Unlike other types of investments such as a term deposit or shares, a rental property needs ongoing management. Some landlords choose to look after the property themselves while others appoint a professional property manager.
DIY or property manager?
Taking a do-it-yourself approach will save money but there are many pitfalls involved in meeting the legal obligations of a landlord, and it can take time and money to deal with tenants, property inspections and co-ordinate property repairs.
Most landlords choose a property manager, and you can expect to pay fees averaging around 7% of the rental income for this service though this may be negotiable.
No matter whether you take a DIY approach or you use a property manager, it’s good to personally inspect the property at least twice a year. This will identify any potential tenancy or maintenance problems before they become a major issue.
Role of a good property manager
A good property manager should take the effort out of owning an investment property by:
- Guiding you on the market rent you should be able to charge for your property.
- Organising a new tenant including advertising the property, conducting inspections, interviewing tenants and checking references.
- Collecting rent payments and depositing the cash into your bank account.
- Drawing up the lease and managing the legal obligations of a tenancy including depositing bond money with the appropriate authority.
- Preparing a detailed inspection report at the start of each tenancy that details the condition of the property.
- Arranging and conducting regular property inspections before, during and at the end of each tenancy.
- Responding to tenants’ ongoing needs including organising emergency repairs if necessary.
- Providing regular statements for the landlord itemising rent received and any outgoings.
- Organising and attending tenant tribunal hearings if necessary.
Questions to ask potential managers
- How much experience do they have with your type of property?
- Does the agency have a dedicated property manager?
- Are clear management systems in place? Ask to see copies of standard forms or checklists used to manage tenants and properties.
- How often is rent (net of expenses) deposited into your account?
- How well are tenants screened? A good property manager will thoroughly check tenant references.
- How often are tenanted properties inspected?
- Does the manager have a list of qualified local tradespeople that can be called on for urgent repairs?
- How frequently does the property manager communicate with you?
- What is the management fee - is it negotiable?
- How often are income and expenses statements issued?
- What procedure is used for rent arrears, evictions and vacancies?
- Do they have good references and testimonials?