Appointing a property manager to look after your property investment will obviously cost you money and therefore reduce your overall investment return – but is it money well spent? After all, the less you spend on your property, the better the performance of your investment, right? Wrong. In most circumstances, property investors are almost always better to pay for a professional to manage their property. Here are the 10 most important reasons why ….
Property Investment is a Business
If you purchase a property and rent it to a tenant – whether you like it or not you have just started a business. The fact is you have purchased an asset which you are marketing for rent, for which your customer (tenant) will pay you to use and therefore expects a service. That’s the rub.
As part of your new business venture, you have an obligation to your customer (tenant) to provide a clean, safe and well maintained property. This includes responding in a timely manner to their questions and issues and dealing with them quickly. The reality is that your customers will expect a relatively high level of customer service and you are going to have to provide it – because otherwise they will find ways to make your life difficult.
So you really need to choose whether or not you really are prepared to deal with the 2 am call to fix the hot water, or arrange replacement keys. This is obviously next to impossible if your property is in another country.
It is difficult to have a direct relationship with your tenants because sometimes it can be either difficult to say no to unreasonable requests. Alternatively, you may be not doing something which is just not being reasonable. In both situations a good property manager will help create the perspective you need.
Don’t underestimate the value of having a third party between you and your tenant. It is easy to get caught up with other people’s day-to-day issues, having a third party will give you some important distance.
Rent Collection and Rent Reviews
A property manager will perform one of the most important parts of your property investment – they will collect the rent! Sounds simple but not always completely straightforward – tenants don’t always pay on time, chasing to collect rent can be a pain.
In addition, your property manager will be able to help you to ensure that you are collecting a fair market rental. This can be quite challenging if you have had the same tenant for a long period of time. A good property manager will help to ensure that the rental is being incrementally increased in-line with the market.
When it comes to owning and managing an investment property the amount of government regulation involved is constantly changing and increasing. Staying on top of all of the regulations is a full time job! The issue is as a private landlord, the consequences for not adhering to the regulations can be severe both legally and financially.
For example, in England, not correctly registering a tenant’s deposit can result in a potential fine of up to 3 times the amount of the tenants original deposit! Check out this link to the Tenancy Deposit Scheme which you should take note of!
So, unless you are confident you can meet the existing regulations and keep up with their changes, it makes sense to outsource the responsibility and the risk.
Social Media is both a blessing and a curse! Social media has given everyone a voice, and many people will use their new found voice to complain! Tenants are no different – some requests will be completely reasonable others will not. Either way let someone else deal with it. Property managers are employed to give a good level of service, to deal with reasonable requests and turn down ones which are not.
Tenants are more comfortable dealing with a professional managing agent who is responsible for the property. Tenants need to provide deposits and a lot of personal information to rent a property. They want to feel comfortable that the party is independent and trustworthy. Importantly, they will pay more rent for this –most tenants will pay a premium for a professionally managed property over one managed by the landlord directly.
Dealing with Disputes
Property managers are close to the ground, they are in conversations with tenants and people in the property industry every day. They will have come across most of the scenarios you can think of and will help you with their detailed knowledge. They know the best practices, they know how to deal with disputes, they understand the rules and are a great sounding board for dealing with your property investment.
Property managers are very good at having difficult conversations with tenants, something which can be difficult for many people, especially if you are not in the same country. They are a great foil for discussions about why rents need to be increased or why a deposit needs to be retained in order to pay for damage to property.
As a landlord your costs for employing a professional property manager are generally tax delectable. So why compromise your investment by doing the property management yourself when there is such a marginal financial gain?
Finally, property managers will give you back your most valuable resource, time. Managing property is time consuming, you need to keep records, you need to respond to tenant queries and coordinate repairs, builders and handymen. Let the professionals take this off your hands.