Property Management

The questions landlords rarely ask

As a property owner, it's important to ensure that your investment is managed efficiently and effectively.

Monday, May 22nd 2023

This requires finding a competent property manager who can handle all aspects of property management, such as tenant screening and maintenance issues, says property management company Propertyscouts.

However, not all property managers are equal, and it's crucial to ask the right questions before entrusting your property to anyone.

Propertyscouts director Ryan Weir says while the company receives many inquiries as property managers, there are a few critical questions that are rarely asked:

1. What's the on-time rent payment percentage?

One of the biggest risks for landlords is rental arrears. If the tenant misses a payment, the outgoings for the landlord don’t stop. When tenants fail to pay rent on time, landlords can find themselves facing financial pressure, as they still have regular payments to make, such as mortgage payments, rates, insurance, repairs, and maintenance. It's therefore essential to ask your property manager what percentage of their tenants make on-time rental payments.
Ideally, the percentage should be more than 98%. A figure of 99% is considered very good. Asking the property manager about the percentage of tenants making on-time rental payments can help landlords prepare for possible rent payment delays and plan accordingly.

Propertyscouts, offers property owners a rent guarantee. This means that even if a tenant falls into arrears, on-time payments are unlikely to be an issue.

2. What's the occupancy rate?

Occupancy rate is another crucial factor to consider when choosing a property manager. A higher occupancy rate means fewer vacancies and more rental income for you. What's the point in saving a little on the management fee if their occupancy rate is worse than a more expensive property manager?

Let's say the rent for your property is $580 per week, making the total rent per annum $30,160 (52 x $580) based on 100% occupancy. A good property manager may achieve a 99% occupancy rate, meaning the property is empty for only one week every two years, resulting in a loss of half a week's rent per year on average ($290).

On the other hand, a cheaper property manager may only achieve a 97% occupancy rate, resulting in the property being empty for three weeks every two years, meaning a loss of one and a half weeks' rent per year on average ($870). As you can see, even though the cheaper property manager may charge less for management fees (saving you about $300 p.a.), they cost more in the long run once you factor in occupancy rates.

Ask your property manager what their current occupancy rate is and compare it to industry standards. A good property manager should be able to achieve an occupancy rate of at least 98% or higher. Keep in mind that a small difference in occupancy rate can have a big impact on your finances, so don't focus solely on the management fee when choosing a property manager.

3. How much time will you spend looking properties?

It's essential to know how much time your property manager will spend looking after your properties. This can be determined by asking about their portfolio size and the level of support (e.g. additional staff) they have. A larger portfolio may mean less time spent on each property, so be sure to ask how much time will be devoted to your property specifically.

4. What are the reputation/credentials/experience of the property manager?

There’s no substitute for experience when it comes to property management. Don’t forget to ask your property manager about their reputation, credentials, and experience. Ask to speak to current clients and check Google reviews to get an idea of how well-regarded they are. You should also find out if they own rentals themselves and what support they have. Being a member of an industry body such as the Residential Property Managers Associaton (RPMA) can be a good sign, as it means the property manager has passed a criminal check and adheres to a code of ethics.

5. What is the staff turnover rate/do they have skin in the game?

To ensure a strong and lasting relationship with a property manager, it's important to select someone who will stick around for the long term rather than having a fresh face every six months. Unfortunately, the turnover rate of property managers in New Zealand is approximately nine months, which can lead to loss of continuity and frustration for tenants.

When considering property management companies, it's essential to ask about their staff turnover rate and how long their property managers typically stay with the company. Additionally, finding out whether the managers have a financial stake in the property management business (i.e., "skin in the game") can help ensure a high-quality service.

6. What is the total cost?

To accurately compare property managers, it's important to consider the total cost of managing a property, rather than just the management rate. Property managers often charge for additional services, such as maintenance fees, inspection fees, and lease extension fees.

Ask for a breakdown of all costs and create a table to compare them to other property managers, ensuring you get the best value for your money. To ensure an apples-to-apples comparison, assume that tenancy changes occur every 1.5 years to account for the property manager's costs for re-tenanting.

The bottom line…
Doing adequate research and asking the right questions is essential when choosing a property manager.

