What is property management?

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When you purchase an investment property, you have more to think about than the price of the property. After you’ve found the right property, you have to manage it. What is property management? There are two important aspects to property management: finding the right tenants and maintaining your investment property.
 
 

Finding the Right Tenants

 
Whether it’s a house or an apartment, you don’t want to rent to just anyone. You need to know something about their background. Are they employed? Do they pay their rent on time? Will they take care of the property as if it is their own?
 
As the owner of the property, you have the right to reject an applicant you feel they will be a problem. Your initial interview will help, but you may need to dig deeper. You want to be confident you can rely on them to pay their rent on time and take care of your property.
 
Interviews can be uncomfortable and you may not know how to do a background check. Your property might also be at a distance from your home and interviewing tenants may be difficult or impossible. In either case, hiring a property management service can be better than taking a DIY approach. Many real estate agents provide this service. As a third party, they can ask questions you may not want to ask. They also know how to do background checks on prospective tenants.
 
 

Maintaining an Investment Property

 
An investment property needs maintenance just as your home does. Routine maintenance might include hiring a garden maintenance service to mow lawns and tidy up gardens. You will also need to have a handyman on call for maintenance issues in and around the house.
 
You will also need to know a reliable plumber, electrician and perhaps a plumber/gasfitter. When something goes wrong, you will need to be sure they can arrive quickly and fix any plumbing, electrical or gas problems on your property.
 
When tenants move out, you may need to employ other trades to make the property presentable. You will probably need to hire a house cleaning service and will occasionally need to hire a painter, carpet cleaner or pest service.
 
 

Options in Property Management

Managing your property yourself

 
DIY property management is fast becoming a popular route for Australian landlords. By managing your property yourself you forego paying real estate agent fees and instead maintain direct communication with your tenants.
 
Being a DIY landlord involves the possibility of dealing with difficult situations, but with the right preparation, tools, approach and attitude, you should be able to handle the situation professionally.
 
One downside is that this could become quite cumbersome if you have a large property portfolio or investment properties far from where you live. Additionally, if you find it hard to look at the situation from a business perspective, you might find that your emotions and biases could get in the way of dealing with issues fairly.
 
 

Engaging a property manager

 
For a percentage of your weekly rent, usually sitting between 5 and 9 per cent, a property manager is expected to look after your property and manage the relationship with tenants. Property management via a real estate agency is a convenient option.
 
A good property manager is expected to:

• Look after the marketing and advertising involved in finding tenants
• Screen tenants
• Make sure rent is paid on time
• Conduct rental inspections
• Manage any legal issues
• Organise maintenance and repairs

 
Of course, the above is an ideal scenario and depends on whether you have selected an agency who is competent, honest and a good fit for your property.