Selecting a Property Manager? Avoid these 4 Mistakes Landlords Make

When you're selecting a property manager, learn from the mistakes other landlords have made. Then you can find the ideal property management company that supports a profitable rental property investment.

There are over 300 Perth property managers, and selecting a property manager can be daunting.

While working with a property management company should make things easier, there are firms out there that do the exact opposite.

I’ve been investing in rental properties for a while now. As with most investors, I want to keep my full-time job and a passive income stream through real estate. To do this, I hired a property management company to manage day-to-day responsibilities, tenants, and property maintenance (then eventually started one myself).

I’ve worked with my fair share of companies that have made property management more difficult, costly, and stressful. But by seeing what some do right and others do wrong, I quickly figured out what to look for when choosing a property management company.

 

What to Look for When Selecting a Property Manager

I realised that part of the reason I ended up with bad property managers is that I wasn’t doing enough due diligence on them before signing a contract.

I would have avoided the mistakes I made with previous property management companies if I:

So, I’d like to share with you the top four mistakes landlords make when choosing their property management company. That way, you avoid any costly errors and end up with a property manager that protects your investment and your peace of mind.

What are these four biggest pitfalls of property manager selection? Let’s take a look.

 

Not Interviewing Property Managers Properly

As part of the selection process, you’ll have a one-on-one interview with your prospective property management company. You’ll likely ask a lot of questions – but are you asking the right ones?

You need to ask ultra-specific questions that help you identify the advantages and disadvantages of a particular company.

Here are some examples of questions that you should avoid, questions that you should ask instead, and a short explanation as to why:

Don’t Do Reason
How much will you charge per month? What is your fee structure concerning your services? They might charge 10% of your rental income per month, but leave out additional “hidden” fees for other services.
How will we stay in touch? How frequently and via which channels would you communicate with me?

Do you have an online portal for storing documents?

They might say that they’ll keep you in the loop whenever an issue arises, but what does that really mean?

You also want to know that they’ll report regularly about property performance.

Will you address concerns from me and the tenants? Who is my go-to contact person? What happens if they’re not available?

Is your organisation structured by department or portfolio?

They might boast of a “robust customer service,” however, that service depends on their organisational structure – having teams that deal with all issues categorically or having one manager per portfolio.
How many years of experience does your team have? What is the experience of each of your employees?

How long has your organisation been operating?

In what locations?

They might say “40 years” but refer to four people with ten years of experience – spread out across unrelated locations.
Do you have SOPs in place for tenant screening, selection, property maintenance, rent collection, and eviction processes? Run me through each of the SOPs you have for tenant screening, selection, property maintenance, rent collection, and eviction process. They might confirm such processes, but you need to know how exactly they carry out their responsibilities to see if they’re a match for the way you want to run your rental business.

 

By interviewing your prospective property managers in detail like this, you will have a holistic understanding of the services they provide to help manage your investments. Thus, minimising the chance of nasty surprises later on.

 

Not Researching Potential Property Managers

No matter how convincing the prospective property management company is, you shouldn’t accept everything they tell you as truth. You need to perform due diligence in verifying what they say by conducting a proper background check online.

Here are four ways to research a property management company:

If you can retrieve reviews from both the perspective of the tenants and the landlord, you’ll see both sides of the property management equation.

 

Not Selecting the Best Value Property Manager

A capable property management company will increase your profitability by improving your marketing tactics and reducing tenant turnover rates. A cheap one, however, could do the opposite.

That’s not to say all “cheap” property managers are bad – it just means that they have less resources to dedicate to managing your rentals. How many hours a month are they going to spend on your properties if they’re only earning a minimal fee?

Instead of going for the cheapest option, you should focus on the balance between value and cost, ensuring that the property management company you choose can provide the service coverage you need.

You’d want to prioritise the companies that can offer two things:

Select services may sound cost-effective, but you’ll miss out on a holistic management service that others can offer you, even if it’ll cost a bit more. A comprehensive property management company is your one-stop-shop for all things related to property management: marketing, screening tenants, maintaining the properties, handling evictions – the list goes on.

Their website alone can tell you a lot about them. If their page is old and offers limited information, they might be stuck in their ways and haven’t adopted new technology in recent years.

Understand what you’re paying for and ensure that the company’s services align with your needs.

Whether their fee structure is a flat rate fee or a percentage-based one, you want to hire a company that does not sacrifice quality service just to keep prices low.

 

Not Scrutinising the Property Management Contract Fine Print

Lastly, one of the biggest mistakes is skipping over the management contract fine print.

You assumed that everything was agreed upon. However, just like with any legal document, you need to confirm that all your expectations and verbal agreements are apparent in the property management agreement – most especially in the fine print.

Here are some vital details to check for when reviewing a property management contract:

The bottom line is to know what you’re signing up for before committing.

 

Select the Right Property Manager for Property Investing Success

As you may have noticed, these property manager selection mistakes revolve around one common theme: the lack of knowledge and information before agreeing to hand over the keys to your rental kingdom.

Instead, you need to ask the right questions, do background checks, evaluate their services, and comb through the fine print before signing a property management contract.

Doing so will help you achieve the sole purpose of a property management company – to have a more efficient and hands-off approach to managing your rental assets.

For information or advice on how you can choose the right property management company for your Perth rental, reach out to the Benchmark team.

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