Essential due diligence questions to ask your property manager
As an investor, the quality of your property management company can have a huge impact on the performance of your property portfolio. Choosing the right manager can be crucial to minimising costly vacancy periods, maximising your cash flow, and (most importantly) ensuring your property remains aligned with market demand.
It’s important to note that the level of service you receive as a property owner can vary significantly depending on who you appoint as your property manager. It’s therefore essential that you carry out thorough due diligence into your chosen company before you sign any agreements. Here are six fundamental questions you should be asking your property management company.
How is the property management team structured?
If a property manager is overseeing too many properties, this can inevitably lead to a compromise in the quality of service they deliver. With less time to focus on your portfolio, they will likely be less proactive in managing your investment property. In some cases, this can lead to issues being dealt with less effectively, which could impact your relationship with tenants or lead to minor issues transforming into unnecessarily costly problems. If your property manager has a large portfolio, it’s important to find out whether they have the support resources they need to manage your property proactively. For instance, are they supported by property management assistants?
You may also want to ask who will be overseeing regular tasks such as routine inspections. In some cases, agencies who have property managers with larger portfolios will outsource routine inspections or administrative tasks such as application processing to external companies. However, this means that your property manager may not be viewing your property themselves regularly, and may therefore not be fully aware of all issues.
What is their process for marketing the property?
If your rental property is vacant at the time of choosing a property manager, ensuring your investment asset is leased as quickly as possible will be crucial to minimising your costs. Whilst some property managers consider simply advertising a property as a marketing strategy, a high quality property management company will understand the importance of developing a more comprehensive campaign when it comes to putting your property on the market. Does the agent use the same marketing plan for each property? Or do they tailor the campaign to the target market of each property? Similarly, are they regularly monitoring the performance of your property during the leasing period? Having a property manager who is proactive during these initial stages can have a huge impact on the success of your marketing campaign, and can ultimately be crucial to avoiding costly vacancy periods and loss of cash flow.
Do they offer value-add recommendations?
As a minimum, a property manager should cover the essential aspects of managing your property. However, a high quality property manager will also proactively identify opportunities to add value to your portfolio, providing you with valuable advice on how to maximise your rental returns. This may be a case of giving you recommendations on how to improve the presentation of your property, or monitoring market demand to identify which features drive demand amongst tenants. As well as improving the immediate performance of your property, these insights can be key to supporting the long-term performance of your portfolio, putting you in the best position to take the next steps in your property investment journey.
Do they have a comprehensive understanding of the current property market?
In order to provide valuable advice on how to maximise your success and minimise your risk as an owner, a property manager needs to be kept up-to-date with property legislation and current market conditions. Good property managers should have a thorough understanding of the Residential Tenancies Act (including any new legislative changes), as well as strong rental market knowledge. When selecting your agent, make sure your chosen company keeps their property managers on the pulse with regular training and development programs. This is crucial to ensuring you are receiving informed, up-to-date advice on how to maximise the performance of your property portfolio.
How do they deal with late rental payments?
Timely rental payments are crucial to an investor’s cash flow. Whilst professional property managers will do their utmost to select the best tenants for your rental property through stringent screening processes, unforeseen circumstances can sometimes arise whereby tenants miss rental payments or fall into rental arrears. As an investor, you need to know that your property manager will be proactive in responding to these issues. A good property manager will have a proactive and quick procedure in place to follow-up with tenants, and (most importantly) they will maintain an open line of communication with you to ensure you remain aware of potential issues.
Choosing a property manager who understands your needs as an investor can be fundamental to the success of your property portfolio. Whilst overseeing the essential day-to-day maintenance of your assets is crucial, the right property manager should also have the knowledge and processes in place to support your investment goals and protect you from the risks you face as an owner.
If you are seeking a property manager for your investment property and would like to speak to a Momentum Wealth representative about our investment services, our Property Wealth Management team would be happy to discuss your needs in an obligation-free consultation