: "I can only change property managers after the contract expires."
This is an example of a common mistake. Landlords often have the freedom to work with any real estate agent of their choosing during the term of their agreement with a property manager.
The truth is included in the property management contract you have. In some contracts, the first term time may be set (usually between 6 and 12 months), although in most cases, giving notice that is equal to or greater than one to two months in advance is sufficient.
The second myth is that switching property managers won't make much of a difference because most property managers operate in the same manner
This is the furthest thing from the truth, as any experienced real estate investor will tell you if you ask them.
The manner in which various property managers take care of your investment property can be very different from one another.
There are two types of property managers: residential and commercial.
- Traditional property management
- “New model” property management
The most important difference is that traditional property managers are... traditional! They continue to handle properties in exactly the same way as they did in the past.
- To connect with owners, they mostly use phone calls, emails, and text messaging.
- A single agent frequently manages more than 100 investment properties for them.
- They offer a variety of services, including property management as one of those options. In addition to that, they host a variety of events such as sales and auctions.
New categories of property managers are coming up with inventive strategies and methods in order to come up with more effective property management solutions.
You should be aware that different property managers have different approaches, and that there may be alternative solutions that are available to you that are even better, but there is no one answer that is universally applicable to all circumstances.
The third misconception is that "it is more cost-effective to wait out the contract than to switch while it is underway."
Depending on the specifics of your situation, this.
The upkeep of a property that is vacant for an extended period of time is expensive relative to any termination fee. If you believe that changing property managers can assist you in finding quality tenants and getting rid of vacancies, then we strongly suggest that you make the transfer as soon as possible.
Consult the property management agreement you have on file for a comprehensive explanation of the termination fees. The vast majority of property managers will not make an attempt to defraud you, but some of them may try to get you to pay them the total amount of the fees they would have received for the duration of your contract even if you terminate it early.
Myth number four: "If I switch property managers, I would be forced to evict the renter they found."
When the property management agreement is cancelled, the only thing that comes to an end is the relationship that you had with your property manager. The terms of the lease have not changed in any way. Your new real estate agent will take care of everything else; all you have to do is provide them with the details about your property and the lease agreements you have in place. Your tenants will not be required to sign any new documents in the future.
Myth number five: "If I switch property managers while my renters are inhabiting the property, it will cause a lot of problems for them."
In point of fact, the opposite is true! If a property management has a solid transition strategy that takes into account the tenants' health, then the tenants may actually experience greater levels of happiness. If your property management has been slow to respond to maintenance problems, your renters will undoubtedly be happy to find that you have changed things up.
Myth number six: "Changing property management companies would result in a significant increase in the amount of work that needs to be done by me."
No, not if the management of the property is any good!
Property managers want it to be as easy as possible for you to switch to them, which makes perfect sense when you stop to think about it and give it some thought. Because of this, trustworthy organisations will have a simple process that will not bury you in paperwork and administrative responsibilities. The procedure for changing real estate management companies
Now that you are aware of the realities involved in switching property managers, let's go over the process step by step:
1: Think for a moment about why you want to end your property management agreement
If the problem is not too significant and the two of you are able to find a solution to it together, it may be helpful to have a conversation about the things that haven't worked and the things that you can do to make it better.
Check to see that your decision was not influenced in any way by your own personal preferences but rather by purely professional factors. You may want to read another article that we've published if you're interested in learning more about how to manage your property as if it were a company.
If you have concluded that your property manager should be terminated, you are ready to proceed to the next stage of the process.
2: Choose a superior property manager
If you rush through the process, you can end up in the exact same predicament that you are in right now, except with a new property management.
Inform them of the situation and the fact that you already have a property manager once you've devised a solution that's superior to the one you were considering before.
There are property managers out there who do not have their very own individualised onboarding process, but there are also some who do. So that you don't have to go for extended periods of time without a property manager, simply let them know when you'd like to start working with them if they don't already have that information.
3: Your property manager should get the letter of termination
Putting these problems on paper makes it much easier to deal with them in every way.
Obtain a copy that has been signed before delivering the letter of termination through email.
Be sure to also indicate the date that you were terminated from your position. Because you do not want there to be any stretches of time when you do not have an agent, you should coordinate the date of your termination with the time that you have agreed to begin working with your new property management.
It is essential, given the circumstances, to have a record of all of the correspondence that has occurred in case there are ever any questions.
4: Pay any termination fees
The fact that the termination clauses in property management contracts are subject to a variety of terms and circumstances was already brought to your attention. This comes into play at this time in the action.
We strongly suggest that you negotiate a one-time payment plan with the prior property manager. For instance, if their termination price is equivalent to two months' worth of property management costs at a monthly cost of $210, you will be required to pay a lump sum payment of $420 immediately. With monthly financial statements, it's easy to let important details slip your memory.
5: Transfer security deposits from renters
Make sure that the security deposits that were left by your tenants are well taken care of. When changing property managers, the bond should never be used to pay any of the associated charges; however, we highly doubt that any property management company would ever try to do this.
Get confirmation from your new property management that the security deposit was passed over correctly, and make sure your tenants are aware of this information.
Summary
Whether you're looking to hire a property manager or handle your rental property yourself, be aware of what their tasks and duties are. Making sure you get the most return on your investment in real estate is one of your property manager's key duties. This includes keeping an eye on legal issues, financial issues, and maintenance budgeting. Having a property manager has the advantage of sparing you the headache of determining unsuitable rental prices. They keep a close eye on the state of the market and provide you with timely recommendations on raising and lowering rental rates.
The property manager will also follow up if the renter is late with payments. An excellent property manager will take care of documenting everything pertinent to your rental property for you. This includes keeping records, upholding leases, paying for postage, giving tenants the key, and creating annual statements. A property manager can represent you in court if there are issues with the tenants. A good property manager will take various efforts to make sure you locate the best tenant for your home.
These consist of, but are not limited to, knowing what to ask a property manager during an interview. Also important are confirming that they have adequate experience and are consistently looking for ways to improve. If you are looking for a new tenant for your rental property, consider hiring a professional property manager. The majority of property managers impose a location-specific percentage-based fee. There is no hard and fast rule dictating what is and isn't included in this fee.
53% of Australian investors are dissatisfied with their property management, many of them do nothing about it. Property managers fall into one of two categories: traditional property management or "new model" property management. Traditional property managers continue to manage properties in the same manner as before. New property managers have different approaches and there may be other, better solutions available to you. "Switching property management companies means there's a lot of work for me to do." Not if the property management is decent!
Tenants may actually be happier if a property manager has a strong transition strategy that takes their wellness into account. Read on to learn more about how to manage your property like a business. Termination clauses in property management contracts are subject to various terms and conditions. Make sure your termination date coincides with the time you've agreed to begin working with a new manager.
Property manager responsibilities include setting and collecting rent, handling maintenance requests, filling vacant units and potentially setting the budget for the property. Property managers often take care of property that real estate investors either do not live near or do not wish to personally manage.
What is a property manager's first responsibility to the owner? To realize the maximum profit on the property that is consistent with the owner's instructions.
Most property management companies charge a monthly fee of between 8% – 12% of the monthly rent collected. If the rent on your home is $1,200 per month the property management fee would be $120 based on an average fee of 10%.