Choosing A Good Property Manager
A good property manager can take almost all the stress associated with rental ownership off landlords’ shoulders. The trick is to choose well for your property, as Sally Lindsay discovers.
1 December 2022
Of the roughly 600,000 rental properties across the country, the private sector provides the overwhelming majority, at about 510,000 or 85 per cent. While precise figures on the size of the rental economy are not kept, if turnover, in the form of rent, is used as a guide then it is worth in excess of $15 billion a year, says the Property Investors Federation.
About a third of private rentals are managed by property managers and it is a service industry, says David Pearse, Residential Property Managers Association (RPMA) chair.
Hiring a property manager is a bit like hiring a lawyer or accountant and a good manager will save landlords time, money and hassle. They take the stress out of owning a rental property by juggling all the day-to-day, nitty-gritty and headache-inducing tasks that sap energy.
Pearse says property management is about the quality of service, which comes down to the amount of time a property manager can spend on a landlord’s asset. “Landlords need to ask when signing up to a property company, who will manage the property, the number of properties they already manage, their expertise and lastly the fees, which can range from 6.5 to 10 per cent.
“If a manager is already dealing with 200 properties, then a landlord will be lucky if they get 10 hours a year spent on their rental.
“This is where the whole industry falls down and gets a bad reputation. It’s not the personal property manager’s fault but the companies they work for, which give staff huge numbers of properties to look after. Often sales people are selling a property management company’s services and what is promised and then delivered is poles apart,” says Pearse.
Fortunately, regulation of property managers is coming. The Government will have a bill before Parliament by May next year with regulations for property managers and meth testing standards for rentals.
Pearse says unfortunately there is no detail around the property manager laws and he expects it won’t be revealed until the first reading of the bill. “That is of no use to the industry.”
Property management experts Propertyscouts managing director Ryan Weir says the new legislation is a welcome relief. “There have been too many bad managers among the good ones.” The RPMA has 110 members and Pearse says it will be going through the legislation with a fine toothcomb. “It’s too important to get it wrong.”
Point Property Management operations manager Louise Tanner says for landlords who make the wrong choice when selecting a property manager, it can lead to personal frustration and financial loss as well as adding unnecessary stress.
Both Tanner and Weir say too many landlords come to them after bad experiences through either managing themselves, or with average property managers.
“Most landlords have at least one cautionary tale of a tenant who damaged property, terrorised a neighbourhood or absconded without paying rent (or all three). And while the overwhelming majority of tenants are decent people simply making their way in life – there are enough ratbags renting homes to mean that anyone who has been investing in property for more than a few years will have their own story to tell,” says Tanner.
Tanner and Weir say landlords wanting to find a good property manager should firstly insist they are part of a recognised industry body that offers some form of professional registration; has a mandatory code of practice; requires continuing education of its members; and, has an independent disciplinary body to deal with
The Residential Property Managers Association was set up with these goals and deputy chair Weir says it will be one of the better decisions landlords make.
11 TOP TIPS
Here are 11 tips top property managers say should be top considerations when researching a potential property manager so you aren’t fooled by brand, size or fast-talk.
1 An audited trust account
New Zealand’s property management industry is deregulated, and therefore a trust account is not required by law. A property management company that has all rent monies going into a trust account, especially an audited trust account, shows that the directors require full transparency and protection for their clients. You should make this a mandatory requirement.
2 Property manager’s qualifications
As the industry is deregulated, this means property managers do not need to be qualified. It is important your property manager has ongoing industry training, especially on legislation. The Residential Tenancies Act is complicated and ever-changing, so your property manager needs to be up to date and confident in their knowledge around the Act. Otherwise it will cost money if they get it wrong.
3 Experience matters
How long have they been in the industry? What type of properties do they manage? It’s important to choose an experienced property manager who deals with similar properties to yours. Experienced property managers will know what to look out for and will make sure problems are remedied quickly and efficiently, without causing undue stress to the landlord or tenants.
4 Portfolio size
Experienced property managers will also know their limits in terms of how many properties they can manage efficiently (without burning themselves out). Try and find out how many properties they manage and if they have the staff to help with their workload.
5 Do your own research
You should be able to get a good feel for the quality of a property manager by doing a little bit of research. Spend some time browsing the internet to gain some
insight into the quality of their service.
Here are a few things we suggest you look for.
• What properties do they have listed for rent on Trade Me or their own website? Do they have empty properties? If so, have they been empty for long? A good property manager probably won’t have properties advertised for long. Additionally, if they don’t have many properties advertised compared to their competitors, they may have already rented them.
