8 Signs of Poor Property Management (& how to make a change)
The quality of your property manager can make a huge difference to the experience that a property investor has during the ownership of their investment property.
A good property manager will take away much of the stress that comes with owning and handling an investment property. From managing the risk of an investment to conducting regular property inspections to ensure that the property is being kept well by the tenants, a property manager has a wealth of important tasks to carry out. This is why it is so important to look out for any tell-tale signs of poor property management and make the change sooner rather than later.
The 8 signs of poor property management:
1. Rent stagnation to avoid a tenant changeover
One of the most important jobs a property manager has is to negotiate rent. A quality property manager will ensure they always keep up to date and familiar with local housing conditions and marketing trends, to ensure they get the investor the best possible return on their investment. A proactive property manager should also ensure that as the market conditions rise they increase the rent so the property does not become stagnant.
The reason why a property manager may not want the investment property to change tenants can usually be attributed to two main reasons:
1. It’s a lot more work to bring in a new tenant over keeping the same one. It requires all new paperwork, open homes, private inspections and handling tenant enquiries.
2. During the time a rental property is vacant the owner will not be receiving income for the property, which causes the owner to start asking questions of the property manager and engaging with them on a more regular basis. Poor property managers do not usually welcome this type of constant communication and prefer to not have to acknowledge any mistakes or errors they may have made when advertising the property and causing it to not have enough tenant enquiry.
3. This is also a time when a lot of owners start to reconsider their current property manager. They start shopping around and asking other rental agency companies for management fee schedules and services they offer. Other proactive agents will also start to target an active listing online, which causes competition for the current agent.
2. Rental property viewings
One of the key roles a property manager plays is to set up the rental property for public viewings, either online or via virtual inspections, open homes or private inspections. A quality property manager will be the one there ensuring that everything is running smoothly and on time, they will give you, the investor, recommendations on what you need to do, what is legally required and what you could do to help ensure the property rents quickly and to quality tenants.
However, a poor property manager will generally leave the ball in the investors court, leaving it up to the investor to decide what needs to be done to prepare the property for rent, and organising trades on their own behalf, which then puts the responsibility back in the owners hands. An investor pays a property manager for these services, and a good quality property manager will offer these without hesitation.
3. Screening tenants applications
Quality property managers have experience with processing hundreds of tenant applications. They know how to conduct reference checks, review previous rental history, and employment contracts. Therefore, another sign of poor property management is when an investor is constantly faced with ‘bad’ tenants. A poor property manager will often not manage the process of locating, screening and securing a tenant well. This could leave an investor with a long history of late rental payments, and disputes over the property’s condition.
4. Organising tradespeople
Property managers should be reliable and competent in organising trades for any maintenance issues which may arise on an investment property. An experienced property manager should have an array of qualified and licensed contractors that they know and do business with regularly. Because the property manager uses these tradespeople so often they can often do the jobs at a quick turn around time and at a reasonable cost.
Poor property managers will organise maintenance with tradespeople who are highly expensive and aren’t able for quick repairs, because they haven't taken the time to build up genuine relationships with tradespeople that in return will benefit the property manager, the investor and the tenant.
5. Rental property repairs
By conducting regular inspections comes the ability to prevent maintenance issues before they become out of hand. If a property manager leaves a property without any inspections for a long period of time issues can start to pile up, resulting in excessive repair costs for the property owner.
A proactive property manager will prevent this from happening by regularly carrying out routine inspections to spot any issues before they become too big or more costly for the owner.
6. Tenant and Landlord Relationship
Property managers should act as a buffer between the property owner and the tenant. If the tenant has any issues they should contact the property manager and have the property manager contact the owner to let them know and get their approval if necessary.
If the tenant starts by-passing the property manager and contacting the owner directly, this is generally a sign that the property manager isn't doing their job adequately. One of the main reasons why investors hire a property manager is so that their identity is protected from the tenant. Property managers should ensure that when they are preparing any legal documents with the owners details on them, they should remove any contact details, and only display the first initial and last name.
7. Communication between property managers and owners
A quality property manager will be proactive. The investor has hired a property manager to do a job, manage their property, so it shouldn't be on the investor to follow up the property manager. With the amount of duties a property manager carries out, it is crucial that - be it through emails or phone - property managers are easily contactable and available.
Whilst everyone can become busy, a property manager who doesn’t return a phone call or emails for days can be a sign that the property manager is not on top of their daily duties, and therefore not completing their required job commitments. Communication channels between a property manager and an owner should always be open.
8. Monthly Statements
An investor will generally be able to decide what frequency of payments they would like to receive and when their monthly payment statement will be sent, property managers should contact them accordingly. This information is paramount because investors need to see, in detail, property income, expenses, owner payments and any outstanding invoices associated with the investment property.
A poor property manager will probably send through a monthly statement, but it will be more than likely one that is focused on how much management fees have been paid, rather than a full property statement keeping the owner informed about any outstanding invoices associated with the investment property.
How to Change Property Managers
Have a conversation
Before changing property managers investors may wish to have an open conversation with their current property manager. Put all the issues on the table and inform the property manager that they will need to change their work ethic to keep managing your investment.
Local market is crucial. A property manager who is versed in the local market, in particular what is on offer and for what price, is a big bonus. This knowledge ensures that the property manager knows how to attract tenants and set an appropriate rental price. They also have knowledge of the area the property is in, and can speak to potential tenants about local facilities and answer any questions they may have.
Do your research
Rely on word of mouth, reviews and recent testimonials on the agency. Ask direct questions to find out more about the agency, research is crucial to finding a good property manager. Take the time to do your homework and find out as much information as possible, this ensures you are fully aware of the agency and the way they run, and you are comfortable with that chosen property manager, and can entrust in them to be well equipped to manage every aspect of your investment property with professionalism.
A highly skilled and experienced property manager can go a long way in towards making an investment property and subsequent rental processes seamless. A good property manager will manage the risk of an investment property and know they have an obligation to the owner to keep the rental property and it’s tenants in-line.
A solid investment should be profitable, low maintenance and stress free, and making the right choice of property manager can make a world of difference. At Lot42, we understand that your investment property - or your home - is a valuable asset requiring expert care and attention, and entrusting us ensures you will receive the necessary experience and knowledge to provide you and your property with the comprehensive level of service required.