Not all property managers are created equal. In 2011 property owners who used Jericho Residential Property Management to look after their properties complained they weren’t receiving rent money, while tenants insisted they were paying. Landlords ended up losing money when the company went bust. So here are three tips to help make selecting a property manager easier.
1. Undertake a background check
In relation to the example of Jericho Residential Property Management, good property managers should manage rent payments through trust accounts, separate to any business management accounts, so even if the property management company goes bust, landlords are protected. To make sure potential property managers follow best practices, ask to visit some of the properties they manage and talk to some of their clients. See what the Independent Property Manager’s Association has to say about those property managers you are considering. Have there been any cases lodged with the Tenancy Tribunal about them? There are a few bad apples in every industry, so you shouldn’t judge all property managers by the actions of a few.
2. Are they capable of representing you at the Tenancy Tribunal?
After the most thorough background checks, vetting, communication inspections, and sometimes difficult tenants still slip through. If any issues can’t be solved directly with your tenant, you may need to file a claim with the Tenancy Tribunal. The Tenancy Tribunal is an open hearing where an adjudicator will hear disputes around the status of a property, who is responsible for damages caused, money owed, and eviction notices. It’s not a criminal court so you don’t necessarily need a lawyer but Tenancy Tribunals do come under the Ministry of Justice and the results of a hearing are binding.
While you can represent yourself, and some do, it’s normal for property managers to act on behalf of their clients. Even though it’s not a court as such, Tenancy Tribunals can still be intimidating. You’ll want to make sure your case is presented in the best possible light by someone who understands the process, has done it before and who knows what an adjudicator will be looking for. Some property managers will include representation at Tenancy Tribunals as part of their fee, while for others it will be an additional charge. In any case, you can ask when deciding if a property manager is right for you. In some cases, a property manager’s expertise and experience can prevent cases from needing to be filed with the Tenancy Tribunal in the first place.
3. Cost isn't everything
A classic motivator for choosing a property manager is cost. The average property manager’s fee is between 7.5%-8.5% of rent received. Your property management fees should pay for managing open homes, interviewing potential tenants and conducting thorough background checks, regular property inspections, reports on those inspections so you’re up-to-date with what’s happening, legal advice on tenancy disputes, representation at the Tenancy Tribunal, keeping on-top of law changes within the industry, ensuring rent is paid on time, chasing up when it isn’t and being on-call to respond to emergencies when something goes wrong with a property. When you take all of that work into account, should you really be choosing a property manager based on cost? Is the well being of your investment and your peace of mind not worth an extra $10-$20 a month?
For more tips on how to choose a property manager download our free checklist.
