Some new property investors get tempted to scrimp on property managers, shopping around for the cheapest option they can find or even trying to do it all themselves. But almost all seasoned and successful investors agree that a great property manager is worth their weight in gold.
In this article, we explore what it is that a property manager brings to the property investing equation and how they can protect your asset and help you maximise your returns over both the short and long term.
Why use a property manager?
A common misconception is that a property manager’s duties are limited to simply collecting the rent on your behalf. While it’s true that rent collection is one of the fundamental tasks they perform, it’s really only a small part of what they do.
The reality is that property is an active investment and one that involves ongoing management and involves some degree of risk. A property manager helps alleviate some of the burdens by making sure the day-to-day is taken care of and that risks are minimised.
Here are some of the ways they do just that.
1. Property managers will work to keep vacancies to a minimum
One of the main responsibilities of a property manager is to find tenants whenever the property is likely to become vacant. This includes advertising the property, holding open inspections, screening applications, and negotiating terms with tenants.
But the best property managers take don’t just do the minimum here. They do everything they can to make sure the property is leased, holding inspections outside of regular hours, and longer inspection times if they need to, to make sure as many prospective tenants see it as possible.
Finding the right tenant for your property can be an onerous job. Done well, it can also be a skilled one. That’s because there’s more to it than simply securing any tenant. You need to secure the best tenants – the ones most likely to take care of your property, give you the fewest headaches and pay the rent on time for the long term.
A good property manager will be well attuned to the signals and context and will do the right research to know exactly which tenants are best for your investment.
2. Property managers are strategic advisers
Speaking of which, there may be times when you have multiple rental offers on the table. So which do you choose? A property manager will be able to advise you based on their research, their knowledge of the market, their experience with tenants, and the reference checks they perform.
But a property manager’s strategic advice doesn’t end when they’ve found your tenants. They’ll also advise you on what type of lease to sign, what conditions to include, how long your lease should be for, and – most importantly – what rent to ask for. They’ll do this based on their knowledge of the market and where it’s headed so that you maximise your income and minimise your pain.
They can also advise you on depreciation schedules and even help you put together a long-term property plan.
3. Property managers will help maintain your property
In an investment property, small maintenance issues, if not resolved, can accumulate over time and have a big impact on your finances. A good property manager will help notice these and correct them before they get out of hand. For instance, a small leak in a bathroom may go unnoticed by your tenant but could eventually lead to water damage and mould problems.
A property manager who knows what to look for is likely to spot the problem early, saving you thousands in the longer term. They’ll also usually organise the trades you need to repair anything efficiently and with a minimum of disruption to your tenants and your income.
Through regular inspections, a property manager will also help make sure that your tenants are looking after your investment. And, if they’re not, they can help rectify that, using their negotiation skills to let the tenant know what’s expected of them and how they need to improve or resolve any issues.
4. Property managers guide you through the rules and regulations
There are many rules and regulations governing the landlord/tenant relationship and getting them wrong can be an expensive exercise. For instance, a tenant has certain rights when you give notice of inspections or increase the rent. On the other hand, landlords have rights too, especially when it comes to the tenant ending the lease and the condition in which they need to leave the property.
A property manager can help you make sense of these so that you avoid unnecessary risk.
5. Property managers help you maximise your return on investment
Cashflow management is one of the most important factors in property investing, especially for first-time investors. At a minimum, you need to make sure you’re covering your mortgage each month and that your investment doesn’t result in ongoing financial stress.
But to really grow your wealth you also want to be confident that you’re maximising your returns and minimising your outgoings. A property manager can do both. Helping make sure your investment delivers a strong yield in both the short and long term so that your cashflow runs smoothly and your rental return remains high.
If you’re looking to grow a property portfolio a property manager can also advise you on your next move, using their knowledge of the market to single out properties with potential for capital growth. They can also advise you on the right time to consider acquiring a new property and help you understand what it means for your day-to-day finances as well as for your future wealth.
In short, a property manager can save you time and money, helping you make the most of your current investment while using their expertise in the property market to ensure you do everything you can to maximise your wealth in the long-term wealth too.
Source: The Property Investors Alliance