Choosing a Property Manager is an important decision to make. After all, this person is going to be responsible for one of the biggest assets you own. Yet many property investors don’t look much further than the percentage rate that’s charged, and whether they like the Property Manager or not.
These aren’t good decision-making criteria when choosing a Property Manager! After all, this person is not only responsible for making sure that your asset is well looked after – but they also need to make you money. And that goes far beyond their percentage commission.
Instead, think of the Property Manager as the Managing Director of your property investment business.
If you were recruiting a Managing Director, you would have a recruitment process that includes an interview with structured questions to gauge an applicant’s strengths and weaknesses.
Similarly, you should prepare questions when you’re choosing a Property Manager.
4 key skills to look for when you’re choosing a Property Manager:
1. Is the Property Manager confident and in control when negotiating with tenants?
This may seem an obvious characteristic in a Property Manager, but it’s surprising how many so-called ‘professional’ Property Managers have tenant-phobia. You only need to watch an episode of ‘Renters’ on TV to see tenants giving the Property Manager the run-around.
Who chose the problem tenants featured on ‘Renters’? The Property Manager! Who failed to identify any problems? The Property Manager!
So yes, you need a Property Manager who’s confident and in control at all times, especially when dealing with tenant problems.
If the Property Manager is calm and confident, the tenant is more likely to work with you to resolve the problem. A Property Manager cannot afford to appear nervous or lacking in confidence when dealing with tenant problems.
However, that doesn’t mean that the Property Manager can just be unreasonable and harsh to good tenants. Instead, the Property Manager needs to have good interpersonal skills to build a relationship of trust and respect with the tenants, as that is the key to securing long-term tenancies. (Think: fewer vacant periods and less moving-day damage means more profit for you.)
Being confident, in control, fair, firm and respectful is important but challenging. At Bridgman Property Management we call this approach “speaking softly and carrying a big stick”.
Take the time to assess any potential Property Managers you’re thinking of engaging, to see what their interpersonal skills are like. Ask probing questions to assess how they would handle various scenarios.
2. Does the Property Manager live close to your investment property?
Make sure you find out how close a potential Property Manager lives to your property… this is just as important (if not more important) than where their office is located. After all, the Property Manager will be on call 24/7, not just the 8 hours that the office is open for!
It is really important that your Property Manager has easy access to your property. That is, the travelling time should not be too onerous. A 1 to 1.5 hour return trip in the car is a reasonable barrier to many property investors from taking a 5-minute walk around the grounds each month to check that everything looks in order.
And when there’s a problem to tend to on site, the Property Manager shouldn’t be deterred by the driving time required. If the Property Manager is based too far away, it’s likely that many site visits will get put off to the next property inspection in 3-6 month’s time. All kinds of things can (and will) go wrong with a tenancy over that time period if left unchecked.
3. Is the Property Manager working for you – or for your tenants?
Many Property Managers consider their tenants to be their clients… and the property owner as their business partner.
This type of Property Manager will bend over backwards to appease the tenants – even when there is damage or unpaid rent. The Property Manager should not act like a social welfare officer or like the tenant’s friend.
The reason why the Property Manager is confused is because they charge a letting fee, so they earn money directly from the tenants.
When you’re choosing a Property Manager, it’s important that you choose one that sees you as the client, and that there is no confusion or ambiguity about this. The only way that that will happen is if you choose a Property Manager who doesn’t charge letting fees.
Remember, a Property Manager should be acting 100% in your favour. It is their job to protect your asset and make it as profitable as possible for you. If the Property Manager receives a financial inducement from the tenant, this simply won’t happen!
So when you’re choosing a Property Manager, be sure to ask them if they charge tenants a letting fee or not. If they do, then keep searching for a Property Manager that doesn’t, so you can be 100% confident they’re working for you at all times.
4. Does the Property Manager have a good team around them?
A Property Manager needs to wear numerous hats in order to do their job. This includes:
- Real estate agent
- Mortgage broker
- Good contractors: lawn and garden care, cleaning services, plumber, electrician, painter, builder, etc.
Whilst the Property Manager doesn’t need to be an expert in everything themselves, it’s imperative that the Property Manager has a good team around them.
In effect, the Property Manager acts like the Managing Director of your property investment business. They need to manage contractors and other relationships in an authoritative and results-focused way. Rather than hide behind the water trough when there are tough decisions to make, your Property Manager should be laying down the law and taking charge!
So when you’re choosing a Property Manager, ask them (specifically):
- What connections do they have?
- Which companies/contractors do they use?
- How do they source suppliers?
- On what basis are suppliers selected?
- How do they manage and monitor contractors’ work?
- Do they follow up when a job is complete – or do they just assume that no further tenant complaints are a successful outcome?
Remember, the Property Manager’s job is to protect your asset and act as your Managing Director. So when you’re choosing a Property Manager, treat the process like a job interview and have these questions prepared to ask them.
Don’t become one of the many people who leave property investment and sell up a portfolio because they became over burdened with tenant problems or Property Manager problems.
- Your Property Manager is acting as the Managing Director of your property investment business.
- Treat the assignment of a Property Manager as you would if you were recruiting a Managing Director, and have interview questions and tests prepared.
- Questions to ask potential Property Managers should be focused on:
- Is the Property Manager confident and in control when negotiating with tenants?
- Does the Property Manager live close to your investment property?
- Is the Property Manager working for you – or for your tenants?
- Does the Property Manager have a good team around them?
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