What is Property Management?
Besser and Co are quickly becoming one of the most respected real estate companies in Melbourne. Making a name in real estate since 2000 with Besser and Co opening their doors in 2009, Dion Besser and his team strive for excellence and a need to do real estate better, hence their motto ‘Boutique is Besser, Enjoy Better.’ This guide is designed to help investors understand the intricacies of Property Management so that they can make an informed decision on their property management needs, understand the different nuances in property management in Australia and how at Besser and Co, we deliver a professional and measured service through our dedicated Property Management team.
Property Management facilitates the act in which properties are managed to provide income for their owner. They can be self-managed by the owner, or managed by another party, which in most cases, is a licensed real estate agency. The licensed real estate agent will have a Property Management Department, sometimes one person, sometimes a team of Property Managers and affiliated employees, including Leasing Managers, Business Development Managers and Trust Accountants to provide a holistic property management service.
Property Management does not only cover residential property. It also covers commercial and industrial property, short-term leasing and holiday letting, caravan parks, asset management and storage rental. But we will get more into that in Chapter Three.
Around 80 per cent of all investment properties in Australia are managed by a professional Property Management service. Of those who don’t use a professional Property Management service, they believe that a Property Manager’s fee is an expense they can do without, just to be ‘just collecting the rent.’ A true Property Management service will do more than ‘collect the rent.’ Property Management also encompasses finding a tenant, all maintenance, all authorised inspections, a thorough understanding of the Residential Tenancies Act, the ability to represent you if there is a dispute and a dedicated trust accounting system so that when it comes to tax time, you can report your profits and losses for your property with consistency and authenticity.
The Victorian Residential Tenancies Act (2021) has new regulations that set a new standard in acceptable housing for all. The detail is intricate, and the minimum standard requirements are designed to prevent inhabitable houses, usually destined for redevelopment, or apartments that have been neglected over the years that cause health problems for the occupant, to be used as rentable properties. The new act expands the rights and responsibilities for both renters (tenants) and rental providers (landlords) ensuring both parties are more accountable within their role in regards to safety within the property. The implication of the Residential Tenancies Act (2021) adds a great deal of complexity to the management of property in Victoria, which in most cases, is above the patience and understanding of most rental providers, so the ‘fee’ is a small price to pay for a qualified Property Manager’s expertise.
Therefore, a Property Manager can be enlisted to manage any of these properties.
The essence of a Property Manager is to facilitate communication between the renter and rental provider. A professional Property Manager will listen and act upon both the renter and rental provider’s needs. Understand the importance of this… ‘listen and act.’ Most Property Managers will put you in a box – one box for rental provider, one box for renter. A ‘rental provider’ wants to maximise their rental investment and will do the minimum spend on maintaining their property. The ‘renter’ will be annoyingly asking for the smallest bit of maintenance to be completed and call 200 times because it hasn’t been done. When in reality, every rental provider and every renter will have different needs and must be assessed on their respective individual requirements. It is rare for a Property Manager to ask their rental provider “Why do you have this property you would like us to manage?” or “What is your intended outcome for this property you would like us to manage?” Is the plan to keep it neat and affordable for the moment, with the plan to renovate it in five years time to accommodate an elderly parent, an adult child or sell it? Have you bought the property in a Self-Managed Superannuation Fund? Will your rental provider personally live in the property when they return from a stint overseas or interstate, so they want any maintenance to be of a high quality? Is it just another addition to your property portfolio so the aim to keep any costs down while still maintaining a happy tenant? Your Property Manager needs to ask you those questions and accommodate your individual priorities as part of the management your property.
The key is to make your decision on your Property Manager based on their dedication and passion for their work, their experience and their understanding of your needs. Getting this part right in the first instance, will make a more pleasurable investment experience.
The importance of professional Property Management is more crucial now than ever. There are so many moving components when investing in property. We need to know the changing tax laws, the changing Residential Tenancy’s Act laws, have a working relationship with reputable trades who understand the importance of acting quickly for maintenance, and we also needs to understand the complexities of Owner’s Corporations, Local Government Authorities and even fire management. We can’t all be experts in everything, and for the sake of saving a dollar, the peace of mind of having an expert who deals with the on-going demands of Property Management every day is worth every cent.
What are the benefits of having a professional Property Management behind you?
The Australian Tax Office have very strict rules on:
They also have guidelines on:
And due to natural disasters and a pandemic, there are another set of rules that could affect your tax obligations.
As Property Managers are not tax accountants, they can’t advise you on the best way to minimise tax. However, the benefit of appointing a professional Property Manager means that you will receive a statement stating all tax obligation transactions that pertain to your individual property or properties, that you can show your tax accountant so that he or she can ensure you get the best benefits from your property investment. The statement will include things like rent received, property management fees, owner’s corporation fees, council rates, maintenance costs, letting fees, marketing fees, etc. It keeps it neat and simple, with only your bank statements to show mortgage repayments and interest obligations, and any other expenses that may have accrued outside of your ‘Property Management’ management. It really does make hiring a Property Manager worth its weight in gold.
The Residential Tenancy’s Act (2021) introduced 132 new laws to make renting a property safer for renters introducing a minimum standard a property should maintain. While it is easy enough to access to the Act and read it thoroughly, most rental providers miss the smaller detail, including the regular compliance checks that need to be documented and conducted by a professional. Employing a Property Manager to manage your property ensures that all inspections – if it’s a 6-monthly rental inspection or if it’s doing the 2-yearly gas check, are performed correctly and in a timely manner. Property Managers are trained in handling all types of situations that may come up at these inspections. Taking the emotional connection out of the equation, Property Managers can work through any confrontations or concerning scenarios with professionalism and poise, as they deal with similar situations every day. Appointing a professional in Property Management benefits the owner both mentally and physically.
Professional Property Managers have the experience to check between the lines when reviewing rental applicants. They know what to look for in terms of the renter’s ability to pay, the renter’s ability to look after the property and the renter’s ability to report concerns. The more credible Property Manager will know that a newly-appointed high paying showy person with the expensive Mercedes isn’t as good as a someone with a low-mid paying job who has been for the same company for 10 years. Generally, the less money people have, the more they look after what they do have, including your investment property. The Mercedes owner will probably prioritise their car repayments over their rent. Knowing what is important to your renter will determine their worth.
The benefit of having a high quality renter means less vacancies. A high quality renter will make your property their home within the law of the Residential Tenancy’s Act. They will look after your garden, clean your oven, scrub your bathroom and have a sense of personal pride within their home. If you value you a high quality renter, you will maintain the property to keep your renter happy. If you don’t, the more likely you will have vacancy problems. The benefits of a Property Manager are that through their 6-month inspections, your Property Manager has the eye to check if maintenance is required, even though it hasn’t been reported. That’s right. Most renters don’t report maintenance issues because they are scared they will be kicked out, inconvenienced or the rent will go up. However, the benefit of your Property Manager is that they will build a relationship with your renter to ensure they know it is OK to communicate any issues, big or small, to ensure that 1) your renter wants to stay, 2) your property is well maintained.
Part of the investment process is dealing with Owner’s Corporations. You may think ‘I don’t need to deal with Owner’s Corporations because I buy investments on their own title.’ However, your property may adjoin a property with an Owner’s Corporation, and that in itself can cause a problem. If you have never dealt with an Owner’s Corporation, or a Body Corporate as they were once known, then it would be best if you have a Property Manager who works alongside Owner’s Corporations every day.
Put up your hand if you have friends who are tradies? A plumber, an electrician, maybe a handyman? Put up your hand if you are one yourself? Now, how many times have you asked your friend to help you with a maintenance project? And how quickly do they get done? Most people would agree, asking a friend to help you with their project or maintenance issue, outside of their normal work hours, can take weeks, sometimes months. And your poor renter is putting up with your slow, unrealistic ways of getting the maintenance done. Whereas the benefits of having a Property Manager on your side is that they have relationships with several trades who understand the importance of property management services and will act on the urgency of getting your maintenance work complete. Plumbers, electricians, painters, even tilers and gardeners all have a specific niche, and if your friend Tony the plumber is a gas fitting plumber not a general plumber who deals with toilets, then Tony isn’t the right person for the job. There are a series of trades out there who deal specifically with property management servicing and maintenance, so they understand the urgency and work accordingly.
Having a Property Manager manage your investment property is the difference between working ‘in’ your business and working ‘on’ your business. Your Property Manager works ‘in’ your business, so you can work ‘on’ your business of creating more wealth through more property or other ventures. It’s your own personal benefits that make investment rewarding. You have more personal freedom to do the things you love and live where you want, knowing that you don’t need to regular inspections or keep an eye on your renter. You have less stress when it comes to dealing with middle-of-the-night emergencies, chasing rent, evictions, damages, paperwork and some of the time-consuming tasks like the compliance requirements involved when owning a rental property. That’s what your Property Manager does for you. Your health, your time and your wealth are ‘why’ appointing a professional Property Management service is so important.
Now, you have a better understanding of the importance of Property Management, what are the services that are included when appointing a Property Management service. The services can be tailored to your needs, and fees are charged accordingly, so to understand the services better, you need to have an understanding of the fee structure.
There are many fees included in a Property Management service, and they can be broken down into:
Letting fees or leasing fees are charged by most property management companies to get your vacant property leased. The Letting fee includes determining how much per week your rental property should make. This may also include preparing your property so that it is acceptable to let, which may include painting, new flooring, doing all compliance checks and any other maintenance required. Your Property Manager will rigidly screen the prospective renters, checking references and credit scores. This could be between 1-4 week’s rent, depending on your agent. Some agents might also charge you a tenancy database check fee ($10-$12 per candidate) and a charge to do a Property Condition Report. Check to see what is included in your Letting Fees before choosing a Property Manager.
Property Management companies have exclusive deals with the two most prominent internet websites to advertise your property for lease, which makes advertising your property much more affordable than if you were to do it on your own. Your Property Manager should advise you to get professional photography on your investment property, as well as professional copywriting, to target the right tenant demographic for your property. Professional rental copywriting and professional photography is known to attract tenants 10 times faster than having you or your Property Manager walk around with your iPhone or ‘slap something together’ with a few spelling mistakes and no clear direction. A few iPhone photos and ‘slapped together’ copy takes an average 23 days to lease a property in Melbourne, whereas enlisting the professional takes on average 3 days. You’ve made 3 weeks’ worth of rental income by using the professionals, which probably only cost you one week’s rent to engage them. A sound investment. Generally your marketing costs will be around $400-$600.
On average, in Melbourne, Property Managers charge 6 per cent of your weekly rental as their on-going management fee, but can be as low as 5% and as high as 12%. So, if you are getting $400 per week for your property, at 6 per cent, that’s $24.00 a week. $24.00 for the urgent phone calls to the plumber, $24.00 to do the trust accounting to pay you the rent, $24.00 for listening to the demands of your renter on a 20 minute phone call. Yes, it doesn’t happen every week, but it’s peace of mind that you don’t have to do it yourself when it comes about. It’s a very small price to pay for your peace of mind. Some Property Management services will charge an additional $10-$30 to do the routine inspection every six months. Some may argue that this is on-going Property Management, so it’s important to choose a Property Management company that is aligned with your values.
