Having worked in the property management industry for a number of years, I have heard every fear imaginable from my clients. Obviously as a property investor and a landlord, you want the best for your property and the highest possible returns, with a minimum of fuss and headaches.
Luckily, this is where having the help of an experienced and reputable property manager will help. I have documented some of the most common fears shared with me over the years by my clients and the responses I often provide to them. Hopefully this will also help you to overcome any fears or underlying concerns you might have niggling away at you so your investment process can be as hassle-free as possible.
1. I will have to pay a fortune in maintenance and upkeep if I own an investment property.
This is not necessarily the case but some houses are better suited as an investment property than others. A run-down, ramshackle old home in need of TLC is not the best choice for an investment property as it will only create headaches for everyone. New properties are recommended as you can claim full depreciation plus the workmanship and appliances are usually still under warranty. I also recommend any property you choose is made of durable, low maintenance materials plus all fixtures, fittings, window and floor treatments are hardwearing and easy to clean.
2. I am paying too much in property management fees.
Many property investors often make this mistake and the devil is in the detail. Some property managers offer a low management fee but sting you with costs for additional extras. I encourage you to source a detailed fee schedule from a minimum of four property management companies and draw up a spreadsheet. Calculate all the fees you are likely to incur over the first twelve months and see how the four companies compare. You might be surprised to find the company which appears to be the most competitive might not be. It is also important not to be swayed by the cheapest rate. Talk to each company and find out what they offer and if they go the extra mile. The difference between a good property manager and a bad one can potentially cost you thousands of dollars each year so consider your options carefully.
3. I won’t be able to find a good tenant.
There are so many trustworthy tenants out there who will love your home as if it is their own – you just need the right property manager to find them. Ask your property manager what processes and reference checks they use to qualify prospective tenants and if you want to have the final say in your tenant selection process, don’t be afraid to voice this to your property manager. You need to trust your property manager to do their job properly but if you are also involved in approving the chosen tenant, it is harder for you to blame someone else if things don’t turn out quite as you had hoped!
4. I am not getting enough rent for my property.
Your property manager should be able to provide you with a clear justification and reasoning for your asking rent, plus evidence of other rental properties in the local area to support the argument. It doesn’t hurt to jump online every couple of months to see how many rental properties are available in your local area and how much they are asking for them. It’s not just your property manager’s responsibility to know this information, you should keep your finger on the pulse too as it’s your investment property and ultimately your responsibility.
5. If I put the rent up, my tenants will leave.
If you are being unreasonable in your expectations, there is a good chance they might leave. But if you are asking for a fair rent that is in line with industry averages for your local area, your tenant should have no reason to argue or look elsewhere.
6. My tenants won’t look after my property.
Your tenant has a legal obligation to look after your property but unfortunately sometimes malicious or accidental damage can occur. A good landlord’s insurance policy will help to put your mind at ease and will cover you for repairs and any loss of rent while the damage is being fixed. It’s a worthwhile tax deduction and definitely worth considering.
7. I should have rented it furnished.
In most instances (especially if you are looking outside of inner-city locations or remote locations) the highest proportion of rental demand is for unfurnished or partially furnished properties. This is because most people have their own belongings and furniture which they want to bring with them. I recommend you research the area where your property is situated plus the local demographics and make a decision based on who you are targeting to rent your property. Are you chasing executives who are flying into town for business or relocating from overseas, or do you want to attract a young family? Make the decision to rent furnished or unfurnished based on what will best suit your target tenant.
8. The tenants won’t look after the garden (or pool).
Again, your tenant has a legal obligation to do so but you may want to consider appointing a gardener or pool technician to regularly maintain the garden or pool. This will be a drawcard for a potential tenant (as they don’t have to do it themselves) plus it will guarantee your property is looked after. Often tenants are willing to pay extra if these services are provided.
9. If I ever want to sell the property, how can I rely on the tenants to present the property at its best?
If roles were reversed and you were renting a property which you loved and you found out it was going to be advertised for sale so you had to keep it looking presentable at all times, plus allow people into the property for home opens, only to most likely be asked to leave when the property sells and your lease runs out – you wouldn’t be too happy, would you? Your tenant does have an obligation to allow the sales process to proceed but many landlords often offer a small concession in rent during the sales process as an incentive for the tenants and in recognition of the inconvenience caused. It might be a small loss of income for you in the short term, but may help you achieve a quicker and easier sale – or even achieve a higher sales price.
10. I love my current tenants, I never want them to leave.
This is every landlord’s dream – to find a great tenant who loves your property as if it is their own. In this instance you might want to consider a small concession on the rental rate or not to keep pushing the rent up to encourage them to stay. You know the saying ‘happy wife, happy life’ – the same applies in your circumstance too. A happy tenant is more likely to result in a happy landlord too so if your tenants are good ones – make sure you look after them!
11. I am not sure my property manager is looking after my investment.
You will quickly be able to judge this for yourself. Keep a close eye on the process.
- How often do you receive communications?
- Is it proactive or only when there is a problem?
- Is your rental income received in a timely manner each month?
- Are maintenance items promptly attended to?
- Does your property manager respond to you promptly?
- Does your property manager make proactive recommendations on occasion as to how your investment could work better for you?
Make sure your expectations of your property manager are fair and realistic but at the same time, don’t settle for sub-standard service. Your property manager plays an integral role in ensuring the optimal performance of your investment so if you are not happy with the service you are receiving, don’t be afraid to consider your options.
I hope my suggestions prove useful and if you are new to property investing or have a property management question you would like answered, don’t hesitate to contact me at Investor Assist.