How to Choose a Property Manager

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Have you, or are you in the process of purchasing an investment property? You can breathe a sigh of relief after finally completing the kilograms of mortgage paperwork and exchanged!


But you still have a pending deadline. You need to find a great tenant and decide whether you will manage the property yourself, or engage a professional property manager.

Why Employ a Property Manager?

Managing the property yourself can save a few dollars in the short term, but without experience, screening of tenants is less likely to be thorough. If you have invested in property far from your hometown, managing maintenance yourself is impractical.

Many have plenty on their plate and wish to make their property investments as passive and stress-free as possible. And that is where a great property manager comes in.

I have recently completed the purchase of our 2nd investment property. A property manager local to each property professionally manages the rentals. There was never any debate that I wouldn’t employ a property manager, but I could find very little information on how to choose one.

Now I have selected two property managers and worked with both for 4 months or more. I’m starting to pick up the contrast between the two, and what to look for in a property manager in the future. I thought I might share my insights with those of you investing in property.

What Does a Property Manager Do?

A property manager in Australia must have a certificate IV qualification and may have other real estate qualifications. They (often as part of a team) provide property management for multiple properties. Included in a property manager’s role are:

Advertising for a tenant.

Property managers are experienced in finding tenants for properties. They will have a streamlined process for photographing, providing a written advertisement and setting up an advert on Realestate.com.au and other websites.

Tenant Screening

A property manager will provide potential tenants with an application process. Tenants need to be screened, previous references checked and tenant database searches to check for prior blacklists, verify tenant identity. Tenant screening is the most critical first step in avoiding a nightmare tenant.

Organising a Written Contract

Your property manager should have a legally checked tenant agreement, and work out any negotiations between tenant and landlord.

Rent Collection, Payment of Bills & Income Statement

The property manager will provide the tenant with a convenient way to pay their rent, and prompt the tenant if payment is late.

You can request your property manager to pay all the bills for the property. Organise these to be sent directly to the property manager. Water, rates and maintenance bills will be paid out of rent before you receive it.

A big advantage of this is having everything documented with the management company. At the end of the tax year, your rental property manager will provide an income statement documenting all ingoings and expenditures ready for your accountant. No lost paperwork and one less thing to do for you.

Your property manager will also collect the rental deposit and document appropriately.

Maintenance

Your property manager will be responsible for keeping the home in a safe and comfortable condition. Should the tenant raise an issue, it is your manager that will initially field the call. They will manage any issues they can sort without your intervention (and that really depends on your agreement), or request approval from the landlord to carry out repairs.

In the middle of the COVID lockdown, the stove in our 1st investment property broke. With supply chains interrupted by COVID, it was my poor manager who spent days searching for a replacement, not me!

I have found the property manager’s access to reasonably priced and reliable tradespeople invaluable so far. Little maintenance issues come up regularly. The property manager emails me a quote, I click to approve and it gets organised.

I can’t even get a tradesperson out to my own home to fix issues a lot of the time!

I also find I’m being charged far more reasonable rates for repairs in Brisbane and Geelong than in my own regional town.

It is also a property manager’s responsibility to understand the rental property laws and ensure the property is maintained in accordance with them. These, of course, vary with each state and include fire alarm checking, gas and electricity safety checks. If you plan to own real estate in multiple states, keeping up to date with these rules may be something you wish to outsource to a property manager.

Organising and Completing Property Inspections

Property inspections are important for picking up maintenance issues before they get too bad. A property manager will contact tenants to organise an inspection, perform this and send the landlord a detailed report.

Lease Renewals

A property manager will contact the tenants before their lease expires, and confirm whether they plan to stay. They can make a recommendation on any change in rent in line with market conditions and negotiate between tenant and landlord before signing a new lease.

If the tenant moves out, the property manager will complete a final inspection and handle refund of the deposit, or repairs as appropriate.

Tribunals & Evictions

If the worst should happen, your property manager will guide you through the process and help to keep you at an arms-length from the stress.

During COVID property managers helped landlords consider applications for rental relief.