• What is on their website? Is the information available of reasonably good quality?
• Are they local? Local property managers have inside knowledge of market rental rates and trusted networks of tradies in the area. They will also be able to attract tenants quickly as they know what tenants in the area are looking for and will advertise your property in a way that highlights its most popular attributes.
• Search them by name at the Tenancy Tribunal. What are the results of the tribunal cases? Are they winning or losing? A lot of tribunal cases could mean they set up problematic tenancies.
6 Do they have any online reviews or referrals?
Good property managers will have lots of good reviews and referrals – there may be some evicted tenants with a bone to pick but if the overall vibe of their reviews is positive, that speaks volumes. Property investor Facebook groups are also a gold mine for referrals. If you’re a member of one of these groups, do a simple search for the property manager by name and see what pops up.
7 Ask about their processes, flexibility and responsiveness
A good property manager should have clear processes they follow when it comes to dealing with things like tenant applications, rent arrears, and property maintenance. Ask them what their process is when tenants don’t pay rent on time. If they tell you, they have “zero tolerance for rent arrears” take that with
a grain of salt. No property manager ever wants rent arrears, but the reality is, sometimes tenants fail to pay their rent (for all sorts of reasons).
You should also find out how flexible their working hours are and test their responsiveness to phone calls/emails. A property manager’s work isn’t limited to regular office hours. Tenants will have emergency repair requests at all hours (a pipe bursting in the middle of the night needs to be dealt with promptly to avoid causing irreparable damage to your property). Good property managers are on call 24/7 and will respond to queries in a timely manner.
8 Do they back themselves?
Find out if your shortlisted property managers offer any form of guarantee to back themselves in the services they provide. Propertyscouts, for example, offers a rent guarantee. If a tenant misses a rent payment it will continue to pay the rent for up to four weeks – so landlords are not left out of pocket while it deals with the issue in the background.
9 What level of involvement do you want?
Do you want to be completely hands-off or would you prefer to maintain some level of involvement (such as the final approval of tenants)? Have a think about this and discuss it with your potential property manager, they’ll be able to provide you with options and examples of situations where landlords have had varying levels
of involvement and the outcomes.
If you opt for a completely hands-off approach, a good property manager will know when they need to involve the landlord and will be able to deal with every other scenario while keeping the landlord’s best interests front of mind.
10 Elevating an investment
Does the company have expertise in increasing your income and growing your capital value? Can they assist with investment planning, finance, project management?
11 Cheapest isn’t necessarily best
When you hire a property manager to look after your investment property, you are putting them in a powerful position (and trusting them with your retirement fund). Are you willing to risk receiving a lower level of service in exchange for a few extra dollars? Ninety per cent of the time you get what you pay for when you opt for the cheapest product or service. If a property manager is charging a 6.5 per cent they will be managing more properties so they can make a profit. Ask what their
fees cover, they should be able to justify them and explain the work that goes into managing each property.
TECH ON TOP
Property management is morphing and changing as technology advances.
The Rental Bureau in Auckland was recently rewarded with the Westpac Award for Excellence in Innovation for their use of technology to provide great outcomes for their clients.
Founder Victoria Heyes says embracing technology allows tenants and owners to have a better experience.
“The innovation focused on reshaping the process for securing good tenants,” Heyes says. “We realised that in the post Covid environment finding great tenants was taking even longer, leaving owners and prospective tenants dissatisfied.”
Heyes and her team mapped out the process and the pain points.
Originally from the United Kingdom, Heyes explains that she was renting in New Zealand through a property management company while liaising with three property management companies in the UK at the same time as an owner.
“I experienced life from both sides at the same time. The lack of customer service and communication as both owner and tenant were extremely lacking and I knew there was a better way.”
She says that property management is about people and serving two customers concurrently is a skill, a challenge, but ultimately can be very rewarding when the model is correct. She feels the industry is developing well.
“As a member of an independent property managers’ group in Auckland, I am happy to say that there are many companies out there with the same goals and ethics.”
The process they use for finding tenants and using technology starts at the beginning with the marketing of the property. They use 3D virtual walkthroughs to enable prospective tenants to “virtually view” before actually viewing. “We then have viewing and application software integrated and a two-member team structure.”
If tenants want to proceed after this, the property manager can alert their partner in the office to start checks.
“We use video software to message an owner real-time from the property viewing to update them. We’ve used technology and processes to create the possibility to have a property rented within 60 minutes of the first viewing without cutting any corners, thus giving current tenants, prospective tenants and owners a great rental experience.”