Real-Estate Expert’s Guide For Finding A Good Property Manager

Buying real estate is one of the most significant investments you can make, so it comes as no surprise that you must make a good choice for your property manager. You’ll want someone who’s both competent at managing your rental property and has your best interest in mind. Making a poor choice could lose you valuable tenants and make property investing much harder than it needs to be.

No matter if you’re a novice property owner or if you’ve already got six properties under your belt, you can still conduct thorough research and screening to find the best options available.

Our property expert Wayde Hildrew has outlined four steps for how to find a suitable property manager. We’ve also included a list of questions you should ask a property manager at an interview, all the while setting you up with essential tips along the way. By the time you finish this article, you’ll be well-equipped to find and evaluate your options and choose the right property manager with confidence.

Step 1: Establish your selection criteria

When thinking about finding a good property manager, you should first think of yourself as an employer. This makes sense since you are, after all, hiring someone to do work for you at a price!

This means that you’ll need some selection criteria. It’s about having an idea of what you’re looking for before you start searching for candidates.

Wayde explains that there are three key factors that you should take into evaluation:

  • Price
  • Service level
  • Ability to manage risks and get results

A large number of property managers will offer trade-offs between these factors. For example, a property manager might provide an all-encompassing service with cutting edge technology, but it’s at a price premium. Or, they might be a low-cost provider but have standardised their activities across large areas, which gives them no location-specific expertise or experience to minimise risks.

However, Wayde further shares that investment property owners who do their research don’t necessarily have to trade off one benefit for another.

“There are property managers who can provide excellent service and get strong results at a reasonable price point. That is what I recommend real-estate investors try to look for as much as possible.”

Wayde Hildrew, Different Property Expert

Property managers who routinely innovate on their processes and their service model have found ways to give property investors all the benefits while staying low-cost.

Once you have identified what you’re after, you can start looking for potential candidates.

Step 2: Find a pool of property managers.

How do you find a suitable property manager? Word of mouth is always a great place to start. On top of that, there’s a world of resources online which can help you vet potential candidates and come up with a list of prospective property management companies. 

Wayde recommends that you talk to other investors for insights on their experiences and property manager recommendations.

“People who have been through the process before will have had positive and negative experiences and are good to speak to.”

He further adds that you can look at what is marketed online to find suitable property managers. Put yourself in the shoes of a potential tenant, and browse rental listings online in your relevant area to see which property managers are doing a good marketing job to find some likely candidates.

Whenever you come across a candidate, you should Google them and jump on their website to see how they work. Check their fee structure and the service they provide, read reviews and decide if they’re a good fit within your criteria.

Once you have a list of about 2-4 firm property managers, you should reach out and arrange an interview with each candidate. This is when the first test happens!

“If you don’t receive a response within 24 hours after reaching out, then it’s probably going to get even worse once you’re actually in business! If that’s the case, then you should probably cross that property manager off your list.”

Wayde Hildrew, Different Property Expert

Step 3: Interview property manager candidates

Now it’s time to get down to business and have a chat with the candidates directly. So, how do you know what to ask a property manager in an interview? And how do you find the best property manager from the 

discussion?

It would help if you prepared vigorous and challenging questions to ask the property manager that tests their knowledge of the market, proactiveness, and ability to set you up for success. We’ve come up with a list of 8 questions to guide you through this interview process.

8 Questions You Should Ask When Interviewing a Property Manager

1: Can you outline your fee structure?

What does a real estate property manager do for the ongoing property management fee, and what services will cost extra? 

You want to get a full breakdown of property management fees to make sure that you know from the get-go exactly what you’ll be paying – if your management fee covers all the possible duties and responsibilities of your property manager, or if you’ll be charged extra for services like maintenance and inspections.

“A lot of property investors only look at the management fee, but you also need to ask about the entire cost structure. Then the property manager has to outline marketing fees, annual fees, and so on.”

Wayde Hildrew, Different Property Expert

2: How many properties do you currently manage?

The property manager should tell you about the size of their team and how many rental properties each agent or team manages. It’s not uncommon for property managers to be overworked from managing too many investment properties, especially if they’re required to perform repetitive tasks for every property under management manually. That leads to poor service for you.

The best property management agencies will tell you what it is they’re doing that makes them successful no matter what number of properties they’re managing at the time. Those who have been able to achieve this, for example, would have employed technology to not only make communication more accessible but also automate repetitive tasks that otherwise would need to be done manually.

3: How many years of industry experience do you have?

A property manager who has rich experience, particularly in your local market, is going to excel at making the right improvements to your investment property and mitigating risks.

Did you know that the average property manager is in their early twenties, and the average time someone stays in property management is only about six to nine months?

“If that’s what the agency is offering, then that’s a red flag that property management is not really what the agency is prioritising.”

4: How do you screen and select tenants?