With your on-going management fees, you are paying for:
During or after your renter leaves your property, you could have a VCAT dispute that will be quite stressful. It could be over a burst water pipe that has damaged your renters’ belongings. It could be withheld rent because the toilet was always blocked. Whatever it is, it can’t be expected that your Property Manager will defend you at the Victorian Civil and Administrative Tribunal without any cost. There are application fees from VCAT that are set at $61.50, and your Property Manager may charge you a nominal fee, around $100-$150 to attend your hearing, or an hourly rate. Again, check to see what they offer when you sign up.
If the renter or rental provider live or move to another Australian state and you have a dispute, then the New Residential Tenancy Act (2021) amendments state that you cannot have your dispute hearing at VCAT, but at a Magistrate’s Court. This is a whole different box of dice, as it’s a court of law and you need to represent yourself in legal discourse. This came about because of a constitutional issue about the power of tribunals, such as VCAT, to hear interstate matters. Most Property Management companies are not prepared on a legal front to be represent their client in a court of law, and to have extensive training to be appropriate in front of a judge. This could mean a more expensive cost than the $100-$150 or the hourly rate to represent you as a rental provider.
As discussed previously, having all your receipts and rents appearing at the end of the financial year so you can hand it over to your accountant to position yourself for the tax year is the most valuable part of appointing a Property Manager to manage your investment property. But of course, there is a small cost to have this prepared for your accountant, generally in the vicinity of $25-$50.
If a renter wants to get out of their fixed term lease early, then a Property Manager has the right to charge either the renter or the rental provider to start a new. Sometimes, renters are asked to find their own replacement, but the Property Manager will still have to do the leg work in checking references, credit score checks, etc. The fee can be as little as $0, as they charge the renter for breaking the lease, or up to $500 to the rental provider.
As you can see, there are various ways a Property Management company can charge for their services, so it’s important to find a Property Management service that offers you value for money, experience and dedication. Have a ‘Property Management Services List’ that you can refer and check off the qualities that are best suited for you and your investment.
The Roles and Responsibilities of a Property Management Team
The essence of a Property Manager is to facilitate communication between the renter and rental provider. A professional Property Manager will listen and act upon both the renter and rental provider’s needs. Understand the importance of this… ‘listen and act.’ Most Property Managers will put you in a box – one box for rental provider, one box for renter.
A ‘rental provider’ wants to maximise their rental investment and will do the minimum spend on maintaining their property. The ‘renter’ will be annoyingly asking for the smallest bit of maintenance to be completed and call 200 times because it hasn’t been done.
When in reality, every rental provider and every renter will have different needs and must be assessed on their respective individual requirements. It is rare for a Property Manager to ask their rental provider “Why do you have this property you would like us to manage?” or “What is your intended outcome for this property you would like us to manage?” Is the plan to keep it neat and affordable for the moment, with the plan to renovate it in five years time to accommodate an elderly parent, an adult child or sell it? Have you bought the property in a Self-Managed Superannuation Fund? Will your rental provider personally live in the property when they return from a stint overseas or interstate, so they want any maintenance to be of a high quality? Is it just another addition to your property portfolio so the aim to keep any costs down while still maintaining a happy tenant? Your Property Manager needs to ask you those questions and accommodate your individual priorities as part of the management your property.
But more importantly, if you want a Property Manager who is dedicated to you and your property, they should be able to tell you:
The key is to make your decision on your Property Manager based on their dedication and passion for their work, their experience and their understanding of your needs. Getting this part right in the first instance, will make a more pleasurable investment experience.
The importance of professional Property Management is more crucial now than ever. There are so many moving components when investing in property. We need to know the changing tax laws, the changing Residential Tenancy’s Act laws, have a working relationship with reputable trades who understand the importance of acting quickly for maintenance, and we also needs to understand the complexities of Owner’s Corporations, Local Government Authorities and even fire management. We can’t all be experts in everything, and for the sake of saving a dollar, the peace of mind of having an expert who deals with the on-going demands of Property Management every day is worth every cent.
What are the benefits of having a professional Property Management behind you?
The Australian Tax Office have very strict rules on:
They also have guidelines on:
And due to natural disasters and a pandemic, there are another set of rules that could affect your tax obligations.
As Property Managers are not tax accountants, they can’t advise you on the best way to minimise tax. However, the benefit of appointing a professional Property Manager means that you will receive a statement stating all tax obligation transactions that pertain to your individual property or properties, that you can show your tax accountant so that he or she can ensure you get the best benefits from your property investment.
The statement will include things like rent received, property management fees, owner’s corporation fees, council rates, maintenance costs, letting fees, marketing fees, etc. It keeps it neat and simple, with only your bank statements to show mortgage repayments and interest obligations, and any other expenses that may have accrued outside of your ‘Property Management’ management. It really does make hiring a Property Manager worth its weight in gold.
The Residential Tenancy’s Act (2021) introduced 132 new laws to make renting a property safer for renters introducing a minimum standard a property should maintain. While it is easy enough to access to the Act and read it thoroughly, most rental providers miss the smaller detail, including the regular compliance checks that need to be documented and conducted by a professional. Employing a Property Manager to manage your property ensures that all inspections – if it’s a 6-monthly rental inspection or if it’s doing the 2-yearly gas check, are performed correctly and in a timely manner. Property Managers are trained in handling all types of situations that may come up at these inspections. Taking the emotional connection out of the equation, Property Managers can work through any confrontations or concerning scenarios with professionalism and poise, as they deal with similar situations every day. Appointing a professional in Property Management benefits the owner both mentally and physically.
High Quality Renters
Professional Property Managers have the experience to check between the lines when reviewing rental applicants. They know what to look for in terms of the renter’s ability to pay, the renter’s ability to look after the property and the renter’s ability to report concerns.
The more credible Property Manager will know that a newly-appointed high paying showy person with the expensive Mercedes isn’t as good as a someone with a low-mid paying job who has been for the same company for 10 years. Generally, the less money people have, the more they look after what they do have, including your investment property.
The Mercedes owner will probably prioritise their car repayments over their rent. Knowing what is important to your renter will determine their worth.
Less Vacancies
The benefit of having a high quality renter means less vacancies. A high quality renter will make your property their home within the law of the Residential Tenancy’s Act. They will look after your garden, clean your oven, scrub your bathroom and have a sense of personal pride within their home.
If you value you a high quality renter, you will maintain the property to keep your renter happy. If you don’t, the more likely you will have vacancy problems. The benefits of a Property Manager are that through their 6-month inspections, your Property Manager has the eye to check if maintenance is required, even though it hasn’t been reported. That’s right.
Most renters don’t report maintenance issues because they are scared they will be kicked out, inconvenienced or the rent will go up. However, the benefit of your Property Manager is that they will build a relationship with your renter to ensure they know it is OK to communicate any issues, big or small, to ensure that 1) your renter wants to stay, 2) your property is well maintained.
Part of the investment process is dealing with Owner’s Corporations. You may think ‘I don’t need to deal with Owner’s Corporations because I buy investments on their own title.’ However, your property may adjoin a property with an Owner’s Corporation, and that in itself can cause a problem.
If you have never dealt with an Owner’s Corporation, or a Body Corporate as they were once known, then it would be best if you have a Property Manager who works alongside Owner’s Corporations every day.
Put up your hand if you have friends who are tradies? A plumber, an electrician, maybe a handyman? Put up your hand if you are one yourself? Now, how many times have you asked your friend to help you with a maintenance project? And how quickly do they get done? Most people would agree, asking a friend to help you with their project or maintenance issue, outside of their normal work hours, can take weeks, sometimes months.
And your poor renter is putting up with your slow, unrealistic ways of getting the maintenance done. Whereas the benefits of having a Property Manager on your side is that they have relationships with several trades who understand the importance of property management services and will act on the urgency of getting your maintenance work complete. Plumbers, electricians, painters, even tilers and gardeners all have a specific niche, and if your friend Tony the plumber is a gas fitting plumber not a general plumber who deals with toilets, then Tony isn’t the right person for the job.
There are a series of trades out there who deal specifically with property management servicing and maintenance, so they understand the urgency and work accordingly.
Having a Property Manager manage your investment property is the difference between working ‘in’ your business and working ‘on’ your business. Your Property Manager works ‘in’ your business, so you can work ‘on’ your business of creating more wealth through more property or other ventures.
It’s your own personal benefits that make investment rewarding. You have more personal freedom to do the things you love and live where you want, knowing that you don’t need to regular inspections or keep an eye on your renter. You have less stress when it comes to dealing with middle-of-the-night emergencies, chasing rent, evictions, damages, paperwork and some of the time-consuming tasks like the compliance requirements involved when owning a rental property.
That’s what your Property Manager does for you. Your health, your time and your wealth are ‘why’ appointing a professional Property Management service is so important.
Now, you have a better understanding of the importance of Property Management, what are the services that are included when appointing a Property Management service. The services can be tailored to your needs, and fees are charged accordingly, so to understand the services better, you need to have an understanding of the fee structure.
There are many fees included in a Property Management service, and they can be broken down into:
Letting or Leasing Fees
Letting fees or leasing fees are charged by most property management companies to get your vacant property leased. The Letting fee includes determining how much per week your rental property should make. This may also include preparing your property so that it is acceptable to let, which may include painting, new flooring, doing all compliance checks and any other maintenance required.
Your Property Manager will rigidly screen the prospective renters, checking references and credit scores. This could be between 1-4 week’s rent, depending on your agent. Some agents might also charge you a tenancy database check fee ($10-$12 per candidate) and a charge to do a Property Condition Report. Check to see what is included in your Letting Fees before choosing a Property Manager.
Marketing Fees
Property Management companies have exclusive deals with the two most prominent internet websites to advertise your property for lease, which makes advertising your property much more affordable than if you were to do it on your own.
Your Property Manager should advise you to get professional photography on your investment property, as well as professional copywriting, to target the right tenant demographic for your property. Professional rental copywriting and professional photography is known to attract tenants 10 times faster than having you or your Property Manager walk around with your iPhone or ‘slap something together’ with a few spelling mistakes and no clear direction.
A few iPhone photos and ‘slapped together’ copy takes an average 23 days to lease a property in Melbourne, whereas enlisting the professional takes on average 3 days. You’ve made 3 weeks’ worth of rental income by using the professionals, which probably only cost you one week’s rent to engage them. A sound investment. Generally your marketing costs will be around $400-$600.
On-Going Management Fees
On average, in Melbourne, Property Managers charge 6 per cent of your weekly rental as their on-going management fee, but can be as low as 5% and as high as 12%. So, if you are getting $400 per week for your property, at 6 per cent, that’s $24.00 a week. $24.00 for the urgent phone calls to the plumber, $24.00 to do the trust accounting to pay you the rent, $24.00 for listening to the demands of your renter on a 20 minute phone call. Yes, it doesn’t happen every week, but it’s peace of mind that you don’t have to do it yourself when it comes about.
