ARE PROPERTY MANAGERS WORTH IT?
Q: I’m about to become a landlord and am currently waiting for my property to settle. I haven’t decided on who’s going to manage my property. I’m even considering doing it myself. I’ve read a lot of horror stories about property managers not doing their job and that they can actually be detrimental to an investment. So is it worth getting a property manager? How can I tell if they’re going to do the job they say they will?
A: This is an excellent question, as many people are hesitant to spend money on property managers when they can’t justify the cost versus the benefits of having one. Ultimately, no one can make the decision for you, as only you know what your time is worth and whether you have enough of it spare to deal with the daily management of a property and your tenant’s needs. Here are some useful considerations for you to begin with.
A good property manager should be making regular contact with you regarding all aspects of your property and tenants, such as rent payments, inspections, repairs, rent reviews, etc. This is the number one sign that your property manager is doing a good job, as it demonstrates an active interest in maximising your return on investment, treating you like a valued client rather than just another number. These behaviours will give you peace of mind that your property file is being checked frequently and not being ignored.
Some of the benefits of having a good property manager are:
- All the responsibilities for tenant management and property care are managed for you
- You should gain and retain better quality tenants, given a property manager’s experience in finding and screening tenants.
- You will bear fewer costs when it comes to rent retrieval, repairs and legal problems
- You will have more time to yourself, to pursue other interests or investments – how much is your time worth?
As mentioned, at the end of the day, only you can judge the cost vs benefit of a good property manager vs self-managing your property. Take your time, do plenty of research and feel free to meet and interview as many potential agencies as you want. Remember, this is your investment and your future, so you must be confident that it is in the right hands.
TERMINATING A PROPERTY MANAGER
Q: I’m to the point where I’m getting so frustrated with my property manager, particularly with their ongoing poor communication. Do I have to stick with the agreement (60 days) or is there a way to terminate the contract earlier? What penalties do I face if I do so?
A: This is a problem that is all too common for landlords today, unfortunately. However, this is real estate and many things are negotiable, so you may be able to propose an exit plan for both the agent and yourself. This doesn’t mean that they have to agree to whatever you suggest as, after all, you do have a contract, but it is worth trying to make an offer to them if you are truly unhappy and wish to terminate your contract.
Carefully consider if going through this process and the possible financial implications is worth it. Ensure you have tried all avenues to resolve their treatment of your property and you as a client, i.e. speak to a more senior manager, or discuss directly with your agent your expectations and how they are not being met. You may find that a change of manager or a rebuke of your current agent could be enough to turn things around. If you have made up your mind that termination of the contract is your best avenue, then go for it. Remember, the agent does not have to accept your offer, but what have you got to lose if you try? Either way, you are going to be out of pocket!
Take a good look at the contract and read the details carefully, particularly with regards to terminating the contract. You will have to stick to the agreement by giving the proper written notice it stipulates, but you can offer to pay them out the remaining days. For example, if you are required to give 60 days’ notice, you can request that they (the agent) take 60 days’ worth of fees from the funds they are holding in trust for you, if they walk immediately (if they agree, of course). If this is not accepted, you will have to wait out the full notice period.
When reading the contract, keep an eye out for additional penalties. These are most commonly just management fees, but I have come across some client’s contracts in the past that have had some ugly break fees in them. Where these exist, you may find that starting with the diplomatic route is a more amenable option.
– Nicole Keene
Nicole has almost a decade of property management experience behind her and specialises in proactively managing investment properties.
