Recent Home Living Property Culture The Team North Shore Living
Recent Home Living Property Culture The Team North Shore Living
Property

How does the “right’’ property manager enhance the value of your rental property?

18-Dec-2019
Written by Matthew Bourn
A rental property in an investment that comes with unique responsibilities, a built-in workload, and an element of risk. It’s also an investment that can prove profitable and secure over the long term – if you make wise decisions along the way.

If you own or are considering purchasing a rental property, you’ll be wondering how to manage it. Should you appoint a property manager, or do it yourself? And what are the pros and cons of each approach?

You don’t have to engage a property manager, and some investors are happy to take on this work themselves. But it’s worth looking at the time it will take out of your week (the opportunity cost), risks and financial implications of managing your investment property yourself.

So what does a property manager do?

1. Market your property

A good property manager will have a database of potential tenants. However, if they don’t have a suitable pre-qualified tenant, your property will be marketed across multiple media. It will appear on the company’s website and social media accounts, and on high-profile platforms such as realestate.com.au. This will bring it to the attention of a large pool of potential tenants who are actively searching for a property. You can list on websites such as Gumtree (or on social media platforms like Facebook) but marketing yourself this way comes with its own risks. You might choose to approach friends and family but with the risk of mixing friends and business.

2. Find tenants and check references

A property manager’s next task is to shortlist potential tenants and check their references. This is a critical task as the right tenants will pay their rent on time, look after your property, and give you notice when they leave. The wrong ones, unfortunately, won’t, and it can be difficult to resolve a situation that has turned sour.

Tenants who have caused problems in the past will be listed on a database to which real estate agents have access. It is unlikely that you as an owner will have access to this database, so making the selection of tenants riskier. Most of the tenants on a property manager database are ‘pre-qualified’; that is, the property manager has checked bank and work references and made sure they have a clean record and rental history as a tenant.

3. Collect rent or chase unpaid rent

While we all hope for ideal tenants, things will go wrong occasionally. Collecting rent (or chasing unpaid rent) is another time-consuming task that a property manager handles with ease. Your property manager will have payment systems and processes in place and receive alerts should a tenant not pay on time.

4. Manage day-to-day issues like maintenance and lost keys

As an investment, a rental property is more demanding that a share portfolio. You have a responsibility to maintain your property and deal with any issues as they arise – a broken washing machine, a leaking shower, a lost key. Unless you live close by and have good relationships with local tradespeople, managing maintenance and liaising with tradies and your tenants is time-consuming.

5. Manage the lease

A property manager manages the lease, including getting tenants to sign. Processes ensure that they’re alerted to when the lease is coming up for renewal so they can alert both you and the tenant to renew the lease to protect both you and your tenant.

6. Set your rent fairly and conduct rental reviews

A local property manager is aware of the current rental market, and is best placed to set a rental price that’s in keeping with local rates. Setting the right rate from the start is important – you don’t want your property sitting vacant for two months. Nor do you want to lose money because you’ve set your rent too low.
A property manager will also judge when need to increase the rent in line with the market or keep it as it is.

As your property manager will have a relationship with your tenants, they’re in a better position to advise when it’s more fiscally prudent to keep the rent at the same level or just slightly higher and retain a good tenant. Although ideally your property is rented continually, you don’t want to run the risk of losing two weeks’ rent for the sake of a few dollars a week more.

7. Understand the legal obligations to your tenants

A good property manager will ensure that all legal obligations to tenants are met, protecting you and your investment. For example, tenants have rights around security, privacy, access, and advance notice should you choose to enter the property. Your property manager will be well-versed in all the legal requirements of a tenancy.

Want to self-manage your North Shore property?

Before you do, consider the following points:

Opportunity cost

It will take time and energy to check all potential tenants, manage the regular inspections and maintenance issues, and to understand how to set your rent at the ‘sweet spot’ that will attract good, long-term tenants. This is time you could spend more profitably.

Practicality

If you live overseas, self-managing a property is not practical unless you have a friend or family member who can be your on-the-ground helper to arrange tradespeople, key handovers, viewings, property inspections and so on.

Tax-deductible property management fees

While you pay your property manager a percentage of rental income each month, this is tax deductible. Your accountant will be able to advise you here, but if you have a high income, it can be worth the cost.

Talk to us about North Shore property management

If you have a property and are wondering about property management, feel free to give us a call.

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