Managing a property is different to managing a stock portfolio or investing in land. A common question real estate investors always ask is should I hire a property manager vs owner manage the property. The answer is different for everyone but the important criteria is how involved or contactable you really want to be when dealing with your tenants.
Personally we prefer to use a property manager as they can deal with any issues with the tenant, minimize risks in managing the asset and we don’t really want to get a call during the middle of the night if something goes wrong with the property.
If you have a good relationship with the tenant, the job of the owner manager is easier and will save you on the property management fees. However the trade off is like any other service where whilst there are financial savings from self managing the property, the cost really is the time and effort or the opportunity cost of your time.
What to look for in your property manager?
A professional property manager attached to a real estate agency or an independent property manager is usually the alternative option.
Hopefully they are experienced and manage a number of properties in the same market so they are knowledgeable when negotiating rents or advertising the property for lease.
They should know the residential tenancy obligations for landlords and tenants.
How much should the property manager charge for leasing?
From our experience agents typically quotes 1 week of rent for a leasing deal. This applies whether the initial lease is for 6 months or a 1 year so on a percentage basis it is more cost effective if the tenant signs a 12 month lease.
All of the costs are agree upfront in the signed management agreement.
In addition our agent does not charge fees if the tenant renewals their lease after 12 months.
what does the property manager do?
- Carry out reference and credit checks (including eviction history)
- Residential tenancy agreement
- Holding the bonds
- Carry out regular inspections and keep track of the condition at the start of the lease and the end (typically quarterly at the start for 2 quarters then every 6 months after)
- Making sure the rent is paid and follow up with tenant
- If you agree for the bills to be routed to the agent like water, property taxes and utilized then they will pay those bills from the rent collected