It is not unusual for us to assist some owners who have managed their properties themselves but who now want a change.
Frequently we get advised that the tenant is really great so the rent has not been increased for two or more years.
A recent example of this occurred and the rental level had not been increased for four years. Our market appraisal showed the property was being under rented by approx. $100 pw. This meant the owner was paying the tenants $5200 per year to live in the investment property. An inspection of this property also revealed a number of maintenance and damage issues which the owner knew nothing about. Regular inspections would have dealt with this much earlier.
We also dealt with a tenant who had been in the same property for 14 years and the rent was still the same as when they moved in. We estimated the owner had missed out on approximately $85000 during this time.
Do either of these scenarios sound like a well-managed investment to you?
Over time we believe that we can outperform most private landlords and add value beyond our costs. This means a stronger investment profile for you.
We are available 24 hours a day 7 days a week for our tenants. So are our key tradespeople. If you don’t want to deal with plumbing or electrical issues at 2 am then let us do it for you!
There are some other considerations as well:
(Warning: If you don’t care about return on investment or about money, then you will have no interest in this).
During an evaluation between different property management options, you may wonder why there is a difference in price between various companies you are considering.
Are you looking for the cheapest service or the best value?
After all there are companies that offer their property management services at a very low price, and in many cases the reasons for the lower price are not at all obvious.
How do you know if a company offering to provide the best service (for a fee which looks to be substantially less than most others) will actually do a good job?
Will there be a difference between the firms that have been around for longer but charge more?
What will the differences be?
Do you have to use both companies for a year each to compare!
The easy way might be to look at the main areas of cost for a property management firm. These overheads, plus a reasonable profit margin for the service provider represent the fee that they charge.
The area of greatest expense when offering a service like property management is staff costs. Property management is labour intensive and requires staff – there are many issues that only trained people with the time to attend to them can do. Therefore the first thing that must be looked at if you want to reduce the fee passed on to landlords is to reduce the number of staff per property. This will then mean that the remaining staff will have to work longer hours, become more efficient or cut corners.
In Property Management Cutting Corners Is Very Easy, But Always Leads To Problems That The Property Owner Must Pay For
While it is easy to reduce staff costs by having fewer staff per property, and therefore a less intensive management service, the inevitable result is that the property owner will end up losing money! Less intensive property management means your investment is put at more risk as there is less intensive checking on rents and less intensive control of costs.
HOW The Lowest Priced Service Can Be The Most Expensive
If we reduced our staff numbers per property inevitably corners will be cut and the property owners interests will be put at risk. We would skip reference and credit checks, would only check rent arrears one every week and would only inspect properties when there is a change of tenancy. We would have no process to deal with disputes that might end in court and would instead pass that back to you!
PROPERTY INVESTORS PROFIT PACK
A comprehensive property management service is one where corners are never cut. It is one where tried and tested processes are followed so that the property is very closely watched and where if something unexpected does happen there are staff with the training, the time and the systems to deal with it immediately.
There is no grit your teeth and hope involved, because the property management firm leaves nothing to chance.
If you are a property investor you are running a business.
Any profitable business relies on keeping costs down.
The value of a comprehensive property management service is that you will have reduced maintenance costs, reduced vacancies and reduced rental arrears. These must be kept low if you want to maximise your return on investment.
Any profitable business relies on keeping income maximised.
You will receive rents more frequently as they will have systems to pay it out to you on the same frequency as paid by the tenants, so you may even have a reduced interest cost depending on your mortgage type.
Any profitable business relies on accountability and measurement.
You will be able to check on the financial transactions online, and it will be up to the minute, like the information you expect from your financial institution.
Any profitable business relies on reducing risks immediately.
If there is a problem, your property manager will have had specialist training in the Residential Tenancies Act, and the firm will have a specialist Lawyer a phone call away should they be required.
They will take more photos than is usually necessary, they will always document chattels, will advertise the property for rent well in advance of the current tenants leaving so you don’ t suffer loss of rents. Importantly they will have the time to communicate with you so you can feel comfortable that your very highly valued asset is being watched very carefully.