If you’re the owner of a rental property, management fees are probably one of your biggest ongoing costs. But, are you getting good value for money from your real estate property manager?
While many investors report having issues with their property management company, statistics show that the vast majority (approximately 80%) do nothing about it. As a result, they continue to receive poor service, as the situation rarely improves without a major shake-up.
When it comes to property management, Sydney investors are spoilt for choice with most real estate agencies offering some services for landlords. However, with quantity comes varying quality – for every great property manager, there’s one who lack commitment and attention to detail. This can create a range of issues, causing stress and eating up your precious time, as you manage your property manager.
Why do investors change their real estate property manager?
While the exact reason an investor is unhappy with their property manager many vary, the core of the issue is usually the same – they are not receiving the service they expect. This could be due to:
- Changes in agency staff: Property management usually has the highest turnover of any part of a real estate agency. These constant changes make it hard for an investor to build trust and rapport with their real estate property manager and increase the chance of things “falling through the cracks” – like outstanding repairs and maintenance.
- Lack of experience: As rental commissions are lower than sales commissions, agencies often assign junior staff to property management – without any support from the owners of the business or senior property management staff. As a result, they may not have the maturity or professionalism to anticipate and manage tenant issues.
- Poor selection of tenants: Many agencies leave tenant screening and selection to junior staff or have targets for the number of properties that need to be leased each month. This increases the risk of rentals being offered to unsuitable tenants which, in turn, increases the risk of serious issues – like property damage and regular late rent payments.
- High tenant turnover: Generally speaking, the longer a tenant stays in your property, the more profitable your investment. This is because, every time a tenant moves out, you miss out on rental income and will have costs associated with finding new tenants. Being unable to keep a tenant is also often a sign that your rent is likely too high for the market.
- Not acting in the owner’s best interests: A good property manager should help a landlord get the most out of their investment. Ensuring the trade people they are using are reasonably priced and do a good job, advising if they should consider landlord insurance, ensuring leases don’t expire during had to lease months; are all signs that a property manager is not committed to the success of their landlords.
In our experience, regardless of the reason why, once a landlord is unhappy with the service they are receiving, changing property managers is the only effective solution.
I want to change property manager – what do I need to do?
If you’re considering changing your property manager, it’s worthwhile discussing your issues with the Head of Property Management or Principal at your current agency. This will give them a chance to respond to your feedback and put a plan in to place to address your concerns. However, if this doesn’t result in a noticeable improvement in the service you receive, it’s definitely time to move on.
The good news is that, once you’ve decided you need to change, making the move is fairly easy. In fact, your new property manager should do most of the work for you!
With that in mind, the first thing you should do is find a new property management company. We recommend interviewing any new property manager you’re considering engaging and discussing your issues with your current property manager with them. This will help you get a sense of how they work and whether they’re a good fit for you and your investments.
You will also need to check your management agreement with your current agency to confirm your notice period. While the standard is 90 days, some agencies will offer a 30 or 60 day termination notice period in their contracts. This long notice period is a way that real estate agents try to get you to stay for as long as possible and make it hard to move. Aim to negotiate the period to 30 days.
After that, all you need to do is notify, in writing (email or letter), your current property manager of your intention to terminate their management agreement. You should also provide your new property manager with a copy of this notification, as they will manage the rest of the transfer process for you – including contacting the tenant and updating their payment arrangements.