12 Important Questions to ask when Choosing your Property Manager
It takes a talented and unique skill set to be a successful Property Manager. Not everyone is cut out for it, but this handy list of questions will help you separate the amateurs from the rock stars.
1) Does the agency have a dedicated Property Management Department?
Unfortunately, many of the larger real estate agents see Property Management as a 'poor sister' and 'stepping stone' to the more glamorous sales department.
Waikato Real Estate’s answer: We specialise in Property Management. It’s our passion. On average our Property managers have been with us for over 7 years. For us, being a Property Manager is a fulfilling career, in itself.
2) Are you a real estate investor yourself?
The company’s owner and management team should be investing in real estate themselves if they are going to truly understand the market, look after your property and provide the sort of service you are looking for.
WRE’s answer: Between our owner, management team and property managers we own over 50 investment properties of our own. They range from $750pw executive homes to $150pw boarding houses. We know what good property management looks like, on both sides of the coin.
3) Do you charge a fee for arranging maintenance and repairs?
You need to make sure that a prospective property management company doesn’t make a profit any time they do maintenance. Whilst maintenance of your property is important, it costs money and affects your cashflow. If your Property Manager is financially incentivised to go looking for maintenance and repair jobs then you might find a few negative surprises in your rental statements.
WRE’s answer: We do not charge any fees on maintenance and repairs.
4) What are the management fees and/or pricing options when the property is being rented?
Understanding what fees you will be paying is vital to successful property investing. Some companies will offer a flat rate and others will offer a rate based on the rent amount. Others will offer 3 levels of pricing, which includes a lease only plan, standard plan, and a premium plan. It can get confusing!
WRE’s answer: We believe you’re best off looking for a property manager that charges a simple percentage of collected rents. This motivates your property manager to fill vacancies because they don’t get paid if you don’t have a tenant. It also motivates them to fight for higher rent amounts because this helps our bottom line too. Having a Property Manager whose financial goals are aligned with yours is vital for a successful relationship.
5) How long are your properties typically vacant?
Minimising vacancies is key to your cashflow, so this is an important question to ask. Most companies consider an average vacancy time of 2 weeks per year to be acceptable.
WRE’s answer: We average just 5 days.
6) What miscellaneous fees could I be charged for the management of my property?
Some companies will impress you with their low management fee, but fail to reveal that they will also be charging various other fees for things like inspections, advertising, arranging maintenance, paying council rates on your behalf, the list goes on. As the saying goes, if it is too good to be true, it probably is!
WRE’s answer: We’ve made it nice and simple. 8.25%+GST management fee and a letting fee of 1 week’s rent+GST when we put a tenant into your property. That means no surprises on your rental statements.
7) If things turn sour, under what conditions can I cancel my management contract?
Make sure you start your relationship with your Property Manager with eyes wide open. Don’t get locked into a contract that you can’t escape from. Most Property Managers will require 6-12 months’ notice for you to cancel the management agreement and take back the management of your property.
WRE’s answer: We believe we’ll keep your business with our great service. We aren’t worried that you’ll be looking for the door, so should you wish to part ways, we only require 1 months’ notice.
8) What are your landlord churn rates?
First of all, what on earth is a ‘churn rate’? The churn rate for a Property Manager is the percentage of its Landlords that cease using that company each year. For Property Managers in New Zealand the average churn rate is around 15%. That means, if on 1st January a company manages properties for 100 Landlords then by 31st December 15 of those Landlords would have left that Property Manager.
WRE’s answer: We have an industry leading churn rate of 7%. Furthermore, if you exclude Landlords who leave us because they sell their properties, then our churn rate is under 2%.
9) How many rentals do you currently manage?
If a company manages more than 500 properties, then you can expect them to have negotiated bulk buying discounts from its network of tradesmen as well as having the specialist knowledge required to manage your property properly.
WRE’s answer: We manage over 1,000 properties with a market value in excess of $500 million.
10) Will my Property Manager show my property to prospective tenants six days a week?
A good Property Manager must be available to show prospective tenants your property when it best suits the tenant. Quite often that means evenings and Saturdays.
WRE’s answer: We believe in going the extra mile. We’ll even show properties on Sundays, if that means finding the right tenant for your property.
11) How many years has the Property Manager looking after your property been working in Property Management?
Going to a brand name agency doesn’t mean their service is going to be better. As mentioned before, Property Management can be an apprenticeship before taking up a role in the sales department. Find a company where your Property Manager has been in the role for at least 3 years.
WRE’s answer: Our team of Property Managers have, on average, been with us for over 7 years. That guarantees our landlords a familiar voice on the phone and a continuity of service.
12) If required, will you go to court for me and what is your success rate?
Sometimes issues with tenants do arise and you may be required to take your tenant to tenancy tribunal to enforce your rights as a landlord. If this happens, an experienced Property Manager will be invaluable.
WRE's answer: We will go to court for you for free and our success rate is over 95%.
We hope this list of questions has been helpful for you. It's not easy choosing between all the Property Managers in the Waikato but we hope you make a good choice!