Six things to consider when choosing a property manager...
Excellent property management is such a crucial element to a successful investment. Like any investment or business venture, poor management of an asset – no matter how strong the asset is – could seriously compromise the viability of your entire investment.
Think of your investment property like a small business. For example, let’s say a corner sandwich shop. You’ve done all your due diligence on the sandwich shop before purchasing the business, so you’ve checked the figures: inventory, turnover, growth, and depreciating asset values. But if you hire mediocre staff to manage and run the business day to day for you, poor management can drive it in to the ground and turn a profitable sandwich shop into a one that is not profitable.
Choosing a property manager is not as easy as asking what fee do they charge. As an investor you need to be thinking about the level of service they can provide you, how experienced they are, do they have an investment property of their own, when are inspections conducted, what sets them apart from the others, and the biggest question of all....How will they maximize your return on investment in the next two years.
So what are the best attributes to look for when appointing and agent? And what things should you avoid? Today I’ve put together a list of things to keep in mind when seeking a managing agent:
1. Don’t just settle for the real estate agent you happened to have purchased a property from.
2. Experience, credentials, testimonials, and references – do your due diligence. This is actually the most important one. Look at websites for property managers who have loads of testimonials.
3. Regular inspections and tenant screening. Ensure that whoever you appoint has, in writing, that their service to you will include twice-yearly (at minimum) inspections to your property. Even if the tenant is a long-term one and looks after the place, it is important for the tenant to know that the agent is actively checking up on the property regularly. As for tenant screening, ask many questions around their process of tenant selection and appropriation. Have a copy of their rental application form emailed to you and inspect it. Generally speaking, the more thorough the application forms, the better quality of property management it is.
4. How are they going to increase your portfolio return over the next 2-5 years? Are they aware of CPI increases or improvements that could be made to improve the dollar value of your home.
5. Do they have support staff? Will the property be managed by one property manager or more? You want consistency with the communication in regards to your property and know who to speak with.
6. Don't just go with the agent who offers the cheapest fee or is willing to discount in a hurry just to get your business...does this mean they will cut corners and just hurry to find a tenant for your property just to get it leased? The cheapest fee is not always the best option.
The success of your investment property significantly depends on the way your property is managed. Unlike investing in say gold, or managed funds, which are typically “set and forget” investment classes, property allows you to be dynamic in the management process, which in turn can help you increase your return significantly if managed well. Just make sure you partner with people who will help this vision, not hinder it.