Did you know that more than 80% of Australian rental property owners use property management services? So, property investors, this post is for you. Whether renting out your investment property for the first time, expanding your portfolio or considering changing property managers, this comprehensive guide covers everything from the definition of property management to choosing the right property manager.
What are property management services?
In Australia, properties are typically managed through a third-party real estate agent or property manager. However, sometimes the property owner will self-manage the property. But after reading this guide, it’s evident that property management entails much more than simply collecting rent.
We go into detail about the property management services you can expect from your property manager below, but at the end of the day, they work on behalf of the property owner. It’s their job to ensure your property is well-maintained and your tenants are happy. Property management is how property owners decrease their risks (compliance and income-wise) and increase their returns, which is obviously what every landlord desires.
What are the different kinds of property management services?
We’ll be focusing on residential properties today, but these are the two primary services available:
Commercial Property Management
- Commercial property management focuses on commercial spaces leased to tenants. This can be everything from large industrial warehouses to quaint shopfronts and office buildings.
Residential Property Management
- Residential property management focuses on residential tenancies leased for private use, like an apartment or a house.
What is included in property management services?
Here is a comprehensive list of everything included and expected in property management services.
A solid marketing plan
The first step is for your property management team to expertly market your property to attract good potential tenants. They should provide the following:
- A detailed marketing plan.
- A compelling property listing that’s advertised on popular real estate websites like realestate.com.au and domain.com.au.
- Professional photography. High-quality professional photos taken in the best light are key to attracting high-quality tenants.
- Inspections to show your investment property to prospective tenants. This might include after-hours and private inspections.
Finding high-quality tenants
Once your property has been properly marketed, the tenant applications should pour in. Your property manager’s responsible for the tenant selection and screening process. The screening process involves reference checks, speaking to their current employer and gaining access to national tenancy databases to view their rental and employment history.
A good tenant is truly worth their weight in gold. They’re more likely to want to stay in your house long-term, which equals a stable rental income for you. Moreover, they should look after your property, which means fewer maintenance requests and peace of mind knowing your property is being looked after.
Property managers also process tenancy agreements, rental bond documents and lease renewals on behalf of the landlord, so all you have to do is sign on the dotted line.
Handling the rental income
A property manager is responsible for getting the maximum return on residential tenancies. By closely monitoring rental rates in the local property market and organising a property appraisal, they will advise you on the market value. In turn, through rent reviews, they can let you know when you should increase or decrease your rent based on current market conditions. Reaching that maximum rental yield ensures the highest cash inflow possible, which is the aim of the game for most property investors.
Property managers will then collect the rental payments (either weekly, fortnightly or monthly) and deposit them directly into your bank account. If your tenants are late to pay or are in arrears at any time, your property manager knows the necessary channels to take and the legislative requirements surrounding evicting tenants if the situation escalates.
Ensuring compliance
There are many specific state/territory, and federal laws and legislative requirements surrounding investment properties and property managers ensure compliance on all levels. This relates to both landlords and tenancy laws. It’s their responsibility to keep abreast of any changes and immediately put them into effect.
Keeping your investment property well-maintained
One of the most important roles of a great property manager is to ensure your rental property is well-maintained. They primarily do this by performing regular inspections. Depending on where you live, routine property inspections are typically performed every six months. Routine inspections benefit all parties, as they can help a landlord identify any necessary short or long-term repairs or updates.
Another way they maintain your property is to action any maintenance requests from your tenants. They will already have strong relationships with trusted tradespeople and can immediately organise for them to attend to your property and remedy any maintenance issues.
You can also advise your property manager whether you’re comfortable with them carrying out repairs without your approval. A well-maintained investment property equals happy tenants.
Handling administrative tasks
Did you know that your property manager can handle all payments relating to your property? This might be body corporate/strata levies, water bills and council rates. They typically subtract these amounts from your rental income.
