One of the most important decisions for your investment property is deciding on the best property management in Sydney. But with so many options out there, it can be a little overwhelming to know where to even start. Before you know it, you might be thrust into using the agency your cousin or friend did, but it might not be the right one for you. The easiest way to discern the right one for you is to ask the right questions.
But, what are they? Some of the most cliched questions, actually don’t provide you any information that is going to help you make your decision. For instance, if you ask an agency what their fees are, you will get a percentage answer. But as some have many hidden extras, you may still not make the right decision. But, with these top 5 questions to ask your prospective property manager, you will get the info you need to decide.
1. What is their staff churn?
This question is one that only true expert property investors know what to ask – and it is a truly vital question. If an agency has a high staff turnover rate, it is a giant red flag that something is not quite right within the agency. The best staff are underpaid, overworked, or some other thing, this is not an agency that will be consistent for the long term for your investment property.
It is also a sign that the property manager you are building a good dynamic and an understanding with now might not even be around in the mid to longer-term. This is quite important as it can change the whole complexion of your relationship and even put the cat amongst the pigeons in terms of a tenancy and ultimately cost you money in the long run.
2. Do they have any hidden extras on their fees?
Everybody wants to know the management fees for a rental property. However, many people don’t realize that they should be asking whether there are any hidden fees or extras. There are a lot of agencies that are not forthcoming with all their fees. So, by asking just about the basic fees, you may get an answer that whilst technically right, doesn’t reflect the eventual cost.
They will sell you on a competitive management fee rate, but not mention their extra fees such as admin fees, lease renewal fees, lease preparation fees, end of financial year statement fees, and the uncommon disbursement fee. These can add up – and a lower percentage management fee may seem cheaper, but when put with the rest, can be double or triple another agency with a slightly higher management percentage.
3. How many routine inspections do they do per year?
The legislation in each state might differ to what frequency is the maximum allowed per year, however, that is not the information you want to get out of this question. What are you asking them is: do they work hard for you?
In NSW, the maximum number of routines that can be done in 12 months is 4. Most agents try to save on this cost by performing 1-2 per year. However, a good real estate agency in NSW should perform 4 routines in the first year of the tenancy, and 2 per year after that, unless the tenant needs a little more checking upon.
4. How do they approach lease renewals?
There are 2 questions in 1 here. Firstly, it’s very important that your agent proactively negotiates lease renewals BEFORE the lease expires and works with the tenant to get them to sign.
Agents don’t always actively negotiate lease renewals, and often allow them to expire, leaving the tenants on a periodic lease, or month-to-month lease. This puts all the risk on you as the landlord, as the tenant only needs to give 21 days’ notice to vacate, compared to when they have break lease fees in a fixed term.
You want to know that your prospective agents don’t lose tenants regularly as well tenants do move out from time to time, however, if there is a revolving door, much like with staff turnover, it can be a bad sign for the agency. As an extra 3rd question, this is also a good moment to find out if they have a lease renewal fee as well.
5. How do they approach maintenance?
A crucial component of property management is the managing of the property itself. It’s important to know if they are either quick and responsive to maintenance requests and if they have reputable contractors on their books and even if they are flexible over who they use.
The costs of maintenance can stack up if left unchecked. If they have a system in place or certain procedures.
During this portion of your conversation, it’s a good time to ask them if they receive referral fees, otherwise known as “kickbacks” from the contractors they use. This is quite common in real estate and is a dying trend. It shows a conflict of interest and makes it harder to guarantee that they use the best contractor for the job. However, it’s not completely gone yet.
I hope this helps you to find out the right information for your new property managers moving forwards. Remember, the basic questions can only reveal so much, as most agents are trained to deal with those questions and keep them looking appealing. You want to get some of the information in between the lines.
About the author
Charlotte Peterswald is a vastly experienced real estate agent and property manager, with successful offices in both Hobart, Tasmania, and Sydney, New South Wales. Charlotte has also experienced life in France, after living there for many years. Valuing customer service over all else and part of that is to share the wisdom and knowledge she has acquired over 30 years in the industry so that everybody can make better decisions in their real estate needs.