Buying an investment property can be an exciting time. You’ve spent time choosing the right property; but have you also thought about who’s the right property manager? Here are the five traps to avoid.
Trap One | Is the selling agent your best manager?
Whoever sells you the property may not be the right choice to professionally manage the property.
Many investors get swept into the property management department of the selling company without analysing the property management department, personnel and practices. When you are appointing a property manager, ask the tough questions:
- How many years experience has the property manager had in that area?
- What ratio of properties per manager do they have?
- Are there written step by step property management procedures in place?
- How are property managers kept accountable to these procedures?
- How often do property managers receive property management training?
- Can they back-up their service with written customer service standards and a guarantee?
Trap Two | Choosing the cheapest agent
As with most things in life, you get what you pay for, and in property management there is a vast difference amongst the service and quality that is given. This is as varied and different as the levels of fees that are charged.
In too many agencies they attract investors with lower fees - then overburden their Property Managers. This leads to poor communication, lack of attention to detail and finally burnout. And that inevitably leads to a continuous procession of new property managers.
At Bourkes, we pride ourselves on having chosen the right staff. And we make sure their property management portfolio is, well, manageable.
Therefore they have the time to devote to you, your property and your tenant. And because they’re not stressed out, and enjoy they work, they stay with us!
We won’t be the cheapest agent - nor the dearest - but we can guarantee you a professional, dedicated and hard-working team.
Trap Three | Inadequate Landlord Insurance
Unfortunately, in property management, even the best tenants can have an unexpected change of circumstances that can result in rent arrears and - in extreme cases – eviction.
Most property investors understand risk and therefore take out landlord insurance as well as building insurance to cover against financial loss like rent default, malicious damage and other tenancy related losses. This insurance is a tax deductable expense.
Beware of Landlord Insurance Through The Bank
When a property investor takes out a loan, they are often also offered the convenience of landlord insurance by the financial institution. In their mind they have a sense of protection that they are covered against major loss should the unexpected occur. However, at claim time, their peace of mind is disrupted when they need to make a claim and either find they need to pay an excess between $300 – $1,000 for rent default, or in fact are not covered for something - like the first 4 weeks of rent loss.
Buy Your Landlord Insurance Through Your Property Manager
Most agencies have access to specialist landlord insurance which are competitive and offer comprehensive cover.
The landlord insurance recommended by Bourkes gives you cover for;
- Unpaid rent in most situations such as breaking of leases and default (up to 52 weeks depending on circumstances)
- Cover for malicious damage or theft by tenants, as well as accidental damage to both building and specified contents including unauthorised home alterations
- Tenant hardship and death of a sole tenant
- Loss or damage to contents by defined events including fire, storm and water damage
- Legal expenses in minimising a claim up to $5000
Trap Four | Misunderstandings. (Or not quite knowing what’s normal.)
We find that many first-time investors don’t know quite what to expect from their tenants. What’s normal behaviour – and what’s something that could be a concern?
So here’s a brief guide to some common misunderstandings. Once you understand these, you can stop worrying.
General wear & tear. ‘Wear & Tear’ is normal. It’s an allowance for some bumps and scratches to paintwork, woodwork and other items. The Tenancy Tribunal allows for reasonable wear and tear on things like carpet, vinyl flooring and paintwork.
The rent’s not paid. This, of course, can happen to any landlord. But at Bourkes, we have a zero tolerance approach to tenants falling behind in their payments. We believe that tough early intervention is the key to ensure that rent arrears do not get out of hand. However, every now and then, despite all our best efforts, a tenant may for whatever reasons not pay and the situation heads towards eviction.
Repairs & Maintenance. Over time, things will break down and need repairing. If an item breaks down, it must be repaired within a reasonable time frame. If it cannot be repaired, it must be replaced. Simple as that.
Sometimes a property investor will provide a dishwasher or airconditioner at the start of the tenancy, with the reasoning that the tenant can use it until it breaks down, at which point it will neither be repaired nor replaced. However whatever is supplied MUST be either repaired or replaced. The law’s quite clear on this.
Trap Five | Miscommunication. (Too little, or too much?)
Some investors like to hear from us all the time. Others just want us to quietly manage their property while they get on with other things.
So we don’t pester you unnecessarily, or call you too often; just let us know how and when you’d like us to be in touch. And by what method; phone, SMS, email or letter.
It’s all about being on the same wavelength.