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Property Management

Avoid a Property Management Disaster

We've all seen it on television, or read about it in the newspaper and yes, we're talking about property management horror stories. So what can you do as a property investor to ensure your portfolio steers clear of the risks associated with outsourcing the management of your investment? It all begins with good due dilligence, much like buying into anything - research is key.

The first place to start is researching the professionalism and reputation of the property management business you have chosen. Much like choosing an employee, speaking with 'references' or people that have dealt with that agency before will give you an idea of their business ethos. Don't limit this solely to other property investors - also speak with tenants that have rented a property through that agency to get a feel for the way your potential tenant may be treated. While you are looking into the property management business, speak with them about their agency policies and proceedures, including tenant selection and screening. It is quite common to be told an agencies tenant selection is second to none, but actually breaking down the policies and proceedures will give you a clearer understanding. For example, as a rule of thumb any prospective tenants should earn at the very least, threefold the asking rent. An agency or property management department that places tenants that earn less than this could be putting their investors in a financially risky situation.

Another important aspect of selecting the right property manager is finding out how maintenance issues are processed. Some questions worth asking the property management business you have chosen include:

  • How much of the rent can be spent by the agency before consent is needed by the investor?
  • What degree of maintenane is required before the investor is contacted?
  • Who performs emergency repairs?
  • Can investors elect the service providers that perform emergency repairs?
  • What is the process for maintenance requests?
  • Can tenants request maintenance requests online?
  • Is there a service charge added to maintenance organised by the property management department?

Finally, is the ever important question being - how is rent collected? Most agencies will offer some form of online payment through what is often referred to as in the industry as a 'payment gateway'. Usually the costs associated with using a payment gateway are forwarded on to the tenant (much like PayPal - except the consumer is paying, not the vendor). You should find out if they also offer payment over the counter via EFTPOS or cash - in the event that the tenant is unable to access the internet. When speaking with the property management business of choice, request information on their arrears process and the proceedure for following up overdue rent. Because afterall, it is in your best interest as a property investor to know exactly when and how often you will receive your deposits.