Besides bill payments, property managers also handle other administrative tasks and file important documents regarding your rental property, such as tenancy agreements and annual statements. You may not realise it, but maintaining these financial records is paramount for property owners to remain legally compliant.
How do you choose the right property manager?
Here are some factors to consider when choosing the right property manager for your rental property:
- Local experience and knowledge. You ideally want an experienced property manager who has an in-depth understanding of the local property market. This ensures they know how to market your property to the right tenants, set the right rent, and have established relationships with local tradespeople.
- Cost. While cost is an important factor, you should always compare the price to the level of service and experience. Depending on where you live, property management services can cost anywhere from 5 to 10% of your rental income.
- Word-of-mouth. This is one of the best ways to find a great property manager. Ask local friends, family or colleagues for recommendations.
- Communication. You ideally want a property manager who knows how to communicate. Schedule an interview, and don’t hesitate to ask them questions about their preferred communication method. This is also a great time to outline the property management services you want. For example, if you want them to pay all bills or if you want to be advised of every property maintenance issue.
Use LocalAgentFinder’s free comparison service to compare property managers today.
How much does a property manager cost?
There are two main types of property management fees: percentage-based and flat-fee.
Percentage-based property management fee
Charging a fee based on a percentage of the rental income is the traditional property management payment method. However, the percentage amount can differ depending on your location. For example, the average is 6% in Melbourne, 5 to 8% in Sydney and 9% in Brisbane. There are also property management services not included in this fee, such as:
- Leasing fees (usually two weeks of rent).
- Advertising and marketing fees
- Inspection fees
- Administrative fees (for filing paperwork, for example).
- The lease renewal fee (usually one week of rent).
Your property management contract will outline the extra fees you’ll need to pay, so there are no surprises along the way.
Flat-fee property management service
As the name suggests, instead of a percentage fee based on your property’s rental yield, the flat fee is calculated on how much it costs the property manager to fulfil their duties. There are pros and cons to this payment method, but it can make some property investors feel like they’re getting a better deal if their investment property has a higher rental income. The flat fee is also more transparent, so you know exactly what services your property manager will provide.
The benefits of property managers
If you are a property owner, you may consider self-managing your property, but as you can see from the list above, property management is a full-time job. Here are some further benefits of employing a property manager:
Local knowledge
Property managers are property experts with excellent knowledge of the local property market and current market conditions. Therefore, they can provide helpful insight into whether your rent is at market value, so you get the maximum rental return possible.
Compliance
Property management teams are trained and required to remain up-to-date with local laws and legislative requirements concerning tenants and landlords to ensure compliance, which gives you total peace of mind.
Unparalleled insight and experience
Firstly, property management services have access to national tenancy databases and real estate websites for advertising purposes that aren’t readily available to everyone. Secondly, an experienced property manager has processed hundreds of tenancy applications and lease renewals, so they have the tenant selection process down-pat and know precisely how to find the perfect prospective tenants for you and your investment property.
Property managers are also trained professionals that know how to respond in any situation, such as tenants in arrears or urgent property maintenance issues.
Save you time and money
Property managers spend their day-to-day existence doing a lot of repetitive tasks that, when taken off your plate, will save you a lot of time in the long run. As property experts, they’ll find tenants, organise repairs, collect rental payments, and so much more for only a few hundred dollars a month.
They’ll also save you time and money concerning tenancy turnover and vacancy. They’ll implement the right property management strategies to keep tenants happy and ensure your property isn’t vacant for long, so it doesn’t hinder your bottom line.
Finally, a great property manager will maintain efficient and responsive communication with the tenant and property owner (another time-consuming task). They will ensure both parties are happy and resolve any complaints or concerns. Let go of control and let your property management team handle late-night emergencies instead.
Where do I find a property manager for my investment property?
LocalAgentFinder is here to assist, as you can easily and efficiently compare local agents with expertise in property management. Our free comparison service features everything from fees and strategies to rental performances and agent reviews so that you can be confident in your decision.
Then follow this step-by-step guide for all the details regarding successfully renting your property.