A case for the property manager
Managing your own properties might mean a small weekly saving, but you risk a much bigger bill in fines and heartache, says one investor. finds out more.
Aphone call from a tenant with a burst boiler is something many property investors are all too familiar with.
But as the Government adds more regulations to landlords’ responsibilities, growing numbers are turning to property managers, rather than doing it themselves.
Real Estate Institute of New Zealand spokeswoman Dee Crooks says, anecdotally, there’s been a rise in people using property managers due to the Residential Tenancies Amendment Act 2020 updating rental regulations.
‘‘Also, since Covid-19, people have said they want to be able to enjoy their weekends – and they’re happy to pay,’’ she says.
Landlords can be up for penalties if they don’t get things right in this environment. ‘‘Paying a property manager is better than paying a fine. It’s about having the ambulance at the top of the cliff,’’ she says.
The move to property managers follows the trend in other countries. New Zealand is behind Australia, which has had more processes and procedures for longer, says Allan Hartley, sales manager at Quinovic Johnsonville.
Sharon Cullwick, executive officer of the New Zealand Property Investors Federation, is seeing new investors automatically going to property managers. She says around 40 per cent of her membership use them.
If you have one to two properties, and you have a fulltime job, it makes sense to outsource, she says. Healthy Homes standards are a big challenge for real estate investors. A lot of people don’t know what they need to do, she says.
Having a property manager doesn’t remove your responsibilities, she adds. Landlords still have to make sure they’re ‘‘managing the manager’’, and keeping abreast of new laws.
A property investor who has tried self-managing and outsourcing
Real estate blogger and property investor Andrew Duncan has tried both – and he’ll never go back.
‘‘It’s the work involved. You might think you want to save $60 aweek, but then there’s the cleaning, the listings online, the logistics, let alone the fines, if you don’t have the right information,’’ he says.
Choosing tenants was one of the hardest parts, he found.
‘‘When there are 20 applications for a property, it’s heartbreaking to say no to young couples moving in together for the first time, or people with a baby on the way, and you can only pick one.
‘‘A good property manager is worth their absolute weight in gold,’’ says Duncan, who uses Lynette Sletcher from Simply Rentals in Wellington.
The property investor also likes the network of builders and tradespeople his property manager has.
‘‘For most normal people, if you call a builder, they’ll say they can do it in six months. With a property manager, they’ll say to the builder, ‘I’ve got a small job, can you come and fix it’, and because you’re giving them regular work, they’ll come and do it,’’ says Duncan. ‘‘It makes amonumental difference.’’
Howmuch property managers cost and how to choose one
Most property managers will charge between 7 and 10 per cent of the rent and there may well be one-off fees on top of that amount – $30 for doing house inspections every three months, for instance, which many insurers require.
Quinovic’s Allan Hartley, who is seeing a ‘‘remarkable increase’’ of homeowners turned landlords, says: ‘‘Property management has almost become like insurance, where you pay $50 aweek more or less on the property and then you have someone fulltime looking after it,’’ he says.
If you opt to manage the property yourself to make the numbers on the homework, ‘‘you’ve bought yourself a job as a part-time property manager’’, he says.
A lot of tenants are not comfortable dealing direct with property owners, he says. They have no idea what they’ll be like as a landlord.
Hartley says for the relationship to work well, the landlord has to be responsive to calls from their property managers.
Not all property managers are the same
There is a range of property management firms to choose from, not all work to the same standards, so property investors should do their due diligence.
The Real Estate Institute of New Zealand has been campaigning for more than 10 years on raising the standards of property managers who are unregulated in New Zealand and it’s hopeful the Government will move on this in the coming months.
Cullwick says she runs her first meeting with a property manager like a job interview – she’ll go into the office and see how organised they are.
Make sure that the property manager has a trust account that gets independently audited, she says.
In his case, Duncan went for a smaller property manager because he likes being on a first-name basis with them and they know his properties well.
He also wanted someone who respected the tenants. ‘‘It’s very important that the property manager doesn’t treat them as a necessary evil.
‘‘Without a good tenant, you have no property investment, so I wanted someone who treats everybody fairly.’’