Whether you are a first time investor or a seasoned professional, there are a number of key indicators that will separate the top performing Property Managers from "the rest".
By focusing on the following key questions, you will be able to determine the quality and experience of the management team under the microscope:
How do you promote properties available "For Rent"?
It is important to understand that 90% of tenant enquiry is now generated through online marketing.
To ensure that your property can attain the highest rent, whilst not compromising on the standard of tenant selected, it is important to be seen by the widest audience possible. Recent advancements and restructuring of online marketing has meant that simply "putting your property on the internet" may not necessarily mean your property will be seen by prospective tenants.
Realestate.com.au (the leaders in online marketing in Queensland) have structured their advertising to different levels in order, to give preference to higher quality advertisements and marketing campaigns. There are 4 levels of advertisement each giving the client differing exposure. The top level of marketing is called a "Premiere" advertisement. These advertisements are given the prime position appearing at the top of each search, prior to any other levels of marketing. There are then two more levels of marketing (Feature & Highlight) before any of the standard listings are seen. With over 2000 properties (on average) being listed each month, a propertly listed as standard may not deliver any results. This will lead to high vacancy periods or poor quality tenants (who work their way through listings until they find an agent who is desperate enough to accept them).
Do you organise professional photographs?
Whilst Realestate.com.au can provide the avenue and the very top positioning on their site, this must be backed by quality presentation. There is no point in securing a position that will ensure every available tenant is seeing the property, if it is not being presented in the best way possible. With advancements in photographic technology, we understand that iphone camera's and do-it-yourself "SLR's" provide images that can be acceptable to the naked eye, however, when presenting your property to the market, these types of photo's are not nearly as effective in promoting the properties best features. Prospective tenants will be assessing your properties value versus the rental price simply through the photographs provided. Most properties, advertised using amateur photo's, usually result in a reduced price simply because prospective tenants cannot see the value, compared to professionally presented properties.
How many properties do each of your team members manage?
The answer to this question has morphed significantly over the last few years, as property management businesses have adopted differing views on how properties and tenancies are managed. Many agencies will have ever-changing structures, allowing their property managers to manage differing numbers of properties. For example, one property manager may be able to manage 200 properties if they are supported with administrative team members, however there is little chance that one person could manage this number alone.
The core reality is... there are a number of tasks that MUST be done in order for your property to be managed efficiently and effectively. These tasks take up a certain number or minutes or hours in the day depending upon the task to be completed. The equation is reasonably simple in theory... the higher the number of properties per person, the less time that person will have to complete the tasks required.
In saying this, any property manager managing more than 100 properties would be placed under a large amount of pressure. This can lead to a high turnover of staff and ultimately inefficient and inconsistent service.
How long have your team members been employed by your agency?
A high turnover in staff can generally mean that the staffing structure, remuneration and support available may be lacking, resulting in a less than desirable working environment. This is relatively common within the property management industry, however, from a landlords perspective, the results can be catastrophic. If the property manager is under pressure, and does not have the support required to effectively manage multiple properties, many critical tasks may be missed causing high rental arrears and the property often falling into a state of disrepair through lack of regular inspections and maintenance. Aside from this, when a new property manager is engaged, they often fall short of expectation, as the history of the property is unknown and often not documented, causing inconsistency in the service provided.
How do you document the condition of the property prior to a tenant moving in?
Probably one of the most important questions you should ask! It is well legislated that an entry condition report be completed prior to a tenant moving in, however, often these entry reports fall short of providing an accurate representation of the true condition of the property. What supporting evidence will the agency provide as part of the entry report process? For example, will photographs or a 3D scan of the property be taken, giving greater insight into the properties true condition. At the end of the tenancy, what protection will you have against the tenant damaging the property, and being allowed to walk away without consequence. We are seeing additional numbers cases heading to tribunal hearings, as tenants become more and more savvy with what they can get away with through lack of supporting evidence.
Do you complete routine inspections and if so, what do you look at and how will I know when an inspection has been done? Will you be invited to attend each inspection?
Most agencies and property managers will say that inspections are completed every 3 or 4 months, however, in reality, how do you know this to be true? If the inspections are being undertaken, is the property manager sticking their head in the door, having a quick look and then ticking the boxes that everything is fine? The truth is, this happens more often than not, unless the team are held accountable by the systems and processes of the business. A routine inspection should be detailed, commenting on each room (accompanied by at least a photograph), and a full report provided both verbally and in writing. The report should outline whether the tenant is keeping the property in clean condition, commenting on any maintenance or reporting on capital improvements that may increase the property's value. You should also be given the opportunity to attend every routine inspection given that, in Queensland, there are strict legislative guidlines as to how often you may inspect the property.
What % of your tenants are currently in arrears with their rental payments?
This statistic is often a great indication of how an agency generally manages property. High arrears rates are the result of poor tenant selection, poor tenant education and they ultimately lead to long delays in monies being paid to landlords. Often if processes are poor, the liklihood of recovering the funds from a tenant heavily in arrears are very, very low, as landlord insurance providers will refuse to pay a claim where an agent has failed to mitigate a loss.
What % of the properties you manage are currently vacant?
High vacancy rates are usually indicative of poor marketing strategies and poor renewal and rental assessment processes. The average vacancy rate is published by realestate.com.au as well as the REIQ (Real Estate Institue of Queensland); a well managed agency should at least meet, if not be significantly lower than, the industry average. High vacancy rates can lead to long periods without income.
How can I access my accounts and information?
Most agents will send you a monthly statement, similar to an account you may hold with a bank. However unlike most banks, many agents do not have the facility for you to view your accounts and information online. Being able to access your information when you need to, without having to wait for a call back from a property manager, will allow you to effectively manage your finances, in your own time. This transparency also gives you the ability to make sure your property is being well managed.
What sets you apart from the competition?
When asked this question, most agents will answer by stating what they will do, day-to-day, in the management of your property (which is usually necessary, regardless). The higher operating agents who understand value (versus what you pay), should be able to discuss the extra services you receive that are not part of the management process. Extra's, such as complimentary finance broking, legal advice, sales and investment strategies, are not connected with the daily processes of managing the property, but necessary if an agent is to provide a comprehensive management service.... a service that gives you more for the money you pay... providing better value and creating a greater return for your investment.