How to find a good property manager
Like many investors, I choose to entrust my investment property to a property manager rather than trying to manage it myself.
A good property manager is worth their weight in gold. They can potentially save you thousands of dollars and improve investment returns.
But, if you choose a poor property manager, it may end up costing money over the long term by increasing vacancies, poor tenant selection and expensive services.
Sometimes it is unavoidable to use a property manager. You may not live near the property, you may be time-poor or just appreciate the value of their service.
Before you select your property manager, it is important you understand how they’re going to look after your investment.
What you should be asking a potential property manager:
What’s the current rental market in the area?
Your property manager should have a great understanding of the local market. They should be able to tell you what the average rent is, average vacancy time and what type of properties are appealing to tenants.
What’s the current market value for my property, and how long should it take to find a tenant at this value?
One of the biggest expenses of your investment property is a vacancy. You can often feel nervous or stressed waiting for a new tenant. A property manager should know what price to set your property so it is competitive in the market place. It is not worth an extra $10 per week rent if it takes an extra 3 weeks to find a tenant.
When do you collect rent from tenants and when is it distributed to me?
Rent should be collected on a specific day of the week or time of the month and you should know when to expect your payment to help manage cash flow.
What’s your rent payment policy and is it direct debited?
If the rent is direct debited, the tenants are generally more motivated to have the money in their account. This creates an automatic system and does not rely on the tenant to remember to pay their rent.
How will my property be marketed?
The property manager is “selling” your property to potential tenants and should take the marketing seriously. It’s a good idea for your property manager to use professional photography. Professional photographs can generally be used for up to 5 years if there are no major changes. It’s also important to have effective copywriting to highlight the features of your property.
What is your fee/pricing structure and why?
Sometimes the cheapest property manager can end up being the most expensive. The cheapest is often not the best. Your property manager should be able to explain why certain fees are charged.
What checks do you do on prospective tenants?
Your property manager should have a process for selecting tenants and conducting necessary checks. These checks should include employment checks, previous rental checks and ensuring they can afford the property.
How do you organise repairs and maintenance?
Often property managers have a list of trades and services they frequently use and have built up a good professional relationship with. This can benefit you as an investor as you know the service will be suitably qualified, insured and reliable. If your property manager has earned your trust, you will hopefully feel comfortable with the trades and services they enlist.
How often do you conduct inspections and will I receive a report?
Inspections are an important part of ensuring your property is kept in good conditions and any issues are quickly resolved. Inspections should be conducted regularly and you should receive a comprehensive report. It’s not good enough to receive a one-line email stating your property is ok. An inspection report should include photographs and comments about all areas of the property.
Do you use a property manager or self mange your investment property? Let me know why in the comments.
Interested in Financial Independence Retire Early? Join the discussion at Chatting FIRE forum.