It’s a very small price to pay for your peace of mind. Some Property Management services will charge an additional $10-$30 to do the routine inspection every six months. Some may argue that this is on-going Property Management, so it’s important to choose a Property Management company that is aligned with your values.
With your on-going management fees, you are paying for:
VCAT Dispute Fee
During or after your renter leaves your property, you could have a VCAT dispute that will be quite stressful. It could be over a burst water pipe that has damaged your renters’ belongings. It could be withheld rent because the toilet was always blocked.
Whatever it is, it can’t be expected that your Property Manager will defend you at the Victorian Civil and Administrative Tribunal without any cost. There are application fees from VCAT that are set at $61.50, and your Property Manager may charge you a nominal fee, around $100-$150 to attend your hearing, or an hourly rate. Again, check to see what they offer when you sign up.
Magistrate’s Court Fee
If the renter or rental provider live or move to another Australian state and you have a dispute, then the New Residential Tenancy Act (2021) amendments state that you cannot have your dispute hearing at VCAT, but at a Magistrate’s Court. This is a whole different box of dice, as it’s a court of law and you need to represent yourself in legal discourse.
This came about because of a constitutional issue about the power of tribunals, such as VCAT, to hear interstate matters. Most Property Management companies are not prepared on a legal front to be represent their client in a court of law, and to have extensive training to be appropriate in front of a judge. This could mean a more expensive cost than the $100-$150 or the hourly rate to represent you as a rental provider.
Annual Statement Fee
As discussed previously, having all your receipts and rents appearing at the end of the financial year so you can hand it over to your accountant to position yourself for the tax year is the most valuable part of appointing a Property Manager to manage your investment property. But of course, there is a small cost to have this prepared for your accountant, generally in the vicinity of $25-$50.
Lease Transfer Frees
If a renter wants to get out of their fixed term lease early, then a Property Manager has the right to charge either the renter or the rental provider to start a new. Sometimes, renters are asked to find their own replacement, but the Property Manager will still have to do the leg work in checking references, credit score checks, etc. The fee can be as little as $0, as they charge the renter for breaking the lease, or up to $500 to the rental provider.
As you can see, there are various ways a Property Management company can charge for their services, so it’s important to find a Property Management service that offers you value for money, experience and dedication. Have a ‘Property Management Services List’ that you can refer and check off the qualities that are best suited for you and your investment.
Types of Property Management
Property Management is a complicated concept of the management of assets – both real property and intellectual property, which is broadened under the term ‘Property Management.’ The differing types of Property Management is simplified into its most basic understanding, and that is, the management of residential property investments. However, the different property management concepts need different property management experts to implement their diverse requirements. The types of property management can range, but are not exclusive to, residential property management, commercial property management, asset management which can include digital and intellectual property management, storage management and parking management. Each type has a different skill level requirement, therefore the Property Managers who are employed in each sector, must have a thorough understanding of their chosen field in property management, and deliver a service that encompasses the holistic diversity of their client’s needs. Different companies will specialise in different sectors of property management, while some will cover all bases. Chapter Three provides a thorough description of each sector in property management, and how they are different from one another.
Commercial property management is the management of non-residential properties like offices, parking facilities, shopping centres, retail spaces and industrial buildings.
The beauty of Commercial Property Management is that the tenant, or renter, covers all the costs of the interior features of the building, they pay all the council and water rates and they pay GST on their rent. Investors look to invest in commercial property, as it’s a ‘set a forget’ style of investment, where they have long term rental agreements and the owners only have to worry about the structural concerns of the building for their tenant, like the walls, floors, sub-floors, roof and plumbing and electricals to the building (not within).
The job of a Commercial Property Manager is to find a tenant through marketing, draw up a lease in the form of a changing contract that builds in regular, usually annual rent increases, and to be the liaison with the landlord when something goes wrong with the building. Once the lease has been signed and your tenant is in the building, the contact with the tenant is rather minimal for the duration of the lease, as long as the tenant pays their rent regularly each month.
Commercial investors often look for the black and white facts of the property – the size of the land and the building, the type of renewable lease, the amount of rent it could make and any outgoings, which is usually minimal, as the tenant pays for everything including all the utilities, the council rates, insurance, their signage, their fixtures and fittings to run their business, their flooring, their security systems and their air conditioning systems.
Leases are usually written up as 5 x 5 x 5, which means that the tenant leases the property for 5 years with two options to renew the lease for an additional 5 years, totalling 15 years. Some can be 3 year terms, some can be 10 year terms. which makes it an excellent investment option for those who don’t want an emotional attachment to their investment. For the Commercial Property Manager, the ‘set and forget’ analogy applies to them as well, as long as they keep an eye on the rent coming in, the Property Manager’s role is very minimal.
Although finding tenants is not as common a task in commercial property management as it is within other property management sectors, finding the right tenants is definitely on the top of the list for importance. The tenant could be a sole trader, a franchisee, a large company with several stores or outlets, or an established company needing bigger premises.
While many people start businesses and want to make them a success, new business start-ups are not the best of security for a landlord. However, landlords are looking more and more into pop-up shops for more seasonal businesses or start-ups, even co-working offices and other ways to ask for more rent for shorter contract terms.
Advertising strategically directed towards the right type of parties is the initial key step in the tenant searching process. Significant screening processes include checking if they have any business plan devised by their accountant, business coach or financial planner; any other financial statements, for instance Profit and Loss documents of an existing business, and historical referencing of other commercial leases they may have had in the past. All this is needed to ensure the right tenant is found for your property.
Once you have found the right tenant, commercial property management companies have a knack of writing and executing complicated leasing agreements. Experienced property managers should prepare a new lease agreement that their new tenant should get their solicitor to read to ensure they know exactly what is involved with the lease.
It should cover everything from the review existing leases to safeguard your interests while remaining compliant with laws and regulations, a maintenance commitment, insurance commitments and any enforce commercial contracts that could be included, like security monitoring, etc in accordance within the terms.
An experienced property manager should have a great network of solicitors, lawyers and area professionals than the property owner and or the tenant can help them advice on anything that helps the different parties understand the requirements of the lease.
An effective commercial property management company will keep financial, maintenance, insurance and administrative records. They will often undertake routine inspections and preventative maintenance to make sure that the premises are in a safe condition as legally obligated. Experience commercial property managers will have a network of trades they can use on short notice in order to resolve issues within a property.
These contractors may include electricians, plumbers, handymen, glaziers, landscapers and IT professionals, as long as the maintenance is to do with the requirements of the building, not the requirements to the interior fitout. Fixing issues quickly can result in a satisfying outcome for tenants.
Commercial property managers can also provide an investment strategy for their landlords. This could be a 5-20 year on-going strategy that will cover set maintenance, quality of tenant and other concerns that may create tax effective opportunities for their landlord.
Commercial real estate property management is a growing service as many investors are unable to accomplish all tasks and responsibilities, be knowledgable about the changing laws and be actively involved with their investment property due to distance or time. Commercial property management in Australia had an approximate market size of $1.4 billion in 2022 according to IBISWorld.
No matter what size of commercial property you have, you need to find the right commercial property manager for your property who understands the nature, size and quality of tenant you expect for your property, and who understands the importance of communicating with you.
Residential property management is the income-producing management of a residential property on behalf of the owner. The types of properties generally overseen by residential property managers include houses, townhouses, apartments, units and land areas like paddocks for horse agistment that are considered residential land.
The residential property manager covers the marketing and leasing processes of a vacancy. When the residential property manager has a new property or vacancy, they must undergo certain steps and processes in order to find a tenant to appease the property owner.
First, they must analyse the area and market at the time of leasing, set a rental rate in agreeance with the property owner, undertake advertising and marketing of the property, show the property to potential tenants through group inspections or private appointments, qualify applications and negotiate lease periods and terms with potential tenants.
Unlike in commercial property management where lease periods often involve numerous year terms, the initial residential property management lease is usually between 6 and 12 months, but some tenants do ask for 2 years, especially if they have had problems holding onto a property because the landlord wants to move into the property, the landlord wants to sell or other circumstances.
This means residential property managers require more involvement in leasing and marketing processes. As a big part of the Property Management process is talking to prospective tenants, current tenants and landlords, most Residential Property Managers enjoy the positive connections they make with their large pool of clients. Building these strong relationships often lends itself to creating a renowned reputation in the real estate industry, that the Property Manager can successfully lease and manage properties with time-efficiency and quality tenures.
The large difference between Commercial Property Management and Residential Property Management is the extensive maintenance co-ordination required. The landlord, or rental provider, is expected to ensure the whole property is maintained to the standard required in the Residential Tenancies Act, which includes some appliances that are considered an emergency repair – hot water units, ovens, stoves, dishwashers, air conditioners, gas heaters, etc. They could also be responsible for regular maintenance, like gardening and pool maintenance, which some leases build the cost of these services into the rent.
They are also responsible for 6-monthly inspections, VCAT disputes, financial statements and any other communication. The reality is, Residential Property Management is very involved and the Property Managers are the first point of call for both renters an rental providers, playing the role of the ‘middleman’ in an attempt to make the process smooth for all parties. Strong communication is key between all parties to ensure that the property is in the correct state and issues are resolved.
The residential property manager should regularly update the property owner on the status of their investment.
Residential property management is particularly useful for property owners with a large number of investment properties or for individuals who do not live in close proximity to the property and cannot easily access it.
Even for those who live nearby to their investment property, hiring a residential property manager can take the stress out of the situation and allow the property owner to focus on their own interests. Investors own 27% of Australia’s 9.6 million dwellings (worth a collective $1.4 trillion) with property managers often the ones looking after these properties.
Property management costs are usually separated into two main costs, the letting fee and a management fee. These amounts can vary significantly depending on the area, market and company, although management fees are usually around the 5-12% of the weekly rent mark with a letting fee of approximately 1-4 weeks rent in exchange for sourcing a new tenant for the property.
Property owners and investors looking for the right residential property management company should do their own research and ask numerous questions to their potential property managers involving the leasing process, financial requirements, experience and workload. It is also generally encouraged to work with companies associated with the Real Estate Institute of Victoria (REIV). The REIV can provide details of skilled property management members, although a licensed real estate agent does not have to be a member of the REIV, nor does a successful property manager.
Self-storage property management (also known as mini storage management) is the service of allowing a third party to oversee daily facility operations and play an active role in the success of a storage facility.
Self-storage is a cheap way to start your investment journey, with an investment that is little to no fuss. You are buying a small storage room, shipping container land holding that a self-storage facility facilitates the property management for their investors.
The tenants are responsible for the insurance to their belongings in the self-storage unit, however the facility is in charge of the insurance on the site, the air-tightness of the room or building, and the public liability of the common areas. This is built into the fee of the self-storage unit for the tenant, and becomes part of the management fees for the landlord.
A third-party self-storage manager has to pay a close eye on the rents coming in for each of the storage units, as many tenants will put their belongings in a unit and stop paying for it when they realise they don’t need those belongings anymore, or they move overseas/interstate, or even worse, they pass away. Many self-storage property managers have to remove all the items in the storage facility, clean it up and have it presented for the new tenant if the tenant abandons the lease.
