Tag Archive for: choosing an agent

6 Common Mistakes Property Managers make that Cost YOU Money!

While many investors ‘shop’ property managers based on their management fee,  this can be false economy as choosing a poor property manager can cost you a lot of time and money.   In this article we examine some common mistakes which end up costing owners more than they bargained for and provide some tips to help you to choose your property manager wisely.

 

  1. Poor tenant selection.  Not all agencies have rigorous processes around tenant selection.  In a difficult market, it can be tempting to accept anyone.  But a bad tenant can cause owners enormous expenses – whether it be unpaid rent or damage to the property.  It is common practice now for agencies to allocate only 10 minutes to ‘open homes’ for rental properties, often attended by a junior person.   This provides insufficient time to talk with these potential renters so tenant assessment is based only on the application form.  If at all possible, choose an agency where the same person who ‘shows’ the property, is the same person who does the reference checking.  Ensure they also check your applicants against a national tenancy database.
  1. Poor inspections.  It is good practice to do an initial inspection within the first three months of a new tenancy as this allows the agent to assess the general state of the property and can alert them to any potential issues early.  Tenants that present well on their application form are not always the best tenant.   The inspection is also a good time to inquire about any maintenance issues that have arisen.  A good inspection is an opportunity for your agent to examine your property with a critical eye – noting not only whether the tenant is caring for your property, but if there are other likely issues to arise that may need owner attention.  For example, if a stair is unsafe, or your smoke alarms are not compliant, you may find that your insurance is void should an incident arise.  A good inspection will highlight these issues so that you can make an informed decision.  A few dollars in preventative maintenance can often save you money in the long run.  You also have the right to go with your agent to inspect your property if you wish to.
  1. Tenant annoyance. When you find a good tenant for your property, it pays to keep them happy.  The longer they stay, the more quickly you pay off your investment property.  Agencies who do not respond in a timely manner to maintenance issues, or otherwise annoy your tenant can be a liability and cost you weeks of vacancy.
  1. Poor rent arrears processes. While you may think that every agency will know if your tenant has paid their rent, and will chase them if it is not paid, unfortunately this is not always the case.  Look for an agency with a process around rent arrears, so that non-payment is followed up in a timely way.  At the end of each financial year, do a quick calculation

                (Weekly rent   x   number of weeks the property was actually rented)

    If the amount of rental income shown on your statement differs from this calculation, you have missing rent.

  1. Poor lease management processes. When a lease is up for renewal three things should happen at least 2-3 months prior to end of lease.First, a new rental appraisal should be conducted to see how the current rent compares to the current market.  If a rental increase is due, then your tenant must be notified at least 2 months prior to the end of their lease.Second, your agent should be contacting you to ask whether you wish to renew the lease and to seek agreement on the rent which is to be set.Third, your agent should be asking your tenant about their intentions.  If they plan on leaving at the end of the lease, then steps need to be taken to start marketing your property prior to the end of the lease.  Your agent should also inquire whether there are any tasks that you would like undertaken if the tenant moves out (e.g. if the inside of the house needs paint) and who will seek quotes and supervise  these works.Many agencies leave these tasks until when the lease has actually expired, meaning that you are more likely to face a vacant property.  If your agency has not contacted you within two months of the end of lease, it may be time to find a new agency.
  1. Poorly trained and/or overworked staff. Most real estate agencies focus on house sales, rather than property management.  Property management is a difficult job with a very high turnover (the average property manager lasting only 9 months).   Often agencies will employ inexperienced people at a minimum wage and throw them into a role where they need to manage over 100 properties.  It is no wonder mistakes are made.  Choose an agency where their property managers are valued and have a realistic portfolio size.  Smaller portfolios mean that the property manager will have time to be proactive with your property.You may pay a little more for the service of a good property manager, but it is unlikely to be a difference of more than one to two weeks rent.A good property manager will save you that rent money many times over and provide you with piece of mind so you do not have to worry about your investment.