Short-term Rentals

Airbnb type short term rentals need far more intensive property management due to frequent turnover of guests, cleaning and higher maintenance requirements.

How Much Does Professional Property Management Cost?

Property management fees vary by location, structure and level of service. There is a large range between 5 and 12% of the gross rental payment.

My property management is 8.8% of the gross rent in Brisbane, 6.8% in Geelong. If you are going to outsource such an important job, it’s worth paying a reasonable amount to secure a great manager. There is considerable variation in fees between cities.


Property management fees are tax-deductible, along with the other maintenance costs, and interest paid on an investment property.

The fee structure varies. As well as a direct fee, monthly admin fees, re-letting fees, end of year statement and inspection fees may apply. It’s really a case of comparing each potential manager’s fees in detail.

Property Manager A vs Property Manager B

It’s hard to know what you’re going to get with a property manager. I had conversations with both of my property management companies before signing up. My properties were immediately handed over to a property manager working under the principal manager.

Within 4 months of signing my new property manager (for the second investment property), the difference between the two managers is obvious. Property manager A emails me inspections on schedule and occasional maintenance requests. She called me during the stove problem and kept me in the loop whilst she solved all the problems.

Property manager B’s company was selling the property I was buying. It made sense to engage the same real estate business so that it would be in their interest to allow an open inspection before exchange to secure a tenant faster.

Problems surfaced pretty quickly with this second manager. The big issue from the very start has been communication. I had to chase this manager to find out whether they had any potential tenants days before the exchange. Safety reports were performed, found issues that weren’t communicated to me until I chased the manager.

Maintenance and cleaning was supposed to be performed and then turn up later as having not been done (or done properly). COVID is not helping with inspections currently being performed virtually in both properties. But it is obvious that manager A is far more on top of things. Manager B, I have to proactively check-in and prompt about routine matters.

How to Choose a Property Manager

I’m not sure this would have been identifiable before the property manager was actually employed. I think the most valuable factor in selecting a property manager is a glowing personal recommendation from another investor.

If you don’t have a personal recommendation, it’s probably best to interview a few potential managers. Communication, organisation, experience and access to reliable and reasonably priced tradespersons are the most important. I would suggest asking your actual potential property manager give you a call. Find multiple sources of online reviews, if possible and read in detail.

Questions to ask include

  • How many properties does your agency, and each manager control? Do you have a dedicated property management department?
  • What are the qualifications and experience of my property manager? Can they give me a call for a chat?
  • Do you have access to a reliable and reasonably priced pool of tradespeople?
  • If my manager is sick is there someone else who will stand in?
  • How many of your current tennants are in rent arrears?
  • How often do you schedule open homes? Do you perform these yourselves?
  • What are all the fees?
  • How often do you organise inspections? Do you perform these yourselves? How much detail is provided to the landlord?
  • How are potential tenants screened?
  • Can I speak to a current landlord client

What to Expect from your Property Manager

  • Communication without having to be chased for information
  • Scheduling inspections and informing you
  • Cleaning and maintenance to be organised at a reasonable cost and be performed correctly (or promptly corrected without additional expense)
  • All legal requirements to be completed, and this communicated to you

How to manage your property manager

  • Make a note of when inspections, and leases are due. Set a reminder on your calender or schedule an email to yourself to check whether the inspection or lease renewal has been organised.
  • If your property manager hasn’t already been in touch by the inspection due date or within 3 weeks of lease renewal it’s time to reach out and check in. With COVID-19 difficulties, a little more flexibility is required, but needing to prompt your property manager to organise an inspection is not a good sign.
  • When maintenance or compliance work is requested, make sure you recieve confirmation it has been completed. Again, reach out to confirm the maintenance was completed successfully.

If your not happy with your current property manager, it is reasonably easy to change over. Check your property management contract for the notice period, and find an alternative property manager to take over. We will find a replacement property manager B towards the end of the lease, I’ll probably check if my buyer’s agent can recommend someone.

Are you a property investor already? What was your experience with property management?

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Aussie Doc Freedom is not a financial adviser and does not offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

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