You see a lot of television reality shows where items in a storage facility are auctioned off or sent to a second-hand dealer. The time it takes to track down the tenant to evict them when they stop paying their rent on their storage facility can take months, so while they are giving the tenant the best chance to pay the rent, a self-storage unit can be considered a high risk investment.
A third party self-storage manager also oversees each aspect of the facility management. This includes responsibilities such as facility maintenance and operations, customer service and implementing facility marketing.
They can also sell storage boxes and materials for safe storage to those moving and/or storing. Self-storage property management services often include payroll management for any staff they may have on the premises, on-boarding and training staff, financial services, internal reviews, digital marketing and maximising net operating income.
The potential advantages of using self-storage property management instead of a business owner include the ‘hands off’ approach that allows owners to pursue other interests within the business and allow the third party to handle each aspect, the wealth of knowledge and experience self-storage property management companies can provide and the potential of increased revenue by spreading the workload evenly.
Self-storage property managers can also be in charge of looking for new sites for new storage facilities as the need for more self-storage is needed in each suburb.
Recreational Property Management is the management of recreational property facilities – property facilities that don’t come under the banner of residential, commercial, or industrial property, as they could 1) be a mixed of all types of property or 2) they have various tenants leasing individual sections of the facility.
Facilities including marinas, showgrounds, racecourses, casinos, cinemas, beaches, sports grounds, concert halls, and other ‘open to the public’ venues. The Recreational Property Manager is more likely than not, a local government authority, for spaces like local football fields, beaches, parks and gardens. For instance, St Kilda Marina is located on Crown Land, and the City of Port Phillip have a Committee of Management with a 50-year lease for the site, which had an extension for another 3 years to mid-2022.
The St Kilda Marina has had upgrades over the years to include restaurants, a boulevard, public seating, cafes and recreational facilities for walkers, cyclists and skaters. It offers wet berth and dry berth storage, boat and trailer storage, jet ski storage, as well as restaurants and other dining facilities, which means the diversity of the property needs to be managed.
A Recreational Property Manager can be in charge of organising specific events, which entails a variety of short term vendors for the venue, or could be long term tenants, such as a catering firm, a cleaning company or security firm who are contracted to all the different events at the venue. Each of these have their own level of responsibility and expertise.
Asset Property Management, or Asset Management is the assessment of fixed and non-fixed assets to run a business and its facilities. An Asset Property Manager will track and monitor a company’s assets to realised their value, work out what needs to be replaced or serviced, and how the assets deliver value in line with the company’s ethics, business goals and suitability for their employees.
An Asset Property Manager can be referred to as other titles, including a Facilities Manager, Property Manager, Asset Manager, Estates Manager and/or a Building Manager, depending on which assets they are managing.
Asset management in real estate is a further extension to standard property management because it encompasses the immovable assets, including the industrial, retail or office space, the outside space including parking, as well as utilities, fire protection, elevators and common area lighting, but also the movable assets including machinery and equipment, vehicles, uniforms, signage, IT equipment and office furniture.
The beauty of Asset Management is that it can streamline operating costs and increase efficiencies, if done well. An Asset Property Manager will review the sorts of utility companies, assess the rental agreements, do any preventative or reactive maintenance, ensure that all workspaces are efficient in terms of light, space and functionality for their employees, they will look after security management of the premises and their digital assets, they look after the cleaning of the offices and factory, they can implement sustainability programs, and they will also keep a track of visitors to the workplace, ensuing the visitor’s safety and the company’s security.
Most Asset Property Managers will use asset management software to maximise their productivity in the care of the company’s assets. Using asset management software can assess any inefficiencies and bring in 5-20% in savings for a company identifying opportunities that will positively increase turnover, employee productivity and record-keeping. An effective and efficient Asset Property Manager is vital to the success of a successful business.
Some property management companies in Australia will offer a complete asset management solution for your business. They may call it Commercial Management, Business Intelligence or even Portfolio Planning, based on your business’ needs, strategies and goals. If you are in business, you should ask your Commercial Property Manager if they offer Property Asset Management as part of their service.
Who is a Property Manager?
A Property Manager is someone who has a caring nature, has an interest in real estate and has the ability to juggle a wide variety of tasks, from administration, customer service and information technology to dispute resolution.
They have a lot on their plate, and the revel in the juggle however they if you speak to any property manager who loves their job, they would say they love the people they meet more than the properties they see. It’s a people job, one that needs to have strong organisational skills, the understanding of tenants lifestyle needs, the knowledge and application of various software and the ability to think quickly under pressure.
They are, after all, the middle person between the renter and the rental provider, two people who have two very different perspectives about their rights.
There are many benefits to employing a property manager to help you with the day to day activities of the management of your investments. First time investors have this overwhelming feeling that their investment is going to cost them so much more than they anticipate, so they think that not employing a property manager could help reduce the costs.
The reality is, a property manager will save you more than money, but also your time. Time you need to spend with your family, time you need to spend on your own wellbeing, time to work your day job, time to explore your hobbies or take a holiday, and time to do other financial chores like changing utility providers, doing your tax return, all those things that eat into your nights and weekends. It’s all about where you place your value.
Think of it this way, if you get paid $50 an hour to do your job, and the management of your property is around $150 a month, it’s 3 hours of your hourly income to manage your property. If you were to do it yourself, it could by 6-9 hours of your time each month, as most first time investors don’t know what they are doing, so they need to research the laws, find the trades, attend the property, etc. Is managing your own property worth essentially a day’s time of work on your day off, your nights after work or taken from your annual leave? Most investors see the true benefit.
If you’re still not a believer, we are going to give you 9 key points that add to the importance of having a property manager.
The Residential Tenancy Act has had a huge overhaul since March 2021, with property managers having extensive training on the changes, the compliance requirements and the legal obligation for both the renters and the rental providers. There were over 130 amendments made to the Residential Tenancies Act of 1997, as they became applied to existing tenancies and issues arose as some of the new legislation did not apply to all rental situations, Consumer Affairs Victoria keep making tweaks to the legislation to iron out any points of controversy or concern. It’s an on-going, very fluid law, so you need to keep on top of it, and privately manager rental properties can sometimes fall behind, as they aren’t informed in the same capacity as full time property managers.
The market is also a very fluid phenomenon that has renters desperate for properties one minute, and rental providers desperate for renters the next minute. Setting the price for your rental takes experience based on the market needs. A privately managed investment cannot be a lone island, they need to assess the entire market to understand where their property fits into the market when it becomes vacant, not base their rental price on what they need to maintain the property.
Companies like realestate.com.au have a special one-off price for a privately advertised rental property with no contract, where as other website sites don’t have a private advertiser option. Without a property marketing team behind you, your property may get left behind because your photos are not right, your copy might not be targeting the right tenants and if you haven’t been able to convert a prospective tenant, your property will work its way down the list, looking forgotten and unworthy if there is no activity on the listing. Marketing your property is more than taking a few snaps and scribbling down a few words, it’s staging, it’s perception, it’s pricing… it’s making the photos pop and the words tug at the heart strings. If you haven’t got the creative flair to make it happen, give it to the experts.
Property Managers have a good eye for great tenants. They know the little nuances that could be a red flag for a bad tenant, and all the white flags for the amazing tenants. They have a systemised approach to ensuring your vacancy rate in your property is minimised, giving you a better return on investment with your property. For property managers, they make the tenant selection process definite, while investors who do it on their own tend to have an emotional struggle with the selection process.
Property Managers have access to tenant databases which are run by privately owned companies, that the property management company pay a subscription to access a tenant’s previous rental history. A listing for a renter is usually made because they were ‘bad tenants’ and they are listed with the reasons why they were bad. For renters, if you’re not on the list, it’s a good thing, so property managers check the database to see if any red flags come up.
Property managers have a knack of retaining renters for longer periods than those who privately lease a property. They build a relationship with their renters, being kind and understanding to their needs, because they don’t have the emotional attachment to the property as a rental provider would endure. Building that relationship with your renter creates a beneficial result for both the renter and the rental provider, making avenues for the rental provider to increase the rent or have an amiable renter if the need comes to sell the property while the renter remains. Property Managers are excellent mediators, where as if a rental provider would do the management on their own, it could lead to friendships being formed with the renter which could turn into something ugly, like not paying rent or a loss of respect of the renter/rental provider boundaries, when the renter is entitled to ‘quiet enjoyment’.
Your Property Manager will have a systematic service that ensures all inspections are done in a timely fashion, and any maintenance is performed urgently because they have the trades on hand. This in itself is the most beneficial service your property manager can give a rental provider, because it saves them time, worry and judgment between the renter and the rental provider. Your renter will be able to reach out to your Property Manager with any concerns within the property without the rental providers emotional responses entering the conversation. Your property manager makes it all black and white and to the law.
Your property manager will be beneficial because they are a holistic service, ensuring all your bills are paid, your tax receipts are in order and your lease agreements are still valid. A property management service is a one stop shop for all your property information.
Sometimes your renter falls on hard times and can afford their rent. Your property manager will explain to them exactly what they need to do to continue their lease according to the law. Again, there isn’t the emotional energy that enters the conversation, it’s strictly what is required by the law. Some rental providers can’t separate themselves from the emotion. Some will give their renters a chance, some will get annoyed that they don’t know where their next mortgage payment is coming from, but it’s best to be handled using the proper legal requirements, which your Property Manager is trained to do. As for a renter vacating, your Property Manager will follow a simple system to help ensure your renter does the right thing when vacating, from cleaning the carpets to removing all belongings and doing a condition report based on the wear and tear of the property and the initial condition report. Again, they remove all emotion out of the equation, giving the renter a fair and accurate representation of their assessment of the property’s vacated condition.
Overall, a property manager will save you time and money in the long run, which in itself, is an extremely worthwhile benefit of having a property manager.
The duties and responsibilities of your property manager depends on what you negotiate with them. When you first employ a property manager, more often than not, they will send you out a listing pack or a listing pack email explaining their services.
All of those services are negotiable, and you can pick and choose which ones you would like to maintain yourself, or if you want your property manager to do it all. Some rental providers want to see the role of a property manager in action before releasing all control to their property manager, with an agreement that they only get notified if 1) the rent is late, 2) if the cost of any maintenance is over a certain dollar amount.
For most Property Managers, having that control and that trust with their rental provider is a privilege and honour, but some property managers can abuse that trust. So you need to give the duties of a property manager to your chosen management for around 12 months to prove to you that they are worthy of having that much responsibility.
The first responsibility a Property Manager has, is to service the rental provider, that is, the landlord. After all, it is the rental provider who is paying for their service, not the renter. In the role of a property manager, they are firstly responsible for ensuring the rent is paid by the renter, and then the money is transferred to you, the rental provider, within a responsible time frame.
When you sign up with your Property Manager, ensure they give you clarity on how many times a week or month they do rent transfers, so that your mortgage can be paid on time. The responsibilities of a Property Manager are not to hold onto your money, but be effective of the ‘management’ of your money, therefore they should transfer it to you promptly.
