Property management is a core function in the property investment process. Only asset selection is more important. Good property management should encompass practical and financial functions and when carried out well, can exert a positive impact on capital growth, rental return and tenant demand. Reviewing rental management and the performance of individual managers is, therefore, your role.
When evaluating the performance of the rental manager, you should do the following:
Confirm that the property manager has:
- Assessed the property’s current rent level by benchmarking it to other properties in the immediate vicinity, according to the architectural style, amount of accommodation, level of amenity and level of renovation.
- Raised or lowered the rental to reflect or meet the local market and the prevailing level of demand and supply, subject to the conditions of any lease or monthly tenancy conditions that may apply.
Confirm that the manager proactively communicates with the investor. Effective communication will cover the following points:
- Advising the investor of any changes to legislation or market conditions that will directly affect his or her property.
- Undertaking routine inspections of the premises to ensure that the property is being well maintained by the tenant and reporting their findings to the investor. These regular inspections should take place at least every 12 months.
- Returning the investor’s phone calls, emails, or other communications promptly and courteously.
- Communicating and promptly responding to maintenance requests made by tenants in accordance with authority levels agreed with the investor.
- If requested by the investor, attending to the payment of outgoings in a timely, accurate and appropriate manner.
If a property manager’s performance does not meet required standards and the investor wishes to make alternative arrangements or if the investor wishes to appoint a property manager to handle a recent acquisition, the following questions provide a helpful guide for you to select and appoint a suitable company and individual:
- How long have you been a property manager?
- What are your professional qualifications? When did you last undertake professional development training, and when do you plan to upgrade your skills?
- How long have you worked in the local area? How long has your company been established here?
- How long have you worked with this company? Where did you work previously, and for how long?
- How do you report to your landlords?
(An efficient property manager should contact their landlords when urgent repairs are needed or a tenant is vacating. They should carry out routine inspections of the property at least every 12 months or in accordance with tenancy legislation and should also provide quarterly or six-monthly reports on the overall progress of the tenancy. These reports should state whether the tenant is looking after the property, whether any repairs or maintenance are needed and towards the end of the tenancy, whether the rent level or lease terms and conditions should be reviewed to keep pace with market conditions or the investor’s changing circumstances. Ask how often they check on the security of the property if a vacancy period occurs between tenancies and how they keep landlords informed of their endeavours to secure a new tenant.)
- Do you own a property? (While this is not an essential criterion for choosing a property manager, it is possible that a property owner will have a stronger personal appreciation of what is at stake and will take a more active interest in looking after an investor’s asset.)
- To whom do you report? (This may be useful if the investor experiences any major problems with their property manager. However, they have appointed the property manager as their agent, with the authority to do what is lawfully necessary to fulfil their responsibilities under residential tenancies and associated legislation. This means that, while the investor has every right to expect efficiency, attention to detail and well-considered advice, they still bear ultimate responsibility for the property management process.)
- Does the company provide landlords with a service level agreement? (This can be used to measure their quality of service.)
- Can you arrange for the investor to speak with some of your current clients? (This will help the investor to obtain a more objective view of the company, its staff and its services.)