By asking about on-time rental payment percentages, occupancy rates, portfolio size, reputation, staff turnover rates, and total cost, you can ensure that your investment is in good hands.

Remember, a good property manager can make all the difference when it comes to maximising your rental income and minimising your stress as a landlord.

(Source: https://www.propertyscouts.co.nz/about/news/the-6-essential-questions-no-one-ever-as)

Comments

On Tuesday, May 23rd 2023 11:01 pm Gregory Young said:

Rent guarantees are just an advertising gimmick by some companies. All landlords can take insurance to cover this. No company can offer you a lower vacancy rate as that is entirely dependent on the market at the time of listing. Don't be fooled by big brand names or companies offering rent guarantees as they usually have additional hidden charges. Google reviews are a mild indicator, at best, as the system is totally flawed and many competitors and trolls add fake reviews. Best is to talk directly to a real client to see how happy they are with the service. Best rates, no hidden costs, best service in Hamilton and Tauranga- call Gregory at At Home Property Management.

On Monday, May 29th 2023 9:25 am Oparatai369@gmail.com said:

Yes this is good and Gregory's comment is spot on. A very good question ask is 'do you own rental property?'. If the answer is 'no' then move on. If the answer is 'yes' then you should ask about their experience. Without skin in the game a property manager cannot know their job well enough. Ian

On Monday, May 29th 2023 12:08 pm Ianacek said:

Vacancy rate is NOT "entirely dependent on the market" . A good manager starts preparing for reletting the moment they receive written notice from the outgoing tenant. From their inspections , they will have a good idea of what will be necessary to make the rental "rent ready" , so they will line up contractors for the tenant departure . They will be drafting a budget for the owner . They will be giving the outgoing tenant a reminder of expectations and a date and time for return of keys and signoff of the bond . If little work is needed and the outgoing tenant wants to leave within the 4 weeks notice , and the market is strong , the outgoing tenant may agree to co operate with Open Homes if there is a good chance of a new tenant moving in immediately . In any case , the Good property manager will have a streamlined marketing & onboarding plans ready to "hit the ground running" and minimise vacancy days whatever the market . This has been my successful policy for many years . However , when I've had to have properties in another city "managed" , the "manager" has not even thought about these things until the day before tenant departure , so days and weeks are lost. It was as though he was relearning the art of property management every time there was a vacancy.

On Tuesday, July 25th 2023 11:01 pm Gregory Young said:

Lanacek, all things being equal the market is the true decider - true fact. And all things should be equal as all property managers should be working in the best interests of their clients at all times. While a good property manger can indeed know the state of the property from regular inspections; what if their last inspection was held 3 months before the departure date of the tenants. They would have no idea what state they would be finding the property in at the first viewing. Giving the outgoing tenant an expectation reminder is standard practice- don't all property mangers do that? I'm not sure when last you worked with contractors but because the building industry is still so full on at the moment and there are still some Covid supply chain issues for certain parts and materials, it isn't always possible to have contractors lined up to tackle things before the new tenants moves in. A great property manger will be able to navigate through that and make the necessary arrangements with contractors, outgoing and ingoing tenants to ensure the job gets done. Tenants have a legal obligation to allow viewings to take place. A great property manager will have built a rapport with the tenants and so setting up viewings will be no issue at all. Many companies work in multiple cities now days. As long as you have good policies and procedures in place and good reliable staff it should be no issue at all. We certainly have no issues in these regards and are able to offer our clients fantastic service at unbeatable rates. So go on save yourself a headache and lots of dollars and give us call to experience the best property management service at a fraction of the traditional rates. Gregory Young At Home Property Management.

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Co-operative Bank - First Home Special 6.79
Heartland Bank - Online 6.89
Wairarapa Building Society 6.95
Co-operative Bank - Owner Occ 6.99
Kiwibank Special 6.99
Unity 6.99
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ICBC 7.05
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Unity First Home Buyer special 6.45
Heartland Bank - Online 6.55
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China Construction Bank 6.75
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Westpac Special 6.39
ICBC 6.39
AIA - Go Home Loans 6.39
China Construction Bank 6.40
Kiwibank Special 6.55
BNZ - Classic 6.55
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TSB Special 6.59
SBS Bank 6.79
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ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
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