The value of a property manager.

[AustinWong]

I have heard different views about having a property manager. I know of a couple in Napier who have/ and had investment properties.

One uses property managers and the other doesn't. The one who does not says that at the end of the day the property manager has no resposibility and ultimately does not do a heck of a lot for the say 10% they get and on top of this they make money from your rent while they hold it for 1 month before paying you out.

Seeing I have yet to have any dealings with a property manager... what are your views?

[Julian]

Much like spouses - the good ones are real good, and the bad ones aren't worth the house you end up giving them.
Julian

[AustinWong]

So how do you define a good un? And also where do you learn about the obligations of a property manager, what they can and can't do and also what they are expected to do.

[LondonKiwi]

AW, like Julian says there are good uns and bad uns, but that could probably be said for any industry known to man.

Personally I only pay 5.65% management fees and get the rent paid directly to my account so it would pay (excuse the pun) to see what options are available for each property manager.

Mine is excellent and I have no qualms paying the management fee, especially when I am so far away from my tenants, it is money well spent!!

LK

[Julian]

AW,
I self manage so couldn't say where you might find them, but I guess the interview process would help sort the wheat from the chaff. You will have to ask the right questions though, and check references.

Julian

[JohnL]

Its like any profession including legal, accounting, real estate agents etc. 20% are very good and perhaps 5 % are exceptional.

The challenge is to find the 5%.

I would tend to start with the companies who's purpose in life is manage property compare to a division within a real estate company. They tend to more focused (but smaller towns don't usually have specialist companies).

However, often the exceptional is found in a person, not the company and that is obviously a problem when that person moves on.

Hopefully its that exceptional person who has started the dedicated property management company and has put in the training and systems which create the results you want repeatably.

The decision whether you manage yourself or contract out the management is a different one. If you do it yourself, then you aren't saving money, you are paying for your time spent managing the properties. So it depends on whether you have a passion for that part of the business or would rather focus you time elsewhere. Many people who manage their properties themselves and do it poorly, actually cost themselves alot of money. If its one of your passions, you will probably get better results doing it your self.

John

[AustinWong]

Hi London Kiwi,

Do you have more than one property with the manager to get such a good rate? Also, does the rate you show include GST?

Bearing in mind also everyone that I do live 6 hours from my IP but only a phone call away to sort things out.

The real benefit I see with property managers is finding the right tenents and keeping vacancy rates low.

[JohnL]

They should also do the 3 monthly inspections, something a lot of investors don't do when they manage their own. They chase up the rent arrears, issue the 10 day letters and best of all, attend the tribunal hearings. They will also organise any maintenance and repairs.

Once again, it depends on where you want to put your own valuable time. If you are still working fulltime, sourcing good deals etc, then do you have the time and expertise to manage your portfolio as well?

Once you have a large portfolio then being the property manager as well can be your 'main job' if thats your area of interest.

John

[LondonKiwi]

AW

I have two properties with them, the amount is GST exclusive, I manage the tracking of the rent (directly into my account so I am happy with that anyway) so there's slightly less overhead on them.

LK

[Glenn]

I do not want to sound as if I am touting for more work again. Goodness we have enough as it is. But if you all look back over say 5 years and count up how many weeks rent you have got for your houses and also figure out if you have got top rents or just average then you will know if you have got value or not. If your net rent is not 48 weeks after paying commission then you are not doing very well.
I have seen one or two firms that arrange for the rent to go direct into clients accounts. I started out like that. This works great for top of the line properties with normal great tenants. We and many others have found this system falls down the minute you have rent or water money missed.
I fail to see why anyone would want to pay a normal commission and still need to do the job of rent tracking and follow up themselves.
If the PM is doing their job correctly then the return for the owner should be equal or better than the owner can do. This is because they should be on the ball with finding tenants immediately and be able to access tenants from both newspaper adverts and their network contacts.

However if you have only a couple of properties then surely most people should be able to fit into their life the work needed to do the job of managing your own property. If however you have a job and life style that puts high demands on your time and mental energy then it is a smart thing to employ someone to do this just like you employ someone to fix your car even if you can do it yourself.