Having a strategy for finding high-quality tenants who will stay long-term is crucial to successful property management. It would help if you were looking for a property manager who has a rigorous tenant screening process and a powerful advertising strategy to maximise the prospective tenant pool. 

Don’t forget to look out for signs that the property manager will endeavour to keep the tenants happy even after your property is leased to them.

“Many of the issues that happen with tenants are because of a lack of communication on the agent’s part. It would help if you got an agent who works for the investor and understands that the tenant is key. This focus should be communicated to you.”

Wayde Hildrew, Different Property Expert

5: What could your agency be doing better?

You want to see that the property manager is aware of their flaws and investing in their processes to provide better service.

“If they’re not willing to tell you something that they can improve on, then that tells me they’re not a property manager who is focused on always improving their service level. They should be able to answer this.”

Suppose the property management agency has good technology, staff and does marketing right. In that case, that’s typically a good sign that they’re investing in their processes and that they take property management seriously.

6: Do you have any recommendations on how I can reduce my risk or increase my return?

Even if it’s your first meeting, the best property management experts would be able to suggest ways of increasing returns and reducing risks, such as making improvements to your property and locking in longer leases. They should be able to let you know what those ideas are from day one.

“I would always ask this question. You want a property manager who is looking at your real estate in the bigger picture – one who tries to figure out what they can do to solve future problems from day one.”

Wayde Hildrew, Different Property Expert

7. Are you the one who will be managing my property?

It’s not uncommon to find that the person you’re interviewing isn’t necessarily the one who will be responsible for the day-to-day management of your property. Unless the agency you’re interviewing has a team-based approach that has proven to be successful, you might feel more inclined to understand the expertise of the specific property manager who will be looking after your property. 

8: Do you have any questions for me?

You want to see that the property manager is trying to understand what you precisely expect of them. They should ask you about your preferred methods of communication, your peeves, and so on so that they can work within those limits.

To make the decision-making process easier for you, we’ve created a free interview questionnaire form that you can use when interviewing prospective property managers. 

When you’ve interviewed all of the top choices on your list, it’s time for you to make a choice and sign a residential property manager contract!

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Step 4: Check if you’ve made the right choice.

So you made your choice, and you signed a contract with a property manager. Is that it? Not quite!

Wayde recommends that you follow up on your property manager and do some routine checks and controls for the first couple of months.

Are they communicating with you? Letting you know what’s happening to your property? Are they providing documentation to you as soon as it’s completed? Have they conducted their first routine inspection, and how did it go?

“The first three months is where you should be gauging whether your property manager choice is a good one. That’s where you’re going to know the real quality of the property manager.”

Wayde Hildrew, Different Property Expert

If you have to chase them up for information, or you don’t have access to what you need, then that’s a sign that they’re either managing too many properties or that they always communicate scarcely.

“That’s not the way to do it.”

7 Things to Look Out For in a Property Management Contract

 

If this is your first time getting involved with a property manager, you might feel anxious about signing a residential property management contract. It’s a big commitment to make, and you don’t want there to be any hidden catches that could come back to bite you in the future!

It’s important to carefully examine the property management agreement to understand precisely what you’re getting into. Still, it can be hard to know just what to look for in a property management contract.

With the help of our property expert Wayde Hildrew, we’ll tell you the basics of what is included in a property management agreement and why you need one. You’ll also learn what to look out for in different parts of your contract. That way, you can sign an agreement with confidence, knowing all the intricacies of your relationship with your property manager.

The property management contract and why you need one

Before we dive into it, it’s helpful to note various names for property management contracts. You’ll often hear people referring to them as: 

  • property management agreements
  • real estate management agreements
  • management agency agreements

Although this might be confusing at first, they all refer to the same thing. 

So, what exactly is the definition of a property management agreement?

To put it simply, the property management agreement is a legal agreement between a property manager and owner which outlines the terms and conditions in the relationship. You can think of it as your property manager’s employment agreement. It’s important to note that you’re required to sign one by law if you take on a property manager.

Part of the property management contract will be standard with all agencies as defined by the state-level government. The other part will be written by your property manager and formalises areas like price and fees, conditions for termination, property inspection, and so on.

“The big picture is that the contract allows the property manager to start acting in your best interest.”

Wayde Hildrew, Different Property Expert

When you sign the real estate management agreement, you agree to all the terms and conditions presented. This gives you and the property manager legal protection if something happened and gives the manager the green light to become the leasing and managing authority of your property!

Seven things you should do when reviewing the property management contract

1: Go through the fee structure in detail

The most crucial part of your agreement to understand is what you will be paying.

If you have been advertised a price that seems too good to be true, then you might just have gotten a spectacular offer – or you might be unaware of some additional property management fees that are likely to pop up down the line. 