Property Maintenance is their next responsibility, to you, which we have previously covered, but also the compliance in terms of the maintenance of smoke alarms, as well as gas appliances including heaters, hot water services and cooking appliances.
It’s also a good practice that your Property Manager looks after the bookkeeping of your property, so they will pay council rates, owner’s corporation fees and all maintenance.
Now this is a challenge. All agents will have a sales type listing kit that will tell you that they are the best, and why they are the best. Yet the reality is, Property Management has the highest turnover of any profession in Australia, with most staying in their role for an average of 7 months.
How do you find the Property Manager who loves their job so much, they have been with the same company for years, maybe decades. That’s the Property Manager you want, or a Property Manager who is led by a Head of Department who has been at the company for years, maybe decades.
They are the Property Managers who are there for the relationships they have built. They are the Property Managers who have pride, consistency, a thorough understanding of the changing laws and requirements, and have an outstanding track record in their role.
However, you can’t pass up those who are eagerly learning and working their ways up the ranks, you just need to find the balance between the two.
How to find a good property manager?
When you are looking for the best property manager in Australia, you need to know that you are hiring a property manager with integrity, experience and drive to be the best property manager for you. here are 6 tips on how to choose your property manager.
Rental property management fees are also a contributing factor when deciding who to choose as your property manager.
Property management fees are charged differently, depending on your property requirements, and on the state your property resides. Sydney property managers generally charge 5% for property management fees, Melbourne is around 6% for letting fees and Perth is around 8-10% for their management fees for rental property.
Now, that is the base rate, and those fees have ‘add ons,’ just like your mortgage contract, as a ‘on need’ basis. Some of you might be asking ‘what are letting fees?’, ‘what is an administration fee?’ and ‘why do I need to pay for a financial statement?’ As these costs are rare, they are things that unfortunately, your property manager can’t absorb, so they need to pass on these fees.
Some of those ‘add ons’ include:
Understanding your objectives in having a property portfolio will give you a greater knowledge of what is required of your Property Manager and their goals for you and your property.
An experienced property manager will have the bigger picture of creating wealth, understanding cash flow and tax incentives within their objective.
As Property Management becomes the juggle between receiving rent, maintenance, customer service, compliance and law, many property management services are investing in specific software that can handle the scheduling, payments, create notifications and systemise the whole process, so that Property Managers can be confident and competent customer service providers.
Some software also helps property managers advise their rental providers when it’s an opportune time to grow their property portfolio, or if a particular property that has come from conversations with their rental provider becomes available for them to consider purchasing.
If your Property Management’s objective is to service you beyond the day to day running of your investment property, trying to improve your revenue with specific rental pricing strategies, providing an easy to use app for your renters so that your property manager can be more efficient with their time, and having the right software to keep you up to date on market events, then you are on a winning team.
With real estate advertising, the internet is going to be more often than not, your first impression. So you need to make that first impression shine. Marketing your property for a quick rental is all about targeting your perfect tenant through strategic copywriting and professional photographs.
Gone are the days where property managers would take a camera and photograph the exiting renter’s belongings to try and capture the essence of the property. Usually the photos were taken at night, because that’s when the exiting renter would allow access.
Now Property Managers are slowly turning to use professional photographers to capture your investment property. They wait for your exiting renter to leave, choose the best time of day to take the photo, based on where the sun is in the sky, and use clever techniques like virtual staging to make your property look inviting.
However, they are slow to use professional copywriters, and most properties are written with no consistent style within the company, bad spelling, no ambience of why anyone would live at your property and a lack of detail.
Don’t you want potential renters to fall in love with your property? Find that extra $10-$20 a week because they would love to live there? Statistics show that using a professional copywriter can take 2-3 weeks off the process of finding a quality tenant.
Looking professional shows your renter that you take pride in your property, and your property manager takes pride in their service and it will make those who apply for your property take pride in their application to secure your property.
Before you secure a quality tenant, you need to know what is a quality tenant. A quality tenant is someone who pays rent on time everytime, someone who looks after your property like it’s their own, they keep the property clean, they are a good communicator and the report any issues with the property.
A quality tenant allowsd a landlord, or rental provider, the freedom to ‘set and forget’ their investment property, meaning that there is less stress, financial burden and time pressures for the rental provider.
To attract a quality renter, you need to provide a quality home. Before you put your property on the rental market, check to see if your property needs painting, new floors, possibly new appliances or cabinetry to make it desirable. Is the property safe, warm, comfortable and peaceful? If not, how can you make it safe, warm, comfortable and peaceful? Are you going to include a gardener in the rental price, or do you expect your renter to do the gardening? Do you have parking? What will make your property more appealing to the ten other two-bedroom apartments available in your suburb at the very same time?
Understand this: For every week your property stays vacant, you have lost 2% of your annual income.
Make sure your investment property has:
A good quality kitchen – plenty of cabinets, good clean benches, a working oven, hotplate, exhaust fan and possibly a dishwasher.
Heating and/or air conditioning – make sure it’s been serviced within the last 12 months for optimal use.
Quality window furnishings – do your blinds work effectively? Are they stained, smelly or broken? If they are, replace them.
Does your investment property have NBN connected?
Is your investment property pet-friendly? With more and more people wanting a pet, you have to consider a pet-door and hard-wearing carpet or floor coverings.
Does your investment property have an outdoor area? Even if there is a communal outdoor space, it could be a porch in front of your apartment, or a park-like lawn area at the back of the block, pin-pointing some time of outdoor space your prospective renter will enjoy is an easy way to get your investment property rented out quickly.
These are just some ways on how to find a good tenant, and the qualities are good tenant is looking for when searching for a quality rental. Whereas, things that can be a ‘turn-off’ include dark properties, dirty properties, brightly coloured rooms and unsafe electricals and plumbing. Investing in these small changes, could mean the difference between waiting weeks for a renter’s application, and a wealth of applications from quality tenants.
As property managers have various trades and suppliers available to them, property managers handle repairs with finesse. Repairs and maintenance is part of their everyday service, talking to plumbers, electricians, painters, handy people, gardeners, chimney sweeps, kitchen appliance installers, appliance suppliers and everything in between, they have a good handle on making rental property repairs effortless.
With the new Residential Tenancy’s Act of 2021 (Victoria), property managers are expected to perform more compliance checks than ever before. Compliance on gas heaters, gas hot water services, gas cooktops, water pressure, smoke alarms, air conditioning systems, ducted heating systems, dishwashers and electric heaters.
These are just some of the property management rights for renters to ensure they have a safe and enjoyable place to live.
One of the most common problem found in property management systems is their lack of systems, and the lack of continuous staff.
One major lack of system is regular rent increases. Some of the biggest property management companies allow their properties go under the radar, and don’t make any effort in reviewing the rent for long term tenants.
Other issues include:
Property managers and your tenants
Property Managers are keen to help everyone – the tenant, the landlord, the owner’s corporation manager, the local government authority, the insurance companies and the trades who do all the maintenance. But always in the back of their mind, they know they are being paid by the owner, the landlord or rental provider. But like a good marriage, where the coined phrase of ‘happy wife, happy life’, it goes the same for ‘happy renter, happy rental provider’… except it doesn’t rhyme. If your renter is happy, then your rental provider will be happy to keep their renter in a space they want to call ‘home.’
The key to a good tenant’s, or renter’s relationship with the Property Manager is for the tenant to recognise that the Property Manager has a job to do to satisfy the compliance and legislation of the Residential Tenancy’s Act and to maintain responsibility for the property for the landlord, or rental provider. The Property Manager wants to do their best for their client, while retaining a healthy respect for privacy and quiet enjoyment for the tenant. The Property Manager expects the right respect of communication from the tenant in regards to maintenance requirements, rental payments, and if that communication turns into friendly banter occasionally, then that makes it a better relationship for all.
What can a tenant expect from a Property Manager?
The first contact a Property Manager will have with a tenant is when they meet them at a rental inspection. Tenants should treat going to a rental inspection like they would a job interview as the Property Manager will be observing you to see if you show respect to both themselves and the property when inspecting.
Key things to remember at a rental inspection:
During the tenancy:
A Property Manager’s duties during the tenancy are to:
However, a Property Manager’s duty is also to ensure that the tenant has quiet enjoyment while occupying the property. That means, that they must give reasonable notice to come to inspect the property or organise a tradesperson or other professional to attend the property.
The duty of a tenant to end the tenancy is to give notice based on the end of their fixed tenancy or 28 days’ notice if on a month-to-month tenancy. However, if a landlord wants to give their tenant’s notice to vacate, there are specific reasons outlined in the Residential Tenancy’s Act for immediate vacating, a 14-day vacating, a 28-day vacating, a 60-day vacating and a 90-day vacating. A Property Manager’s duty is to facilitate the vacating of the property which includes notifying the tenant of the expectations in vacating the property. Those expectations will include:
The Property Manager’s duties, once the keys have been handed back, is to do the final condition report and ensure the bond is returned to the tenant, or disputed with the tenant. Any dispute must occur prior to the bond being returned, which is within 14 days of vacating the property. To some, the cleanliness of a property is subjective, however a property manager is legally expected to keep photos and the condition report to refer to when conducting the final inspection, and they are expected to consider wear and tear on the property.
Ideally, tenants should maintain a good relationship with their Property Manager, so that they can have a great reference for their next property, and possibly have some leniency on any concerns with the property, to be put into the ‘wear and tear’ category.
How Property Managers Help You Find the Best Tenants
Property Managers are renowned for knowing what to look for in a good tenant on both paper and in real life. They are quietly reviewing all prospective tenants at the open for inspections, checking their respect for them as a property manager, how they respect your property and how they respect others when inspecting the property. They turn up to the property tidy in their appearance and may even speak of what they have planned for the day ahead after the inspections, including inspecting other properties, to make the Property Manager know that there will be competition to have them as a tenant.
The best tenants usually present themselves as a previous tenant, who already has a great track record of maintaining a property to a Property Manager’s satisfaction, however those types are tenants are hard to find, as most tenants either move to a different suburb, city or country; they could be in the market to buy a property or their circumstances change where they move in with a partner, a parent or a friend who already has a place for them to stay.
However, if you haven’t got a database of readily available tenants that fit in with your perfect time frame (a rarity at the best of times), then it is your Property Manager’s duty to ensure your property attracts the best tenants. How can they do that?
After your previous tenant has vacated, they will ensure that the property is thoroughly cleaned and presentable for your new tenant. They will ensure things that may have been considered ‘wear and tear’ but noticeably need to be fixed are attended to by a proper tradesperson, they will make sure all appliances – the oven, the hotplate, the dishwasher, the hot water service and any heating or cooling systems are in working order, and they will ask you, the rental provider, if you would like to make any improvements to the property prior to any new tenancy to either attract a higher rental or a better tenant.
