Hi all,
Will be needing to enlist the service of a real estate agent to provide Property Management service as we will be renting out the townhouse we currently live in when our new home is completed construction.
Just wondering if anyone had any tips in what to look for when choosing an agency to look after the rental, and also if anyone had suggestions for a particularly good property manager/agency in the Hills/Blacktown area of Sydney.
We already have tenants lined up so a good database of potential tenants is not a necessity at the moment, probably looking more for a reasonable % management fee, chasing up late payments if required, conducting inspections, good reporting of rental income & expenses (pref monthly rather than just at tax time)...
Thanks in advance for your assistance!!
Helena
I've got a couple with R & W at Rooty Hill. Of all the property managers we have, these guys are the best by far in chasing up rental arrears and in keeping us informed of anything going on.
One thing to check when signing a rental agreement is the cost of a repair that they are allowed to authorise without you being told. I set mine to $50 cos I want to know what's going on all the time. Might sound a little OTT but there have been quite a few requests for repairs that were not our responsibility, eg. plumbing and fence issues which both fall under strata's responsibility.
As for monthly statements, we always get them sent each month for every property. I assumed this was standard practice? You do get an annual summary you give to your accountant but that's just a bunch of figures on a single page.
I’d get 3 property managers to come look at the property. Some tips of things to look for:
- Do they manage many other properties in the area? If they do, then other landlords must be happy with them and they must be familiar with the area so they should know how best to achieve the highest possible rent. If your townhouse is in a group, it would be great if they managed another townhouse in the same group.
- Ask them about their management fee and also, any other fees. Some agencies might offer a lower management fee but then sting you with other costs so they might appear cheaper but actually aren't (eg. they may charge a postage fee, admin fee, leasing fee, lease renewal fee, monthly fee, etc.)
- A lot of real estate agencies are primarily sales focused as that’s where the money is. They don’t invest as much time or resources into the property management side of the business. You need to find an agency that values their property management staff and business just as much as the sales side, if not more.
Also look at their adds on realestate.com Some of them are HOPELESS. Bad photos, descriptions etc.
Also I've noticed one in Blacktown continually advertises rentals lower than expected rent. Probably because they'd rather rent it lower (quicker, easier for them). Or do they really have NO clue??? Frustrates me as I go to put my rent up and I have to wait for their add to disappear. They (not mentioning the name) had a 2 bedroom VILLA for rent for $280 a week. You can't get a 2 bedroom unit for rent in Blacktown for that.
It pays to know what your property is worth. Don't believe what the agents tell you.
I had a house for rent and 2 agents told me I'd get $300pw. It was snapped up first day at $340pw.
I agree with what everyone else has said.
Also check how long the property manager locks you into a contract with them, and find out if this can be altered - if they want the business, you should be able to go as low as a 6 month contract. Mine was 1 year, but I didn't realise the repercussions of that and ended up wishing I had negotiated down to 6 months. Then I could have given them the boot when they weren't performing as expected, instead I had to wait it out a year.
See what type of rent inspection documentation you get - some just give you a short written summary of the inspection, others will give you photos plus the written report. Also some charge ridiculous fees for your EOFY summary, others have this included.
Also find out what their policy is on getting back to you and your tenants, ie. do they guarantee to get back to you within a day of enquiries? What about if they are off sick? This came up when my property manager was off sick for a week and I urgently needed to get something sorted out, but it ended up being 3 weeks later by the time my PM got back and got on top of her work. Not happy.
Another thing to be aware of once you sign up - my PM said they were coming by just to take photos to put on the internet, I was still cleaning/renovating but they said that would be fine. It turned out they did the property condition report that day but did not tell me, and I didn't receive a copy until I was out of my contract with them. So now my property condition report doesn't match what the property actually looked like when the tenants moved in (I'm crossing my fingers that it doesn't come back to bite me when they move out). So perhaps ask to see the property condition report once it is filled out, to ensure you agree with it.
Luckily, I have the most amazing tenants, and was able to get rid of my PM as soon as the year was up, I now self manage my property
**this ended up being a lot longer than I intended, but I hope it helps!**
DP and I own a small agency here in Perth; he has owned 2 other agencies previously and I’ve worked in a couple of other agencies in sales admin and general & trust accounting, so we’ve seen and heard a lot of things.. and not all good!
In our experience, some of the things to look out for are:
- Lowest fees aren’t always the best (obviously)... nor are the highest fees.