On top of the usual percentage-based fee, many property managers also charge additional fees for services like tribunal preparation, administration, and lease renewals. You should also find out how many inspections the property manager will conduct each year and whether or not they’ll charge you any extra for this. Ideally, you’ll want to find a property manager with a transparent, all-inclusive management fee

Did you know that 42% of 3000 investment property owners we spoke to quoted “cost/value for money” of property management as their most significant pain point?

That’s why you should vigorously examine the fee structure in your contract. Failing to do so has given many property investors unpleasant surprises when they’re suddenly billed for items and services they thought were included.

The best property managers keep their pricing simple, fair, and transparent.

It would help if you also clarified which fees and liabilities apply to either you or the tenant. Wayde explains why:

“What can happen with the fee structure is that they put fees in that are relevant to the tenancy rather than the owner. For example, charging the tenant something if they break the lease. That can make it difficult for the owners to figure out which fees they’re liable for and which ones the tenant is liable for.”

Make sure that everything in the contract applies to your agreement. Also, if there’s anything in the section that is handwritten or manually added in by the property manager, you should ask about this straight away.

“If your agent has to add anything manually or tells you not to worry about something in a contract, saying ‘it doesn’t apply, then that’s something you should be querying. If it ‘doesn’t apply or is handwritten, then it is easy to have it removed, so I would get the contract redrafted.”

Wayde Hildrew, Different Property Expert

2: Check the termination clause

If things don’t go to plan and you decide to switch property managers or terminate the agreement early, you need to be aware of their implications.

You want to sign a contract that gives you the freedom and authority to terminate the agreement without incurring heavy penalties.

Here are a few questions you should ask yourself while checking the termination clause:

Are there any fees for terminating the agreement early?

The cost of terminating some contracts might outweigh any benefits you might get from changing! We don’t charge our property investors anything for cancelling their agreement since we don’t lock them in. Still, some property managers charge a few hundred dollars, and others might even charge you the sum of the fees they would have collected for the rest of the duration of your agreement. We suggest steering far away from the latter.

Do I need a reason to terminate?

You want a property manager who doesn’t require a reason to terminate, as that gives you more flexibility and ease of mind.

We also recommend having a termination clause that allows you to terminate the contract without penalty if the property manager fails to secure a tenant within a specific period.

3: Understand how the property manager will market your property

You want to ensure that you’re entering an agreement with a property manager who will set you up for success and understands how your investment property should be marketed.

Property managers will typically market your investment property on their website, lease signboards, and newsletters to potential tenants.

Try to put yourself in the shoes of your investment property’s target demographic and decide whether the marketing is sensible.

4: Check the property manager’s authority to spend

The property manager will typically require you to maintain a fund or account that they can use to manage your properties. You’ll need to make sure the fund is always above a certain amount, which your property manager will specify.

The authority to spend is how much of this fund the property manager can pay on your behalf without seeking approval. This is important because you don’t want to be bothered by minor details and fixes, but you should know about significant spending necessities.

5: Take lots of time, and ask clarifying questions!

The best way to properly understand the rental property management contract is to take a generous amount of time to read it in a quiet environment.

“Most agreements are between 15-25 pages, so it can be difficult to read through in detail, especially since things are written as per legislation, which can make it hard to understand! You need to take plenty of time to read it through.”

Wayde Hildrew, Different Property Expert

Along the way, you should ask the property manager any questions you have to clarify points in the contract. You will find that most property managers aren’t trying to trip you up and are happy to help!

6: Luckily, you don’t have to read everything in-depth

Since large parts of the contract will be standard as per government legislation, you don’t need to spend too much time on those parts. Verify that they’re properly included, and focus on the factors that your agency writes.

“The first six pages in most property management contracts are the ones that the agency edits. They’re the most important ones to read through, as they include the fee structure, what the property manager will be doing on a service level, and so forth. That’s where I would spend most of the time reading.”

Wayde Hildrew, Different Property Expert

7: Check for red flags!

The details provided in the rental property management contract typically include their license number with the expiry date. You can verify the license on government websites.

You should ensure that the data is current and not past.

On occasion, the details of the agency in the contract won’t match the company you have sat down to meet with. Wayde explains why below.

“You might be speaking to one business and realise that that’s who they’re trading as, but that they’re part of a larger corporation that has several branches. This is important as the agency you’re speaking with might not be an independent one-stop-shop, making it less simple for you. You should put the details in the contract into a Google Search and verify that the company in your contract is the same one you have been speaking to previously.”

Wayde Hildrew, Different Property Expert

The final point is that you should ensure you receive a fully signed copy of the residential property management contract within 30 days.

“This is something I hear a lot of agents fail to do. Then, it’s not until the property investor changes agents or gets charged fees they weren’t aware of, and they’re asking for a copy of the property management agreement, that they get one. If the agent can’t provide a copy of a property management contract you’ve already signed, then you’ve got to wonder why that is!”

Signing up with a new property manager

Reading through and examining a residential property management contract might seem like a tedious task, but the most tedious tasks are sometimes the most important ones. Your contract is no exception!

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