Is it worth the risk?
The difference between a good and a bad property manager can amount to the cost of a sandwich and drink per week but will save you huge headaches.
Generally speaking, when a landlord is shopping around for a new property manager the only commonly asked question is on fees. Property managers rarely get asked what their difference is from their competitors, what their team’s stats are in relation to renting properties at solid rents or what the average length of tenure is on their portfolio (even though these questions say much more about value for service and how much a landlord will save in the long run).
For landlord’s who have selected their agent based on fees…let’s break it down and do the sums on an average rent of $450 per week. Whilst a 7.7% management fee is supposed to be ‘industry standard’; let’s start at 9.25%
- $450 per week @ 9.25% = $180.37 per month in agents fees
- $450 per week @ 8.5% = $165.75 per month in agents fees
- $450 per week @ 7.7% = $150.15 per month in agents fees
- $450 per week @ 6.6% = $128.70 per month, $21.45 less in agents fees
- $450 per week @ 5.5% = $107.25 per month, $42.90 less in agents fees
There is only $73.12 per month difference ($16.87 per week) between the cheapest and the most expensive agents. This equates to $877.44 per annum.
Now if you select the cheapest agent there is likely a reason they are cheap – normally it’s their only way of gaining business. This is because they either have inexperienced property managers or because they are aiming for high growth at any cost, and in turn your property will be on a portfolio of around 260 properties or more and that averages out to very little time left for you and your management.
A solid property manager who aims for firmer fees should generally have a smaller portfolio, higher quality landlords and properties, and be able to spend more time on you. That property manager only has to do one of the following things to advance you on the $877.44 annual saving you thought you made by going with the cheaper option. They are:
- Rent your property 12 days faster
- Achieve a slightly higher rental ($2.43 per day)
- Retain your tenant for a further 6 months
- Not charge a lease renewal fee
The above items will NOT happen with a property manager looking after too many properties. They simply don’t have the time.
Most people wouldn’t think twice about $73.12 when it comes to having a meal out or perhaps a quick lunch with a friend or even enjoying a pizza and a bottle of wine with your partner, yet when it comes to property management there seems to be a real issue in seeing the value.
Because there is so much difficulty in seeing value, let’s illustrate some of the things property manager’s do that sometimes get forgotten. Property managers:
- Write property advertisements
- Meet the photographer on site and get professional images taken
- Advertise the property on all the appropriate portals
- Conduct tenancy and reference checks (from reviewing applications with you to approving the tenant, taking their rent/bond and completing a condition report)
- Show many prospective tenants through the property
- Deal with several phone calls from the new tenant about things they don’t know how to use in the property
- Manage all the entry maintenance that gets addressed with us
- Manage your expectations in relation to the issues that have arisen by a new tenant that the old tenant didn’t worry about
- Manage the tenants' expectations in relation to what is maintenance and what is not
- Conduct routine inspections, report on the maintenance required, organise the quotes for repair and coordinate access between tenant & tradesperson
- Re-negotiate rent and leases and provide you with comparable evidence of such
- Pay your rates, water & owners corp from the rent
- Collate an approved statement each month as well as an end of financial year report
- Deal with tenant and neighbour disputes
- Conduct entry, routine and exit condition inspections
- Attend regular training to keep up with law changes and best practice
- Attend mediation and tribunal hearings on behalf of the landlord
Above is a list of just a few of the tasks that First National Real Estate Rochedale property managers do as part of our role, but if they lease the property 12 days faster, not charge for lease re-newels, obtain a slightly higher rent per week, retain your tenant for 6 months longer – then you are already miles and miles ahead by selecting the best, not the cheapest property manager.