- Be wary of agencies who have a lot of rentals; Property Management can be extremely time consuming, and if an agency has a LOT of managements, then they need to have the staff to back up their service. The biggest complaints made to our Institute over here is the lack of communication between PM and owner/tenant. (One agency I worked for had nearly 200 managements but only 1 PM.. she had a breakdown and was told by her doctor to get out of the industry!) There is a very high turnover in Property Managers over here.. a lot of them constantly looking for greener grass, and some are quick to move where the bonuses & allowances are higher.
- DEMAND a copy of the Property Condition Report. It is what will be used to compare the final bond inspection report with; if things go bad and it ends up in court, this report will be the thing that the magistrate will make judgement on.
- Go with an agency who does NOT outsource their PCR’s. Again, an agency I worked for outsourced them because the PM was too busy to do it herself. BUT!! At the bottom of the outsourced report, the person who conducted the report had a little disclaimer “Blah Company accepts no responsibility for any items found not to be in working order or any damage, loss, cost or expense incurred to any party (Owner/Agent/Tenant) as a result of any error or omission in the above report”. Excellent! Just what you need when you’re trying to sort out Bond Disposals or standing in front of a magistrate who is scouring the report looking for something that isn’t there!
- Ask the agency how many photos will be taken during the PCR. Again, outsourced reports sometimes might only include 100 photos. We don’t put a limit on photos.. I take as many as I need to, burn them to 3 discs and send a copy to the tenant, the owner and 1 is kept in file. One of my 4x2 properties has over 700 photos. Pictures tell a thousand words and will stand up far better than words on a page.
- DEMAND an end of month statement. It is a regulation requirement here in WA that this be provided to Owners showing all debits and credits. If your agency is using one of the few specialist trust accounting software packages, it should be standard EOM procedure for the statements to be printed and posted or emailed.
- End of Year statements aren’t mandatory, but we do provide these as a matter of course. It’s basically a summary of all of your income and expenditure itemised into different ‘accounts’ for your accountant to work with. Ie, rent income, council rates, water rates vs water usage, maintenance, etc. Check the price they charge for it! We know of an agency over here who charges over $100.. with the trust software we use, we get it at the click of 2 buttons!
- Ask agents if you are able to contact a couple of their current owners for testimonials/references. We have a few owners who have given us permission to give out their numbers for references.. a comforting sign that we’re doing the right thing!
- Our management agreements with owners are usually for 2 years, but we do have a policy whereby if the owner doesn’t like what we’re doing, contact us and let us try to fix it, if you’re still not happy, then we’ll let you out of the contract with no further questions asked. (As a side note, if you enter into a management and your PM/agent does not do what they are contracted to do, you have the legal right to end that contract.. contact your fair trading department and seek advice!). We have had clients follow DP from his past agency so again, we’re obviously doing something right because they’re happy to follow and renew with us
- Ask them how they deal with arrears. A friend of my dad had his property managed by an agent who let the tenant get into arrears of almost $10k before they breached them. DUMB! As an owner, you will know straight away if your tenant is in arrears because the end of month income statement should tell you how much your tenant has paid, for how many periods (ie 4 weeks, 1 month, etc) and the paid from and to date. If you notice your tenants are behind, go and see the Licensee of the agency and ask them WHY you haven’t been consulted. I have never really understood why PM’s let tenants get into arrears – if the tenant doesn’t pay their rent, the agency doesn’t get its management fees. Again, DUMB!
- Do your own research for rental income if you’re unsure of what you should be getting. Remove any emotion you have (including financial needs) and have a look on the net at other properties in the area. Be ruthless and compare apples with apples. Go to some of the viewings if you think it might help, just to see where your property is sitting in comparison to others in the area. Our appraisals are presented in the same way as our sales; a printout of what is currently on the market (showing days on market, which often gives a good indication if something is overpriced) and what has recently been leased. At the end of the day, what is currently on the market isn’t always the best indicator.. recently leased or sold data is where the proof is.
- Ask your PM to show you comparable properties and ask them how they came to the figure they’ve given you.
- Be a bit cheeky and ask them if their Property Managers get a bonus for signing up new clients. Once again, experience shows that those on bonuses are really quick to get your signature, but when you want a return phone call or email, forget it! They’re too busy chasing new signatures
- Be aware that tenants have a right to privacy. I think it is somewhere in the Residential Tenancies Act that we can't take photos of the property without their permission first - another reason why some tenanted properties for sale don't have any inside pics on the net. At the end of the day, it is your HOUSE but their HOME. As long as your property manager is doing their job properly, you shouldn't need to worry about what the property looks like, as apart from general wear & tear, it should look the same as the day they moved in!