Once the property is ready to go, a Property Manager will organise a photographer to take professional photos, preferably with virtual staging, to show prospective tenants what can fit in the empty spaces of the property, and ideally, have professionally written copy to tug at the prospective tenants’ heartstrings, making them love the property with all its desirable spaces and modern appointments. They will put the photos and the copy together and create an advertisement for the internet, a board or the local paper, advertising the property in its best light. Most inner city tenants will look at the internet for their next home, and be savvy in what they want, so ensure your ad picks up on all the extra added features that will attract a discerning, yet quality tenant.
Your Property Manager will also set the price of your rental property to attract the right calibre of tenant. Setting it too high will turn the better tenants away. Setting it too low will reduce your opportunity for 12 months of obtaining a good rental income. There is a fine balance. Your Property Manager, or people who work for your Property Management company in the roles of a Leasing Manager or even Business Development Manager, will check other properties available for rent at the present time, check how comparable they are with your rental property, and rent your property for a fair market price. Your Property Manager should also consider any recent improvements to your property, any smart-home facilities that could assist with security and communication within the home and other upgrades that are not available in other properties on the market. In the end, the rental provider must agree with the set price of the weekly rental before anything is advertised.
When your Property Manager screens the applicants, they must check previous rental history, bank accounts for regular income, any bankruptcies in their history, any criminal history and all credible references. The National Tenancy Database can give a Property Manager a wealth of information, that most landlords are not privy. A key to finding a quality tenant is to ensure they complete the application form in its entirety, provide suitable references and attach relevant banking and pay skip information to show regular income. For instance, if a prospective renter gives their mother as a reference, they aren’t taking the application seriously, as a mother will always say kind things about their children. Once the Property Manager is happy with the selected applicants who they believe are right for the property, they will ask the rental provider to make a selection or approve the one applicant that they have selected for their property.
What most prospective tenants don’t understand, is that a property will remain advertise until that selected prospective tenant has signed the tenancy agreement and paid the bond. Essentially, a prospective tenant may have been selected for a number of properties which they applied for over the weekend, and now they have the choice of which one they prefer. So, until they secure the lease with a bond payment and a signed lease, the property remains active to attract other prospective tenants. If your property management company does not treat your property with this respect, it might mean you need to find a property management company who finds tenants, secures tenants and then confirms through the Tenancy Bond Authority that your prospective renter/tenant is ready to move in.
Attracting the right tenant is like a game of cat and mouse. Every agent and every landlord wants the perfect tenant, so those who do apply in the correct way will always be offered the properties first, it’s just having the property that they want in the first place.
Technology and Property Management
There are new innovations coming into property management that will change the way we manage property in real time. Technology is moving at a rapid rate, enabling both property managers and building managers to be able to manage property more effectively and less evasively. Property management software is keeping property managers organised offering cloud like solutions to what is a very cumbersome paperwork juggle, while building management is becoming more streamlined with the onset of IoT (Internet of Things) technology, that allows physical objects with sensors, processing ability, software and other technologies to connect and exchange data with other devices or systems over the internet and other communication networks.
loT Property Management
What is IoT property management?
IoT (Internet of Things) or BIoT (Internet of Things in Buildings) will help monitor common area usage, social and ability needs, travel between floors, cloud services, security monitoring, lighting, cleaning and maintenance, etc. Smart building technology has been around for a number of years, however Swedish tech company Memoori said that the Asia-Pacific region will represent 36% of the global market in 2022. New buildings will need to adopt IoT technology for the safety of the residents, allowing access to only their floor or to common areas, the booking system of common areas, lighting and emergency systems and even the movement of elevators. You’ll find some newer building even have their own central internet cabling system, allowing residents to buy into the network rather than having them source a separate internet provider. It’s essentially smart home technology for an entire building, which some may think is more evasive because your movements and usage are constantly being monitored, while others will enjoy the sense of security and the ability to connect through their smart phone to turn on their air conditioning systems, lighting or music to create the ultimate in comfort and lifestyle.
The beauty of IoT for rental providers and owner’s corporation managers is that they can assess real time data, through a series of sensors, that is meaningful to the habits of the occupants. Imagine if they had this technology in the World Trade Center towers in New York in 2001, where they would know how many people were on each floor at the time and be able to assess the emergency needs more accurately enabling more people to escape with their lives. IoT will also help rental providers get a true understanding of their return of investment or if there is the need to implement any Artificial Intelligence and 5G technologies.
Currently, some IoT buildings are already using IoT in the areas of smart lighting networks and occupancy data to analysis the space utilisation. They are also using it for smart predictive energy management systems, building equipment management, fire protection and maintenance operations. IoT in property management will help in cost reduction by creating a focus on finding and retaining renters, infrastructure optimization and profit maximisation through the building management system.
How does IoT influence the development of smart buildings?
Developers are more mindful of developing smart buildings using smart thermostats to ensure temperatures stay constant in common areas, triggered by occupancy motion sensors that helps to lighting, and thus the efficiency of energy. As the sun rises in the east and sets in the west, and most buildings have internal corridors with no natural sunlight, there are different energy needs in different parts of the building required throughout the day. The zoned automation of the HVAC (heating, ventilation and air conditioning) thermostat system would reduce the cost of energy dramatically with the use of movement sensors, allowing lighting to be either dimmed or completely off if no movement is detected.
Other benefits to smart building IoT include:
Preventative maintenance on large scale residential buildings will be more cost effective for the rental provider in the long term with IoT building automation and smart building management.
How property management technology is evolving?
Most property management companies now have cloud based software that ensures communication with their rental provider or their renter is efficient and impactful, ensuring there is a better customer experience.
The shift to cloud based technology is cost saving in terms of time, giving property managers greater accessibility to the information they need, it allows for scalability within the property management department, it provides for greater security and privacy of confidential information, and it provides a simple backup and recovery system, compared with server-based systems. With the rise of employees working from home, the cloud-based system means that property managers can work from their home, their car or their holiday location with greater ease and reliability.
A cloud based system ensures there is a clear digital trail of all occurrences that happen with each property. From the initial applications for a tenancy to the condition report, to any communication between the property manager, the rental provider and the tenant; to rental payments, rental arrears, maintenance requests and compliance with the Residential Tenancies Act. With the onset of Covid, property manager’s felt at ease that they were able to get renters to electronically sign leases and work with paperless document storage when they didn’t have access to the office.
Property management departments thousands of dollars with paperless technology. There is no need now for duplicates of condition reports and tenancy agreements, postage and printing costs, and it allows tenants to move in faster saving the rental provider money with quick leases.
Cloud based technologies can also help property managers automate their workflow. They can plan out routes for inspections, draft inspection notices, have their calendars automatically updated with 6-monthly inspection notifications, to both send out the letter to the renter but also schedule the inspection. Property management technology also helps automatic predictable communication, trust accounting and administration, mitigating the risk of human error and allowing for a streamlined workload, ensuring property managers can dedicate more time to their renters and rental providers.
Benefits of technology and software for tenants and landlords
Renters (tenants) and rental providers (landlords) can also access the self-serve technology to communicate with their property manager about any concerns they have with their property. Renters can also log and track any maintenance, see when upcoming inspections will take place and download receipts for rent payments. Property managers will receive an alert if payments are in arrears, maintenance hasn’t been actioned or a lease is due for review.
How do you know if a property manager is tech-savvy?
In the first instance, it is hard to tell if your property manager, or indeed the property management company you have employed to look after your investment is tech savvy. Most of your communication will be done through emails, phone calls and trust account receipts, so you can’t tell the systems they have in place to lease and maintain your property.
Most property management companies in Australia still use an internal software system. Check to see if your property manager is tech savvy if they use any of these top property management software applications:
For commercial properties, ask if they use these top commercial property management software applications:
Ask your property manager if they communicate through an app driven software that allows for communication to be automated and instantly actioned? Ask if it will cost them any more, or any less money for you to use their system? As the reality is, the software will make their lives a lot easier, however the cost of the software may need to be passed onto the rental provider, or the renter through their weekly rental. Ideally, as a rental provider, your life is already extremely busy, so if your property manager uses advanced property management softwares and property management technology to streamline the whole process, you will be appreciative of the systems, freeing you up for a seamless investment experience.
At Besser and Co, we used advanced technologies and software to manage property effectively and efficiently. We are a boutique property management service that aims to do property management better. Our team is highly trained in our software, enabling us to provide the best customer service and property management service in Melbourne.
Managing a Property Yourself Vs Using a Property Manager
Firstly, we will debunk a few myths that defies the new investor confidence in managing their property. There will be a sense of, “it’s easy,” “the money will roll in,” “it will look after itself,” “I don’t know what everyone is concerned about,” “it won’t take up too much of my time”, and so on, and so on. Like with everything, if you don’t know what you are doing, you’re essentially learning a new skill set that takes time and experience to get it right. And only those who have managed their own properties and have learnt the hard lessons will know. As most of your tenancy problems happen when you don’t have the time to be at your best for your renter or your property.
Property management maintenance is usually where property managers, and even rental providers come undone. Most rental providers want a trouble-free rental property, but most investment properties will need some type of maintenance in a 12-month period, as 1) it shows the rental provider that their property manager has the best interests of your property in focus, 2) that your renter also cares about your property and wants to live in a home that is comfortable and in line with the rent their pay.
Some of the property management myths in regards to rental property maintenance include:
Skilled tradies can do basic repairs to save money on their rental property, however finding the time to do the fix for your renter can sometimes be more trouble than it’s worth. Sometimes the fix is beyond the rental provider’s expertise, and sometimes there needs to be more evaluation into what is wrong. As OH&S concerns and property management compliance are more prevalent now, it can be better to get in the experts who work on rental properties every day to do the work required. If you can’t issue a compliance certificate, then don’t do the work. The other concern is time… doing the work required within business hours may not be conducive to your own work needs, and that of the renter, which again, could be another cost burden, if you need to do the maintenance in your own working day. Stick to your day job, as in reality, what you believe may save you money, may be the very thing that causes greater damage or financial loss in the future.
Unless your property is a commercial property and your renter needs to maintain or repair anything within the four walls of the premises, then the rental provider is responsible all the repairs and maintenance. The only other time would be at the end of the lease, where the renter must return the property as they received it, minus basic wear and tear. This usually means that a renter will do some painting touch ups, clean the property thoroughly, possibly sugar soaping walls, cleaning carpets, or fix any discretionary concerns like a cabinet door that may not click into place properly, maybe they have some dog scratches at the back of doors, the sheer drapes are dusty or maybe they have a temper and kicked a hole in the wall at one stage. If there is some accidental glass breakage caused by the renter, renters can get tenancy insurance that will alleviate that cost, or the rental provider can see if it is worthy claiming on their insurance; however generally, the cost would go to the renter based on the fact that they caused the breakage.
In the first instance, No. Rental bonds cannot be used as payments for repairs or maintenance. Mainly because most rental bonds will not cover the entire cost of any repair or maintenance. Rental bonds are held by a third party, the RTBA (Residential Tenancy Bond Authority), and thus the rental provider does not have access to the bond money to do the repairs. Rental providers cannot make a claim for fair wear and tear for the property, only if there is deliberate maintenance that needs to be fixed.
