Steve Nottle,
Head of Property Management at Image Property.
The cost of poor property management
Most investors use property managers to look after their properties because of their significant responsibilities and legal obligations.
There is still a brave cohort of novice investors who attempt to do it themselves but often find that it is much more complex and time-consuming than they had predicted and quickly engage a professional to do it for them.
Unfortunately, like all industries, there are good property managers and bad ones – the difference between the two is likely to cost you money.
Bottom line impact
The cost of poor property management can be extreme, including some investors even having to sell their properties because of serious mistakes.
There are a variety of issues that can come about because of poor property management, including the following:
Poor communication
Inferior communication skills between a property manager, lessor and tenant can spell big trouble for your finances.
Perhaps they are not responsive to requests from tenants or you as the owner, so they miss essential notice periods in a tenancy, such as issuing entry notices or notices to leave at the end of a residence.
They may also not inform you if your tenant is in rent arrears on time, which can create significant problems for your cash flow.
Poor maintenance and repair management
Every investor should keep up-to-date with necessary maintenance and repairs in their properties, but a lousy property manager may mean you are unaware of issues until they become big problems.
A professional property manager will manage maintenance requests and repair requirements versus a poor one who will probably do nothing at all – and you may be none the wiser.
Poor tenant screening and selection
One of property managers’ most vital roles is screening and selecting tenants for your property.
The best property managers have a tried and tested system to ensure they are screening and selecting tenants that are the best fit for your property.
A poor process will be a tick-and-flick approach because the property manager wants it done as quickly as possible rather than spending the time to select the very best candidate.
Poor record-keeping
At the end of each financial year, property investors should be supplied with a financial statement by their property manager that outlines all of the incomes and expenses associated with their property. This document is often then used in the creation of their tax return.
However, poor record-keeping from your property manager may mean that they have miscalculated your income or expenses, which can negatively impact your tax position.
Poor market knowledge
The most experienced property managers have excellent market knowledge. This means they can advise their lessor clients about the correct market rent for their properties at lease renewal periods.
Suppose a property manager doesn’t have this knowledge or experience. In that case, they may provide you with incorrect advice that can result in your property sitting on the market vacant because the advertised rent is too high – or the rent is too low, which will negatively impact your bottom line.
