We are often asked a number of questions by current landlords or home owners, but the one that consistently appears on everyone’s lips is “Why do I need a Property Manager/Property Management Company?”
And it’s a fair enough question – you’ve sacrificed numerous things to purchase your investment(s) so why would you consider handing over the management of your rental to an external party. In this article McPherson Property Management will highlight the main reasons for engaging a Property Manager, and preferably a McPherson Property Manager!
First of all, let’s take a look at what a Property Manager is and does. A Property Manager, in a nut shell, is the buffer between a renter and a property owner. They are engaged by the property owner usually to fill vacancies in a rental property, collect rent payments on behalf of the owner, carry out regular property inspections, and address any complaints or organize maintenance works of behalf of the owner.
The main roles a Property Manager performs include the:
First, you’ll be joining a slow emerging trend that has seen the typical landlord relinquish their roles and use the services of a Professional Management Company.
“72% of New Zealand’s rental properties are being self-managed by the owners. Only 28% of rental properties are professionally managed using a Home Rental Management Company.”
Stake Property Rentals, 2014
Though 72% is identified as being self-managed in 2014, 2011 data shows that 80% of rentals were self-managed – this is a shift of 8% over a three year period. With a rising population, inflated house prices, and changes to the lending criteria by the major banks, a large rental market has evolved.
Though the majority of properties still remain under the self-managed umbrella, a portion of these could possibly be attributed to the ‘hands on, do it yourself’ kiwi attitude.
So there is evidence of a fundamental shift, but the main reasons for engaging a Property Manager is the real benefits that they can provide. These are discussed below.
The opportunity cost (and time cost) that one undertakes self-managing a property could be significant.
For example, if you are a professional, the cost of having to deal with a property issue vs the cost/time of not providing your service to a paying client could be out of sync – a total imbalance where you may be actually losing money by having to deal with any issues that arise.
And besides, who wants to be woken at 1am with a property issue? Chase rental arrears? Organise contractors to complete works?
Not every property owner has the necessary skills and attributes to successfully manage a property.
By employing a Property Manager, property owners can rest assured that they are employing the necessary and appropriate skills for their investment to turn a profit; including professionalism, strong communication, experience, marketing and recruitment.
When engaging McPherson Property Management, you’re not only tapping into the experience and knowledge of one Property Manager, but all the staff that we have at our disposal. Property Management is at the heart of what McPhersons does – it’s engrained and we have the necessary experience and skills to deliver a faultless service.
Property Management companies have got a large pool of screened and readily available tenants for your property, just waiting in the wings.
Not just limited to an advert in the local paper, Property Managers will have a list of potential renters to call on when a property becomes available to rent.
On average, a Property Management Company will undertake more stringent controls than a self-managed owner. Where a self-managed owner may make a rental decision based on face value of a tenant and some references, take much lower bonds etc., in contrast a Property Manager will ensure the intended tenant completes comprehensive application forms, passes credit checks, reference checks and interviews.
You can be assured the appropriate due diligence is carried out to ensure that your property is let to the most appropriate tenant.
Some sources indicate that rental yields will generally be higher with professionally managed properties.
One of the reasons for this is that Property Management companies have a higher marketing budget (and are more professionally astute in the marketing of rental properties) and therefore have a greater reach and a larger potential market. With the volume of prospective tenants, rental yields can be higher due to the increased competition as it drive values up.
Another reason identified for higher rental returns is Property Management companies will typically have regular rent reviews and increases. In comparison with privately managed properties, some landlords don’t feel comfortable increasing rent, especially with tenants they have a good relationship with. With the Property Manager, this is just part and parcel of the role they undertake.
There are also some extreme efficiencies of scale here as well in regards to research, market awareness, legislation awareness and a tenant database.
“The experience of the owner manager who will most likely only go through the process annually compared to a professional Property Manager who potentially signs up new tenants daily is going to be obvious. The professional Property Manager will know the current market rates, have access to tenant check data bases and be up to date with all current legislation.”
Though there is a case that higher yields could be available, one needs to take into account the cost of engaging a Property Management company.
The final benefit is that of the organized and completed property inspection. Tedious, disliked by both the tenant and owner and difficult to organize to ensure all parties are present, the property inspection is a core service of the Property Manager. They carry out hundreds a year, so they are well equipped to organize, undertake and follow-up on any corrective actions that arise during the inspection.
As with any decision, there are advantages and disadvantages of each available option, but on balance, the decision to pass on the timely and often tedious actions that are required with a self-managed property to a Property Manager is one that is beneficial.
There is an obvious cost to employ the services of a Property Manager, but through specialization you can be assured of a professional service and positive outcome (and income) that see’s your property as one of a portfolio that they manage and of course the property management fees are tax deductible. Experience, continuity and repetition mean that nothing will phase them and that it is truly just another day at the office for a Property Manager.
Speak to McPherson Property Management today to see how we can take the stress out of your property management and make it an enjoyable experience owning an investment property, as we take care of the small things.