One of the biggest mistakes I see investors make is choosing their property manager on price.
Management fees are a tax deduction but the difference between the cost of a good manager and a bad manager can be substantial – both in a monetary sense and in the level of service received.
Of course investors are looking for every competitive edge as they chase a return but securing the best property management is very important.
And the cheapest agent may not necessarily give you the best return.
When I talk about the price of property management I think of the 52-week figure that I see on my financial statements.
This will be determined by:
- Vacancy – how many weeks empty?
- Maintenance – was it reactive, proactive of even effective?
- Property condition – are there regular inspections? Are you being kept in the picture?
- Advice – good property managers can show you how to maximise gains and minimise losses. They are experts in their field.
- Why do some company’s fees differ so much?
- More properties per manager
- Less service per customer
- One or two person operation, office or staff
- Less training or ongoing investment to the business
A sign you may be with one of these companies is the continual turnover of staff, low morale and a lack of consistency in your dealings with the company.
The most definitive way of noticing if your property manager isn’t doing the job is if you have to chase the agent continuously.
That is a tell-tale sign your property manager is behind in their work tasks not ahead of the curve.
The number one enemy of investors is vacancy.
You should only choose a property manager on their ability to find, approve and keep quality well-referenced tenants for the long term, not because they are the cheapest option.