The merits of investing in a residential rental property are well-known, but what is less well-known is the impact - both positive and negative - that a property manager can have on the financial performance of that investment.
In short, the choice of property manageris critical. The right choice will oil the wheels of the investment and underpin its financial growth, but the wrong one can be very costly.
To help property owners make good choices when it comes to their property management, here are six of the most common mistakes to avoid.
- Cheap fees
- Inferior communication
- Inadequate rental collection process
- Tolerance of contract breaches
- Acceptance of vacancies
Paying cheap fees is false economy. Many investors are lured by firms offering seemingly low property management fees, but in reality, management fees are a very small part of the big picture. A couple of dollars 'saved' every week means nothing if the property is vacant for any length of time or if rent collections are late because the property manager has been inefficient. Essentially, you pay for what you get and investors should be wary of compromising on quality by cutting corners.
An inexperienced property manager may lack the expertise and knowledge to deal with certain situations such as breaches of the tenancy law or resolving a dispute with a confrontational tenant - and any delays in reaching an agreement or sorting out issues may have an impact on cash flow.
Any lack of communication between the property manager and the investor can be costly.Problems with tenants can go unresolved, maintenance and repair jobs can worsen, issues around unpaid rent can escalate and contractual breaches can quickly become legal battles - so it is imperative that owners choose a property manager who is a good communicator.
Sloppy rent collection processes will always hurt the property owner. If the property manager isn't methodical and meticulous when it comes to collecting rent on time and has zero tolerance of rent arrears, there is every likelihood that the tenant will take advantage of the situation. A good property manager will not only have proven selection processes to identify quality tenants, they'll also have systems in place to quickly identify late payments and take swift remedial action. Late rental payments affect cash flow, which in turn impact on the financial performance of the investment.
If an investor chooses a property manager who is tolerant of contract breaches, they're asking for trouble. Even if the tenant is a friend or is experiencing difficult circumstances, the property manager should deal with any situation fairly, respectfully and importantly, firmly and impartially. Failure to treat a contract as a legally binding document will generally cost the investor money.
A property manager who doesn't take vacancies seriously should ring alarm bells. Vacancies can undermine rental returns and put pressure on cash flow - plus empty properties can be harder to let. A good property manager will have vigorous marketing strategies in place to attract and screen quality tenants and will work tirelessly to minimise the time that your property remains empty.
Property owners also often make the mistake of not doing enough homework on the property management firm before appointing them, not doing sufficient reference checks and not ensuring that their service levels are up to scratch. Ultimately, a poor choice will cost the investor money, so it is really worth taking the time to find a professional firm who will work hard to contribute to the financial success of your investment.
One such firm is Time Conti Sheffield, whose 60 years' experience in real estate and property managementin Perth has made them a favourite among buyers, sellers and tenants. They pride themselves on their professionalism and ability to deliver exceptional service to all clients across the real estate spectrum - and to find out more about their service and value guarantee, you can contact them on 08 9362 5333 or via their website, www.timeconti.com.au.