Again, this is a ‘No.’ Rental providers must give notice to attend the property. Renters have the right to ‘quiet enjoyment’ which means rental providers must not be doing drive-by inspections to check the state of the property to see if they are preparing for a party, parking a car on the front lawn or their dog has dug up some of the garden. In Victoria, the law states that a rental provider can provide a written request to do a routine inspection with 24 hours’ notice if it is a short term lease, or 14 days if it is a long term lease, however they can only do the first one after 3 months of the start of the tenancy, and then every 6 months thereafter.
The only other times a rental provider or property manager can enter a property is for:
Another struggle most rental providers have over the talent of property agents is the ability to know how to find a good renter. Re-letting a property is much harder than most think, as there are specific nuances that help real estate agents identify the good from the bad and the ugly when it comes to quality renters.
The real estate agent’s role in re-letting your property is:
There is so much involved with re-letting a property, and it takes the experience and expertise of a quality property manager to do it right. Most property management services will charge a separate letting fee for finding the right renter. While this is subject to negotiation, it is usually one week’s rent.
It is suggested that one in every seven Australian taxpayers own at least one investment property, Owning an investment property helps you to prepare for your future financial freedom, but can also be an insurance policy for when times get tough.
Imagine, if you have an investment property for 10 years. You bought it for $300,000 10 years ago, and now it’s worth $600,000. You have had it leased continuously throughout that time, starting at $290 per week (approximately 5% return), and now it’s $450 per week (approximately a 7.8% return from what you initially paid). You’ve put some money into it, painting it every 5 years, updating appliances, carpet and window furnishings, totalling around $30,000 over the years. You’ve paid your rates and owner’s corporation fees, and your loan on the property is down to $180,000.
But you’ve just had an accident. You fell on a walking track in a national park because you did a silly jump and have smashed your patella and broken your wrist in 5 places. You have no income protection insurance, and as you didn’t do the injury at work, you aren’t entitled to WorkCover or in a position to go back to work anytime soon. You have 4 weeks of annual leave owing, 20 days of sick leave owing (so another 4 weeks), but you know that will run out soon. Your doctor has said that it will be months before you complete recover. Yes, you have your rental income to help a little, and you can talk to the banks about pausing your mortgage repayments on the property while you use the income for your own needs, however, you still don’t know if that will be enough. The reality is you have $420,000 in equity in your property that could be released within a matter of months. Yes, the majority of it is subject to capital gains, but if you aren’t working, you could significantly reduce a portion of your capital gains tax to suit your circumstances.
As you can see, using your property like an insurance policy in another way your investment property benefits your way of life.
There are so many benefits of investment property:
This is the key question many first-time investors ask themselves. Can they handle the added workload to their already busy lifestyle? Managing your own property takes time and money, knowledge and resources, and if you can’t tick all the boxes, it might just be better to leave it to the professionals.
For those who do manage their own property, it’s because they have ticked all the above boxes. They have the time. They have created a passive income from their properties to no longer work the day to day 9-5 job. They have built up the knowledge and experience in how to manage property and they have a team of professional resources they can depend to do all the maintenance required on their properties. Most who manage their own properties live in close proximity to their investment properties, enabling them to self-property manage with greater ease.
The reality is those who self-manage their own properties look for:
Can I manage my own investment property?
There is no doubt you could be self-managing rental property on your own. It’s not rocket science. However, you need to decide if the time learning the legislation, keeping up with the compliance, dealing with VCAT issues, doing the condition report and the routine inspection is worth the $24-$40 a week (on a $400 per week rental) of your time. What are you worth? Some weeks might be 5-6 hours of work you need to put in to manage your own rental property, other weeks it may be nothing. But it’s not like it determines when those hours are going to be. It could be at 2am when the hot water service blows, it could be at 9.05am when you’ve stepped into an important work meeting, it could be 5 minutes before the ‘seat belt light’ goes on before flying to Bali. An emergency can happen at any time of the day, at the most inconvenient times, and this is when you wish you had a property manager.
The main components of how to manage an investment property yourself are:
Can you rent your own investment property? Of course you can, but now you know how to manage your own rental property, you’ve now got to decide if your time is more valuable than employing a property management expert.
Renovating your investment property is a strategic decision. Assuming you have done a depreciation report when you first bought your investment property, or have decided to do one now, which takes into consideration how long you’ve had your investment property and how much depreciation you have already claimed on certain assets within your investment property, your depreciation report will give you a good sense of what you should be doing to your investment property in terms of renovation, based on your tax benefits.
Here is a simplified version of a depreciation schedule:
Claimed | Claimed | Claimed | Total Claimed | ||
Asset | Paid 2018 | 2018-2019 | 2019-2020 | 2020-2021 | |
Carpets | $5000 | $1000 | $750 | $500 | $2250 |
Paint | $6000 | $2200 | $1500 | $1000 | $4700 |
Dishwasher | $800 | $400 | $300 | $100 | $800 |
Some items will take a long time to depreciate, like carpet, some will take a short time, like the dishwasher, which means that you could buy a new dishwasher within 3 years, but it might take 7-8 years before you need to replace the carpets to take full advantage of the depreciation.
As with everything with your investment property, there are pros and cons that will make it worthwhile.
The amount you should spend on your investment property renovation will depend on how much your investment property is worth. A rule of thumb for home owners is 5-10% when preparing their home for sale, however an investment property is different.
Understand your purpose… are you renovating to flip, that is renovating to make a quick profit, or are you renovating to attract a better quality renter? Those who like to ‘flip’ a property generally manage the renovations to be done quick, to get in a quality renter for 12 months to minimise the capital gains and tax implications, then sell to make a profit. If you’re renovating to attract a better quality renter with a long term investment strategy, you will be better to engage a renovation project expert so that you do it right the first time so that you have minimal maintenance issues through your renter’s tenancy. As a rule of thumb, your renovation costs should not be more than what you could get back on capital gain, if it’s over 2 years or 20 years.
How much do renovations cost in Australia? Experts suggest that you should not spend more than 2% of the properties worth on a kitchen or bathroom renovation. So a $500,000 property, you would spend no more than $10,000 on a kitchen, and no more than $10,000 on the bathroom. Renovation your bedrooms are a low priority, as they don’t add value in rent or capital gain, however landscaping is one area that can add value to both a final sale price or attract better renters. Again, be strategic in how much to spend on renovation, as it will be a pivotal factor when it comes to renting your property to make a good return, or in its capital growth.
Managing Multiple Properties with Ease
So you’ve gone from one investment property to two, to four, to six in just a matter of years. You have many options in how to manage multiple properties – you can do it all yourself, essentially becoming a full time property manager; you could give them all to one company to manage them all, or you could be selective in your property managers based on location and demographic need, finding agents that suit the best use of each property.
When you look at each property’s merits, you should look at what you could do to get the best cash flow for each property. When you are at the point of having multiple investment properties, you should have a team that helps you on that journey. The team will include your mortgage broker, your accountant, your solicitor or conveyancer and a buyer’s agent who will steer you in the right direction of what makes a great investment property. But you also need a property manager who understands the nuances of having a large portfolio, and how to maximise your rental income through targeting the right market. This is where you need a property manager with the depth of the experience required to build wealth in your property portfolio, not just a property manager who looks after the maintenance and the rent.
If you choose to use a one stop shop for a prospective property manager, you need to choose wisely to help you manage your multiple rental properties. When interviewing your property manager, make sure they are:
When you own multiple properties, it’s more about having the expertise as well as the time. Good property managers will have a wealth of experience, understand the intricacies of the laws and understand the needs and abilities of renters.
The way most investors raise capital for their investment property portfolio is using the equity in their mortgaged property, either their principal place of residence or an investment property. If you’re starting out, you need to find the first 10-20% deposit for the property to get you started. The more properties you have, the more you can disperse the risk between all the properties. For example, this simplified table of how buying multiple properties can be tax effect for an investor.
Principal Place of Residence (owned for 5 years) | Investment 1
(owned for 4 years) | Investment 2
(owned for 2.5 years) | Investment 3
(owned for 1 year) | Total | |
Worth | $1,500,000 | $600,000 | $600,000 | $700,000 | $3,400,000 |
Mortgage | $600,000 | $300,000 | $450,000 | $630,000 | $1,980,000 |
Equity | $900,000 | $300,000 | $150,000 | $70,000 | $1,420,000 |
Equity/Mortgage | 60% | 50% | 25% | 10% | 41.76% |
Income pa | $150,000 (PAYG) | $20,800 | $21,840 | $26,000 | $218,640 |
Repayments@5% | $38,652 | $19,320 | $28,992 | $40,584 | $127,548 |
Interest portion | $15,000 | $22,500 | $31,500 | ||
+ various costs for management, maintenance, rates, fees, etc | $10,000 | $10,000 | $10,000 | $30,000 | |
Cost to owner | $25,000 | $32,500 | $41,500 | $99,000 | |
Tax | $43,567 (PAYG) | ||||
Income tax is now paid on only $51,000 of the owner’s income, therefore reducing the income tax liability from $43,567 to $7827 = a total of $35,740 in tax savings, essential paying for the cost of living in the investor’s home. |
The longer you hold onto property, the more they increase in equity. As you pay off your loans each month, you are also reducing your debt, so the gap between the equity and the property’s worth is ever increasing. This gives you leverage to be able to buy more properties, using that equity. Most banks will like to see that you have at least 20% equity in the total properties before they will proceed with any new loan inquiry from you, and in the table above, the property owner here has 41.76%, which means they could easily re-mortgage themselves to buy another investment property or even two with up to $680,000 of the available equity (20%), as long as the rent coming in, and your personal income will cover the borrowing required.
Once you’re in the motions of buying investment properties, it becomes more imperative to have the support of a fantastic professional team behind you, and it also becomes easier to obtain finance. Ensure that your professional team has your personal financial objectives in check and they recommend properties that will fulfil your investment needs.If you are at the beginning of your investment journey you can raise investment capital by:
And for older Australians
The biggest challenge when it comes to self-managing your own properties is when it comes down to disputes. The New Residential Tenancy Act almost needs to have a lawyer on your side if you need to go to VCAT, or worse, the Magistrates Court, if the renter or past renter disputing you has moved interstate or overseas, or in fact, if you the rental provider resides interstate or overseas, where you will need a lawyer.
Civil disputes are messy. The rental problems could be during a tenancy or after a renter has vacated. They can take a long time to be heard, adding added angst to the already distressed renter or rental provider. Disputes should be conducted with a mediator, which is where a property manager can step in, as they know intimately both sides of the story, however an order to VCAT (The Victorian Civil Administration Tribunal) will need to be requested if the dispute cannot be agreed. It is best to put these disputes in the hands of a rental property manager who understands the law behind the dispute.
If after all that you still feel you have the ability to manage your own properties or want to have a different property management method from the standard ways, here is a list of must have tips when managing your own multiple properties:
Having multiple investment properties which you manage on your own can be definitely rewarding. The relationships you create with your renters can be as wonderful as they are onerous. The question is if you have the time and patience, when you own multiple properties, to be able to manage multiple properties. That’s only a question you can answer.
