Choosing a Perth property manager? Learn how to choose the best property management company to run and maintain your rentals for a successful investment without the hassle.
“Passive income” has been a buzzword for years now. And if you’re anything like me, you’ve invested in the Perth rental property market because you want to kick back and relax while the paychecks roll in each month.
This is how most landlords want their rental investments to work:
- You acquire a single-family property in a nice little neighbourhood, thinking that you’ll have proper tenants renting them within days, perhaps weeks.
- They move in, take care of the property reasonably well, and pay you $800 a month for you to finance another investment or earn a passive income on the side.
But is it really that simple? What’s the catch?
Well, the catch is that rental properties need a lot of management. The income isn’t as “passive” when you consider the time and effort it takes to market your rental, thoroughly screen tenants, maintain the property, and deal with the day-to-day tasks of running a rental business – like tenant issues, property maintenance, and the headaches of late rents or evictions.
If that doesn’t sound passive to you, it’s because it isn’t!
The Reality of Property Management
Property management in Perth is just like the world over – a lot of work! If you want your rental investment to be a truly passive one, you need to find a property manager to handle all of these tasks for you. With a good professional management system in place, you’ll free yourself of these responsibilities, while being assured that your assets remain protected and profitable.
The only thing you need to do is make sure you hire the best property manager Perth has to offer. And not one who’s going to take your money and give you poor service in return. You’d be surprised how many unscrupulous property management companies there are out there.
Ever heard of a property manager who claimed to be depositing bond payments into a trust account but really was stealing the money? I have and he left the country with hundreds of thousands of dollars in tenant bond money.
Let’s get into how you can identify Perth’s best property management service to handle your properties, so you can enjoy a profitable, hassle-free rental investment.
Property Manager vs. Property Management Company
Generally, there are two types of management that you can choose from: a property manager or a property management company. The main difference is that the former is an individual, while the latter is a group of professionals operating together in a company:
|Factors||Property Manager (PM)||Property Management Company (PMC)|
|Expertise||An individual property manager handles all management responsibilities by themselves||A PMC has dedicated departments or portfolio-based teams that handle different parts of rental management|
|Network||A property manager works with their own network of tradespeople||A well-established PMC will have a broader network of trusted tradespeople and service companies|
|Screening||Individual managers rarely have an online portfolio that details their experience||Companies tend to have websites full of information on their services, available for anybody to review|
Individual property managers are ideal for handling a few properties, while property management companies are a better fit for larger-scale portfolios.
In another perspective, the employees of a property management company are also technically called property managers, depending on how their company is structured (as we’ll see in the next section).
Property Manager Business Model: Department-Based vs. Portfolio-Based Structure
There is a structural difference among property management companies that can impact the type of service they provide. So, before anything else, you need to decide on the structure that best fits your expectations for a hired property management service.
There are two main structures to choose from: department-based vs. portfolio-based property management companies. Here are the main differences between the two:
|Factors||Departmental Structure||Portfolio Structure|
|Organisation||Company is split into departments that specialise in specific management tasks, and collaborate to provide holistic services||Clients are grouped geographically with one overarching manager to oversee them; departments within the company rarely need to talk to each other|
|Service approach||One department is responsible for their field of service (e.g., property maintenance team vs. tenant screening team) for all properties||One manager is responsible for all aspects related to their assigned properties, being jack-of-all-trades for all services|
|Communication||Client and tenants can get in touch with a department depending on what they need, with a range of experts at their disposal at any time||There is only one contact person for both the client and the tenants; they usually have no replacements when they are unavailable|
Many property management companies tend to have a hybrid of these structures, but they typically lean towards one more than the other. The bottom line is to choose the structure which best matches the way you prefer to communicate. If you like to deal with just one person, then go for a portfolio-based PMC. If you prefer to have round-the-clock access to support, then departmental structures may be the better fit.
With this information in mind, let’s look at the specific steps to identify a property management company in your area that best fits your needs as a rental investor.
4 Steps to Choose Your Property Management Company
While a capable property management company will simplify your life as a landlord, an incapable one will do the opposite—bringing you more headaches than financial freedom.
So, here are four steps to help you find a good property management company for your properties:
- Establish Your Criteria: What is your budget? What service level do you require? How experienced do you want your property management company to be?
The price of hiring a PMC typically ranges from 5% to 12% of your monthly rent amount. While there are exceptions, higher rates often mean more services offered, and more hands-on service. You get what you pay for – so make sure to pinpoint the management services you need to determine how much you’re willing to spend, and how much effort you want to put into managing your properties personally.
- Search for Your Options: There are roughly 10,000 property management companies in Australia alone for you to choose from. With such a large pool of options, the best way to start your search is by asking for referrals from other investors or by looking at reviews from online sources, like lists from ManageCasa or Clutch.co.
Alternatively, you can put yourself in the tenants’ shoes and check online listings to see impressively marketed properties—indicating that a good property management company is working behind the scenes.
Using your criteria, shortlist your options to a good handful.
- Interview Your Prospects: Once you have your list of prospective companies, conduct interviews with each of them to dive deeper into their services. Prepare strong questions that will reveal their capability and experience level. Here are some to get you started:
- Fee Structure: What is your fee structure? What are the services included in the cost? What services will incur additional fees, and how much?
- Communication methods: How frequently do you communicate with landlords, and using which channels? Do you have an online portal for landlords where documents are stored?
- Service Capability: What is the structure of your company? How many clients and properties does your company currently manage? How does your company ensure quality service for each of them?
- Experience: How many years of experience does your company have? In which particular location do you mainly operate?
- Standard Operating Procedures: Can you run me through your management processes such as tenant screening, tenant selection, property maintenance, rent collection, and eviction process?
Ensure that the company you decide on fits your criteria. They should align with your goals as an investor and be fully capable of meeting your expectations.
- Sign the Agreement: Once you’ve identified the best choice, seal the deal and begin working with them – but try to make sure they offer a trial period where you can terminate the contract within the first 3 months if the relationship doesn’t work for you.
- Verify Your Decision: Now, the first three months is where you can verify if you’ve chosen the right property management company for your rentals. Follow up with them, conduct routine checks, and pay attention to crucial factors such as their work ethic, communication skills, documentation processes, and overall organisation as a management service.
If you’re not satisfied with their service, let them go. Then return to the first step in this list and refine your criteria a bit more—now that you know exactly what you want from a property management company.
Kick Back and Relax, with Expert Property Managers
And there you have it! You can now move towards a genuinely passive rental investment by hiring the best Perth property management company to do most of the work for you.
This way, you can spend your time searching for new rental properties to acquire and analysing other real estate investment opportunities—all while being assured that your existing rental business continues to run smoothly and efficiently.
For information or advice on how you can choose the right property management company for your Perth rental, reach out to the Benchmark team.