Property management nightmare

Even Affordable Property Management Fees Don’t Guarantee Tenants!

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Affordable Property Management Gets New Tenants

Eek!!! We are without a tenant!

The property managers of our townhouse in Carina Heights have very affordable property management fees, and this past week, although we have been without a tenant – we are very grateful to have them on our team.

More about our empty townhouse shortly…..

Our intention is to make the most money we can from our investment properties. This includes keeping rents as high as possible and outgoings to a minimum. I’m sure you want the same thing from your properties too.

Paying a professional to manage your rental property is one of those questions I get people asking all the time – “Do I do it, or not?”

What Are Affordable Property Management Fees?

Property management fees are the amount of monies a property manager will charge for their time and resources to take care of your investment property on your behalf.

You should expect to pay anywhere from around 8% to 10% of your gross rental income for this service.

I can forgive you for thinking if you manage your investment property themself you’ll save money and increase your overall profits. Good thinking – but it’s rarely the true!

I know, I know – to see a statement each month where a good chunk of your rental income is gobbled up by property management fees can seem a little disheartening at times.

Property management nightmareBut consider the flip side. If you are not engaging a professional manager to do this job for you, you can end up spending hours and hours running around after all sorts of tasks related to the management of your rental property.

… calling plumbers, engaging garden maintenance, fixing door handles, chasing up rental payments. What a nightmare – especially when you already probably have an extremely busy life.

Just last week we got this email from our property manager:

[quote]“…. Just a courtesy email, we had an open home last week and have another Open this Saturday. The enquiry has been very low on the townhouse, which is an indication of this time of the year. I have seen townhouses reduce in price to attract more interest and applications. I would suggest a price reduction down to $430 per week to attract more interest and more people through this Saturdays Open Home. Please let me know your instructions on this.”[/quote]

Thank goodness we haven’t had to spend hours of our precious time trying to locate new tenants! Instead, the work is being done by the property manager. The only thing we need to do here is decide what our course of action will be in response to her suggestion. I’ve wrote this post all about how to get good tenants for your property. We advised the agents to follow though with an incentive just as I described in the post. Within a couple of days we had an application to consider icon_smile

Next email….

[quote]“I have a lady who is interested in renting your townhouse although she has a cat? Would you consider a cat at the property? “[/quote]

So, in order to get our property tenanted, we have reduced the rent AND taken a pet bond for a tenant who will have a cat!

In an ideal world, neither of these options are great – but it’s not always an ideal world. The reality is – we have a tenant moving in and money going into the bank account once more.

All being well, the new tenant will be moving in very soon.

The fees charged by your property manager will cover lots of time spent on your behalf in addition to the regular maintenance checks done on site.

Their time is also spent seeking new tenants for you, representing you in court if a violation of lease agreement is made, calling maintenance services, handling tenant complaints and loads of other incidental tasks.  Based on this, in most cases the fees charged are reasonable.

And, don’t forget that in most instances, fees paid to your property manager can be claimed as a tax deduction against the income you receive from your rental property.

How Do I Choose A Good Property Manager?

Not all services are equal and the fees a property manager charges may not be a reflection of the level of their services. Fees that seem more affordable at first may end up costing you more money if the service provided is sub-standard.

When you are selecting a property manger to take care of your investment, there are some things you should consider and discuss before making your final selection.

  1. Property management fees ARE negotiable! You don’t have to accept the fees provided as final. Good negotiation skills can often see you get a discounted rate on your management fees, especially if you have a couple of properties in a similar location that need managing.
  2. Discuss thoroughly what your expectations are for management, and find out exactly what your managing agent provides in the way of services.
  3. Request that photographs accompany all of your management reports. This helps to keep you up to date with the condition of certain areas and also helps you to make maintenance decisions.
  4. Ask other investors for referrals. These are people who have already used property managers in your area. You can leverage their experiences and make an informed selection.
  5. Stay in constant contact with your property manger. Be proactive in contacting them as your know your lease agreement is coming up for renewal and ask about the likelihood of increasing the rent.

What Happens If My Property Manager Is Not Doing A Good Job

You don’t have to stick with a property manger you are not happy with! Firing your property  manager

While a good property manager is worth their weight in gold, it’s important to take responsibility for your investment and stay pro-active when it comes to decision making.

Remember, these are business decisions and you must think with your head and not your heart.  

Even if you’ve been with a PM for many years, if you have good grounds to believe your appointed PM is not maintaining your investment or acting in your best interests, you can provide ‘Notice of Termination’ to them. Refer to your original management agreement to see what terms of notice you need to give as they can vary.

Provide them with written notice of termination and seek out someone who is going to work harder for your interests.

This is exactly what we did just three months into our managing agreement when we were very unhappy with the property manager who was taking care of our Wilson property. That was back in 2003 and we’ve been very happy with the new property manager ever sinceicon_smile

To Pay Or Not To Pay?

In my opinion, hiring a good property manager with affordable property management fees can make sense and actually save you money.

I know that not everything goes smoothly when it comes to managing your investment properties and I hope you do too.

Thanks again for your support, and if you enjoyed this article, please help me out by sharing it for me.

Here’s to your success!

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8 thoughts on “Even Affordable Property Management Fees Don’t Guarantee Tenants!”

  1. I was very reluctant to hire property management company as I always thought they will charge high commission, but I was wrong. The property management company helps you to find the best deal for you based on your preference and budget. Without property management company you find it difficult to find decent property and do all the paperwork on your own.

    1. Hi Anna,
      I’m glad you’ve ‘seen the light’! It’s so easy for investors to feel that property management is an unnecessary expenses, but as you have mentioned, it really does pay for itself over and over.
      Cheers,
      Fay
      Fay recently posted…The Game of LifeMy Profile

  2. I’m currently leasing my home and needs a dependable property chief in light of the fact that more often than not we are out of the island. My property is situated here in Ewa Beach Hawaii. Can you suggest one for me please?

  3. I was extremely hesitant to contract property administration organization as I generally thought they will charge high commission, however I wasn’t right. The property administration organization helps you to locate the best arrangement for you taking into account your inclination and spending plan. Without property administration organization you think that its hard to discover not too bad property and do all the printed material all alone.

  4. I can see how finding a cheap property manager might not be the best idea. Even if the fees are low, that doesn’t mean the manager knows what he or she is doing. Still, like you said, it pays to remember that the fees are negotiable, even with professional managers!

  5. Showing prospective tenants the property takes time because people wanting to lease a home generally want to view the property during after work hours such as the evenings or weekends.  Private land lords are more restricted in their time and therefore may not be able to find the best tenant for the property in the fastest time.

  6. A property manager will also have a list of tenants who may like to rent the property. Many prospective tenants contact local property managers directly for information about properties for lease. In addition, a property manager will also have access to Internet marketing which is becoming more important in the rental market.

  7. Because of the growing trend towards litigation, people who privately lease their properties can open themselves to litigation if they fail to discharge their legal responsibilities in relation to the investment property i.e. fixing items in the investment property that could cause personal injury. A property manager is fully briefed on these legal responsibilities and this offers additional peace of mind for the investor.

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