Things to Consider Before Hiring a Property Manager
You’ve decided that you value your time, patience and stress levels more than saving money on a Property Manager. You’ve also discovered there is a lot of knowledge and experience required in property management that is beyond your willingness to learn all the intricacies to make it a viable proposition for you to manage your property or properties on your own. So, it’s time to choose that incredible, well experienced Property Manager who will manage your investment properties. How do you go about hiring a Property Manager?
How to choose a Property Manager is not an easy task. Most property management companies will give you a standardised listing kit with all their costings, all their benefits, and some might even throw in a few testimonials. When you receive three or four of these, usually via email, they become repetitive and blend into one another, without showing you real depth of what they are offering you. Most Property Managers offer a standard service, and the key is to find the stand out qualities that you want from your Property Manager, and that they show you that they have the same set of values you value, to make that decision.
Firstly, when you hire a Property Manager, there are the logistical requirements they need to satisfy:
Obviously, there will be some answers that will make you choose this Property Manager over all others, and other answers that will make you stand back, but overall, you will get a much better feel to see if this person will have your best interests at heart when you interview them.
Choose a Property Manager on their personal merits, not the company. If for instance you choose a franchise company in Melbourne’s South East for your South East suburb properties, you shouldn’t necessarily choose the same franchise company for your investment properties in Melbourne’s West.
Let’s be frank, for the amount of work, stress, time, travel and software required to run a Property Management Department, the fees your Property Manager will request is really a token for their services. Companies like to have properties on their Property Management books for the consistent income, the opportunity to have a saleable commodity in their business, but also for the possibility that one day you will sell your property and they will get a huge commission from it. The day-to-day running fees of anything between 4-10% of your monthly rental for their efforts, you probably wouldn’t get your son or daughter working for that type of hourly rate. (For instance, a $400 per week rental would bring in between $69-$173 a month in company income), so that’s why they have to have other fees, like letting fees, annual statement fees, etc to feel like they aren’t working for nothing. Like with everything, you pay for what you get, but be thorough with your understanding of all their incidental fees.
We all have ideas of what is clean and what is not, so work out when you hire a Property Manager what their standard of cleanliness looks like when they do their Condition Report reporting. Check their personal desk or their car to see their personal high standards they keep. Take note of anything they say in conversation that they brush off or over, with phrases like ‘that doesn’t matter.’
Also work out their understanding of maintenance and repairs, especially as they will be doing your routine inspections. Do they know how to identify if a hot water service is about to blow? Do they know how to identify if a roof is leaking?
If something goes wrong with your property, in the end, as a rental provider, you are liable, not your Property Manager. You need to be confident in your Property Manager that any decisions they make on your behalf has your best interests at the heart. This comes with years of experience as a Property Manager and the confidence to trust.
Ask your Property Manager if they have any written referrals from their existing rental providers about their service. Written testimonials should be current, in the last 12 months, reflecting their level of service, knowledge and going above and beyond.
There are many social media pages and internet pages that can give you free advice on the services of real estate companies and their staff. Get a feel for how the renters are treated by them, as well as other rental providers before you make your final decision.
Once you decide on your Property Manager, and you let them know that they have been chosen to manage your property, see how quickly and attentive they are on signing you up, preparing advertising and organising open for inspections for you. Every day matters… every day costs you another day of mortgage repayments. If they are swift and have it ready to go, you could have a new renter in within 7-14 days. If they take their time (more than 48 hours) sending you all the paperwork to sign, then you need to move onto your second choice. Remember, actions speak a lot louder than words.
As you can see, there are a lot of variables in the process of hiring a Property Manager for your property management. At Besser and Co, we have Property Managers with decades of experience, and a team that supports each other with dedicated roles and streamlined systems that are both innovative and pro-active.
Property Management Risks
As with everything we endure in life, there are risks – some high level, some low level, and property management risk is no different. The key is to minimise the risks knowing that you have made an educated decision in choosing how to manage your investment properties.
These are the risks that are completely out of our control. The risks that government rules, and as much as we are attracted to the desire to own investment properties, governments have a way of complicating the processes for many reasons – some to line their own pockets, some for the safety of the occupants and some to protect the overall marketplace.
Again, these are risks in property management that are completely out of our control. The market is the supply and demand, and while there are niche markets within larger markets, the movement within the market will vary depending on where your rental property is located.
These are risks in property management that can be made by either the Property Manager or the Rental Provider. You need a strong administration system to ensure all the risks are managed properly.
Renters are human, and while they all being their tenancy with good intentions, if your relationship with your renter becomes uncomfortable, if they are struggling with something personal or if they have issues with dependence, then your investment property might just wear the risk.
The last category of risk is ‘Physical Risks’ – things that may create an insurance claim or make your investment property inhabitable. This could be due to lack of maintenance from your renter or your personal commitment to the upkeep of the property, or it could be an Act of God.
The best way to hand the risk in property management is to sign up with a company who has strategic risk avoidance systems in place. Software that enables them to log in compliance dates, issue legal notices to renters and ensure all rental reviews are timely. If you can find a Property Manager who understands the depth of property management risk, you’ll be confident that you have transferred all risk with your property into capable hands, ensuring a safe and comfortable place for your renter.
Besser Property Management
Now that you have a thorough understanding of why you need a strong dedicated property management team behind your investments, let us tell you something about us, why we are different to the thousands of other property management teams in Melbourne, and how we can help you.
Besser Property Management has a systemised team that are trained in specific parts of the property management process, so that you and your investment are constantly feeling supported. With each team member having a dedicated task, it enables them to be proficient in their role and ability to help you, rather than bogged down with every aspect of the property management process, which can lead to burn out and a high turnover in staff. We are proud of our team and how we have created innovative roles to ensure you have the best property management experience.
Here are our people who help you:
Host
Ellie is your first point of call at Besser and Co. Like the host at a dinner party, she will guide you to who you need to speak to in regard to your property management needs and queries. She is professional, caring and listens attentively to ensure you are put in the hands of the right expert in our team.
Marcel Dybner
Head of Property Management
Marcel is the brains behind the systematic roles within the Besser and Co team. He leads our dedicated team with a supportive and friendly manner. He is a respected leader in Melbourne’s real estate community, frequently requested to comment in the media. He is a clear communicator, is compassionate and is always happy to help Besser and Co rental providers and renters understand the Residential Tenancy Act and what it means for their specific situation. He revels in the problem solving aspect of Property Management.
Dion Besser
CEO and Business Development Manager
Dion has stepped into the role of Business Development Manager to help on-board new rental providers who are looking forward to the Besser difference in their property management service. He brings in new clients and supports both the leasing team and property managers in their roles through the company’s streamlined processes.
Ella Frankiewicz and Gabbi Mercuri
Team Leaders
Ella and Gabby are an integral part of Besser and Co’s property management team. They have decades of experience in property management between them and have personal investment portfolios to speak from a landlord perspective. They give the same respect to both renters and rental providers, as you never know when a renter is actually a rental provider, something that is becoming more common. They lead the team with support, empathy and commitment. They are also responsible for helping their team achieve their targets, cover any staff when they are on leave, the support the staff professionally and personally, and follow up on any rent arrears. They make the hard calls with compassion and professionalism. They are responsible for VCAT hearings and dispute resolution.
Dimi Forytarz and Saeda Al-Dakkak
Senior Property Managers
Dimi and Saeda look after any project management and international side of Besser and Co properties. They advise rental providers when it is best to do any updates in décor, appliances and functionality of their properties to help them maximise their rental returns and their capital growth. They also assist international students when they need to move back to their homeland or need to put their personal items into storage. Their strong cultural backgrounds enables to help people from all corners of the world. Senior Property Managers are also there to support our Property Managers when they need an extra hand.
Raya Qaqadeh, Tom Naughton, Gigi Hunt and Liana Strangis
Property Managers
Raya, Tom, Gigi and Liana are the first contacts for your renters when they are settled into their rental property. They have a customer-centric role that ensures that they are there to help renters with any maintenance, any concerns for paying rent on time, resolving any issues – if it’s to do with neighbours, concerns with the property or maintenance appointments, and above all, keeping relationships smooth, friendly and approachable.
Sonya Galitos
Property Management Inspections
Sonya’s years of experience ensures she is dedicated to making sure your property is always maintained to its highest standard. Sonya is in charge of ensuring routine inspections are conducted every 6 months, as well as all pre-rental and post-rental condition report inspections. She will also be the one who recommends any maintenance that needs to be done to your property to ensure its compliance, but also comfort for your renter. The beauty of having someone like Sonya on your team, is that she is the one who sees your property before, during and after your renter moves in and moves out. Her eye for detail and her dedication to conduct thorough reports will be beyond your expectations.
Christine Tjahyadi and Salsabila
Trust Accounts
Christine and Salsabila are the people who look after your money. They will pay your rent to you, plus pay all your maintenance, owner’s corporation, rates notices and any other bills you need to do with your investment property.
How Can Besser and Co Help You with Your Real Estate Journey
At Besser and Co, we had an all-encompassing real estate service that helps you in every aspect of your real estate needs. We can help you buy property, sell property, rent property or have your property rented. We also offer a build to rent service.
Buying Property
Besser and Co can help you buy property. If it’s to bid at auction on your behalf, help you with any negotiations through a private sale campaign, or help you get the best value for money in the type and location of property you are looking for to live in or let out, we can help you understand the qualities you need to look for in a property and where are the best buys.
Selling Property
We tailor our sales and marketing of your property to your needs. Every property is different, every property sits in it’s a nuanced marketplace and we know what buyers are wanting for either their personal home or as investment. We can help you with styling and the maintenance of your home including organising trades throughout the pre-sale period, create a unique marketing strategy for your property and assist you with the ups and downs that comes with selling one of your biggest assets.
Renting Property
If it’s renting your first property straight out of the family nest or you’re a seasoned renter, we help our prospective renters find the best property to suit their needs. We are approachable, caring and understand that it can sometimes be difficult to secure a property. We can guide you through the process to make it easier to secure a property, or understand what a rental provider sees as ‘red flags’ in your applications so you can do what you can to get your application approved.
Leasing Management
If you are a rental provider looking for a new property management team who takes the responsibility of managing your property seriously, then you’ve come to the right place. Our efficient systems incorporating the latest technology, our continual professional development and our nurturing ways in building relationships, is all part of our service. We are more than a rent collection and maintenance provider, we represent our clients with the highest level of service maintaining the best interest of our clients at all times. As a result, we are listed among the top property management companies in Victoria.
Build to Rent
We have multiple rental providers who own whole apartment developments needing a strategic plan to maximise their return over a 12 month period. When you have similar apartments in the same block, it’s not about getting the best return per apartment, it’s about getting the best return for the entire block. At Besser and Co, we maximise your occupancy rate to maximise your rental yield. A building that is full is better than a building that is empty, so we focus on streamlining your investment income over the entire block.
At Besser and Co, we are Manage Property – A Better Way.