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14 August 2018

Six reasons why the majority of Australian investors use a property manager

A tenant calling about a blocked toilet at 9pm on a Friday can either be a quick way to ruin a landlord’s weekend, or a minor hiccup that gets solved smoothly.

Property managers have access to tried and tested tradies at reasonable rates.Property managers have access to tried and tested tradies at reasonable rates. Photo: Paul Bradbury

If you’re among the 75 per cent of landlords who use a property manager, they will arrange an emergency plumber to fix the issue without you having to lift a finger.

But if you’re part of the remaining 25 per cent who take a DIY approach, you’re in for an evening of wrangling tenants and tradies and figuring out who foots the bill.

A property manager does more than just advertise for tenants, and these are some of the ways they can make a landlord’s life easier.

Property managers have access to tenancy databases, helping them sort good tenants from bad.Property managers have access to tenancy databases, helping them sort good tenants from bad. Photo: Craig Sillitoe

1. Making maintenance a no-brainer


The above scenario occurs every week in real estate agencies across the country, and a similar scene played out at Gunning Real Estate last week but with a further twist to the tale.

“We found out that the reason for the blockage was that foreign matters had been put down the toilet,” says principal and REIA president Malcolm Gunning. “This then becomes the tenant’s problem and the tenant’s cost.”

Gunning speculates that if you were managing the property yourself, you would likely be in for a one-on-one confrontation with your tenant.

“Instead, your property manager becomes the adjudicator and they can have those difficult conversations,” he says. “They can navigate the expectations of both the landlord and the tenant and apply the lease conditions fairly.”

2. Taking control of tricky conversations


Carolyn Parrella, executive manager for landlord insurance specialist Terri Scheer Insurance, says it’s advantageous to have a buffer between landlords and tenants.

“It means you’ve got someone who’s there to take calls when your hot water service breaks down at 8pm,” she says. “It’s less personal, and keeps you at arm’s length. It’s also a time issue – it can be quite time-consuming to arrange maintenance and inspections. If you want to manage your property well, it makes sense to appoint a manager to do it for you.”

3. Hiring top tradies


Having a relationship with good tradies is also key to smooth and timely repairs.

“We’ve got a group of tradies that have worked with us for many years,” says Gunning. “We know they’re reliable and will do a good job and won’t need to be called back. The property manager is aiming for quality service for a reasonable cost.”

Instead of paying premium landlord prices, director of Property Alchemy Penelope Valentine says good property managers will always get at least two quotes.

“The policy should be to work with the best professionals, making sure everyone is licensed and insured.”

4. Staying across rights and regulations


Valentine believes it’s a false economy to try and manage your investment property yourself.

“Let’s say your tenant damages your property. If you don’t have the expertise to manage those issues, they can escalate unnecessarily and landlords will find themselves at the tribunal,” she says. “A property manager can save an investor time and money.”

Parrella says a professional manager knows the fine details of the regulations that govern tenancy agreements and are also required to keep up with regulation changes via newsletters, advice bulletins and training.

“The average investor is not going to know the ins and outs of the law,” she says. “It’s better to leave it to someone who is familiar with the processes and understands what’s involved.”

Gunning agrees that navigating the tenancy act when problems arise is where a professional’s skills come to the fore.

5. Choosing choice tenants


Of course, choosing the right tenant in the first place is paramount to setting up the tenancy for success, says Valentine.

“It’s more involved than investors think. You can go on a gut feeling but there’s so much due diligence that needs to go around that.”

Parrella says property managers have access to tenancy databases which allow them to avoid tenants with a bad rental history that might include breaking a lease, failing to pay rent or damaging a property.

They are also likely to keep their own database of prospective tenants for the area they service.

“Each Saturday, if you’ve got a reasonably large portfolio, you’re doing open homes and you’ve got a list of people that come through looking to rent,” says Gunning. “So when you get a new listing you can make a call and lease it quickly – you may not even need to do marketing.”

6. Understanding market movements


Gunning says your property manager is also your barometer for the state of the market.

“They’re exposed to the whole of the market in their district, so they’ve got a pretty clear indication of rates and can advise when rents should hold, go up or go down,” he says.

“In this current market where you’ve got vacancies above 2 per cent, you need a good gauge on what will lease your property. Your property manager can help you set the right rent and show you how to present your property well.”