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An estimated 80% of investment property owners in Australia employ the services of a dedicated property manager to carry out tasks on their behalf, such as collecting rent and organising maintenance work. The kinds of services provided should be specified in a written agreement.
In Australia, properties can be managed either through a real estate agent and property manager, or it can be done independently by the investment property owner themselves.
The focus of this guide is on residential property management. Other types include commercial and industrial property management.
What services do property managers provide?
A property manager can provide the following services:
- Determining an accurate market rate for the rent charged for your property;
- Advertising to renters and screening prospective tenants, including background checks on timely rental payments;
- Finding renters and evicting them if necessary;
- Preparing the property to be rented;
- Carrying out regular inspections;
- Ensuring compliance with local and state property laws;
- Chasing liabilities and arrears; and
- Ensuring the property is well maintained by organising repairs.
Do You Need a Property Manager?
Managing a property is time consuming, and if you don’t live close to your investment property, it is almost certainly going to be preferable to use a property manager. Those who own more than one investment property are also well placed to use one, as are those who have little interest in the work it involves.
Ultimately, it’s a question of weighing up whether the time saved by outsourcing the property management tasks will actually save you money and free up time for more lucrative or satisfying work. It will almost certainly spare you potential headaches, as conflicts could arise down the track with tenants or tradespeople.
Make sure that you understand all the services that a property manager can provide—it should be much more than simply collecting rent.
Pros of Using a Property Manager
Many property owners prefer not to have a direct relationship with their tenants, and tenants may feel similarly. For example, tenants may feel that their privacy is compromised during routine inspections if the owner is carrying them out, and may even avoid properties without a property manager.
By contrast, a third party property manager can oversee any issues that arise with neutral professionalism. The property owner may have a strong emotional connection to their property—particularly if it was previously their home.
Using a property manager can be an enormous time saving, and the fees are tax deductible. A local property manager will also have a good understanding of any issues affecting the local area (such as major development projects on the horizon) and will have a wide network of reliable tradespeople who can carry out repairs.
Cons of Using a Property Manager
A property manager is an expense—which is not a bad thing provided the service is genuinely useful. A property manager will be poor value for money if they lack initiative or communication skills. If they fail to act as an intermediary between the tenant and property owner, repairs could be delayed and reliable and responsible tenants may feel frustrated and leave.
The other possible disadvantage is that the owner lacks direct oversight of their property. If the property owner fails to carry out their responsibilities diligently, the property could fall into disrepair that could be more costly to fix.
How to Choose a Property Manager
If you bought an established property rather than a new one, you can simply ask the previous owner who their property manager was, and if they recommend them. There is no obligation to continue using them, however.
Seek recommendations from people in the area and read online reviews. Property management professionals require great interpersonal skills, so speak to potential property managers to see if they are willing to sit down and explain all the services they provide, and their approach to resolving difficult issues such as a tenant making excessive noise.
A good property manager will be clear about what is provided in exchange for their fees. Again, it should be more than simply collecting rent each month.
How Much Are Property Management Fees?
Real estate agencies charge different amounts for property management services, but as a general rule expect to pay a commission ranging from 7% to 10% of the weekly rent plus GST. The area can make it cheaper or more costly, with reports of 4% on the lower end and 15% in others.
What this covers needs to be set out in writing—some agencies represent better value than others, and some charge everything beyond rent collection as an ‘extra.’
There are an increasing number of property management apps available that can streamline communications and save on the need for emails and phone calls—this should bring down the fees charged by real estate agents. Apps include Managed App, Property Me and Landlordy.
Frequently Asked Questions (FAQs)
How do I find a property manager?
Like just about everything nowadays, a property manager can be found online—with the added benefit of reviews. Real estate agencies also provide property management services.
Recommendations from friends, family and professional networks can be invaluable. Speak to a couple of potential property managers before making a decision.
What is a property management agreement?
A property management agreement is a contract between the person who owns the property and the professional or company hired to manage the property. It will set out the specific tasks the property manager is responsible for, the fees charged and other typical contractual items, such as ending the agreement.
Should I use property management or not?
The majority of investment property owners use a property manager because it saves time. A property manager has a solid network of reliable tradespeople and are well versed in market rates for repairs and rental prices.
Tenants will likely prefer to deal with a real estate agent rather than the owner, and this will make the property easier to lease.
Are property managers regulated in Australia?
Residential property managers are regulated by state and territory laws. Each state has an authority responsible for licensing real estate agents, who in turn provide property management services. In New South Wales, for example, it is NSW Fair Trading.
