Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
When to sack a property manager
Inertia can be our worst enemy. It’s an affliction that sees many of us stick with the same mediocre bank and its fee-ridden service our entire adult lives. It’s the reason why car insurance premiums creep up every year when one doesn’t ring around at renewal, punishing not rewarding loyalty; and it underpins many property investors’ mistakes.
Sticking with a property manager who isn’t delivering is a major mistake. The consequences can be very costly – both in terms of lost income and impairment to a valuable asset. But, like our attitude to many service relationships, too often we tend to let underperformance bubble along in the background.
A ‘she’ll be right’ approach has no place in property management, but it can easily flourish. That’s because 99 per cent of the time an investment property doesn’t need management – the property manager is an insurance policy. It’s only in that one per cent of the time – tackling emergencies and other pressing issues plus the occasional check-ins with a tenant and landlord – where the property manager earns the fee they charge all year. Bad managers cruise along hoping crises won’t occur and are then unprepared when they inevitably do.
I’m afraid a manager who fails in a crisis generally has to go. If the roof leaks in a property they can’t fumble the interaction with the tenant, landlord or tradie at this critical time. So no, a landlord doesn’t want to be woken at three in the morning to make a decision about which roofer to use, but neither do they want to learn a property manager has spent hundreds of dollars on repairs without their authority. The landlord has the right to expect good and nuanced judgement from their manager.
But one shouldn’t wait until a crisis occurs before judging whether to move a property manager on. Let’s start with what good performance looks like. The foundations of good property management are accessibility and accountability. It is the manager who is there for their client when required, returning phone calls and following up on requests. They also take responsibility for their actions and how the tenancy is tracking. If there is an issue, say a late payment of rent, the good manager will let the landlord know sooner rather than later; and they’ll recognise that rent is effectively salary for an investor and that the implications of not getting paid can be just as perilous for an owner of capital as for labour, so will chase up the laggard tenant with alacrity.
The quality property manager is skilled at tenant management: they know the middle ground of attentiveness – one that neither leaves the tenant feeling unloved and likely to leave nor encourages too many expensive requests for action. And they can distinguish between the tenant with a reasonable grievance and the over-demanding one – and know when to involve the landlord and when not to. They are more than just managers. They are commercially savvy and strategically minded. They are alive to opportunities to increase their client’s revenue (i.e. raise the rent) and forward with advice about how this might be achieved, based on a sound and up-to-date knowledge of demand and supply of rental properties in their area and current tenant expectations regarding the level of renovation and amenity in a property.
Property managers typically charge between five to eight per cent of gross rent for their services. Generally you get what you pay for, so going for the cheapest agent can be a false economy.
Look for the property managers who are committed to their trade. They are not frustrated sales agents who feel stranded in a backwater. Often they have many years or decades of experience of property management or work for someone who does.
So don’t procrastinate. If there isn’t one in the diary already, get on the phone and schedule a meeting with your property manager for some time in the next six months. If their performance in the intervening period is lacklustre, let them go. Richard Wakelin