Knowing how to evaluate a property management company can have a real impact on your experience as a landlord. Find a good one and you’ll be able to relax, knowing your investment is in capable hands. Choose an average (or worse!) one, and you will be spending more time dealing with issues and your stress levels will increase.
However, for most people, choosing someone to manage their property is almost an afterthought. Having spent months searching sales listing and scrutinising the numbers; once they have the property, they usually default to the selling agent or who’s the cheapest. While this may not be the worst option, it also probably won’t be the best.
But, with so many options out there, how do you evaluate a property management company?
What are you looking for when you evaluate a property management company?
When working out how to evaluate a property management company, you first need to think about what you expect from such a service. Each agency will take a slightly different approach, focusing more on certain elements of the process and communicating with you in their own way. As such, having a clear idea of what you want from your property manager is critical to choosing a company that works for you.
For example, if you own an apartment in the inner city and maximising rental returns is the most important thing to you, finding a agency that focuses on keeping tenants in the property for the long term and the rent payments coming in, may be best.
What questions should you ask a property management company?
Whatever your goals and expectations, there are a number of questions you should ask when evaluating a property management company. In addition to helping you understand more about their approach, how each agency answers these questions should provide insight into their communication and relationship management style. Questions you should ask a property management company include:
- How is the property management department structured? Property management is often understaffed and can even be seen as just an ‘administration activity’. Having a Director of Property Management (or similar senior manager) is a quick way to evaluate if a property management company takes the work seriously.
- How does the agency measure (and reward) property manager performance? Focusing on hard numbers and rewarding the team members who fill the most properties, quickest, can cause some negative behaviours. Try to find an agency that prioritises strong relationships – with landlords and tenants.
- How long have they been a property manager? Manyagents treat property management as a path to a career in sales, so don’t want to spend time developing their skills. However, career property managers understand that the job is so much more than just finding tenants and collecting rent.
- How long have they been with the company? The average property manager moves agencies every 12 – 18 months. Regularly changing property managers can affect the stability of your investment so try to find one that’s been with their agency 3+ years.
- What is their approach to backfilling roles? Property management is a 24/7 activity, but you can’t expect a single property manager to work all day every day. As such, having clearly defined processes for managing after hours enquiries and leave periods is critical.
- How long have they been working in the area? While most property management activities can be done from almost anywhere, knowledge of the local rental market is critical to helping you get the most from your investment.
- How many properties do they manage? As some property managers at larger agencies look after 200+ properties, they can’t devote much time or thought to any individual property. Ideally, your property manager should have 100 – 150 properties in their portfolio.
- How long is it taking them to rent properties in the current market? Knowing how long your property will likely sit vacant can help you plan financially and gives you an indication of the agent’s market knowledge.
- What is their marketing approach? A good property manager should suggest much more than listing the place online and opening for an inspection once a week.
- How do they assess applications? The quality of a tenant is measured by more than just their income.
- What is their tenant turnover rate? If having a long-term lease is important to you, try to find an agency with a good record of 2+ year tenancies.
- What is their approach to managing maintenance? Finding the right level of maintenance is a real balancing act – too much and rental returns suffer in the short term; too little and rental returns suffer in the long term. A good agent should recommend proactive maintenance and manage minor requests on your behalf.
- What is their approach to managing tradespeople / contractors? A property manager should treat your money like it is their own. Look for someone who works with reliable, reasonability priced and good workmanship.
- How much of their management process have they automated? The best agencies have systems that automatically create tasks, sends messages and follow ups. This reduces the risk of things slipping through the cracks.
- How do they structure their fees? Beware hidden fees! In addition to the management fee (usually 5% – 6% of all rent collected) almost all agencies will have additional charges for other activities (like advertising, re-letting, lease renewals, monthly charges etc.).
- When was the last time they went to NCAT? This may seem like a strange way to evaluate a property management company, but sometimes going to court is the only option. It shouldn’t be a regular occurrence though, so look for someone with Tribunal experience but avoid anyone that’s regularly there.
- What do they like most about being a property manager? Why someone does what they do can significantly impact how they do it and how good they are at it. Asking a property what motivates them will give you a good indication of what working with them will be like.
- What is the hardest landlord / tenant situation they’ve had to deal with? One of the most important things to look for when evaluating a property management company ishow they handle tough situations.Asking them to share a difficult story will give you a better sense of their experience and how they handle stress.
- What is their favourite landlord / tenant success story? All good property managers should be able to provide multiple examples of how they’ve helped both their landlords and tenants. Asking them to share a happy story is a good compliment asking about their motivations and a great way to end the interview on a positive note.
In addition to interviewing the agency, checking landlord and tenant references and reviews is an important part of evaluating a property management company.
Want more information?
Whether you’re looking for someone to manage your property or want to discuss how to evaluate a property management company, Local Agency Co. is here to help. Over our 18 years in the industry, we’ve seen it all and have become experts in what to look out for and what to ask. Give us a call on 1300 258 888 or drop us an email at firstname.lastname@example.org today!
We’re your local property management experts that help property investors SAVE MONEY + TIME & REDUCE STRESS by finding great tenants.