Given the high property prices in many cities, particularly in Sydney and Melbourne, many first home buyers are purchasing property in areas where they can afford but choosing to lease it out and live elsewhere. This has meant an uplift in the number of first-time landlords in the market.
Like many Firsts, becoming a landlord is both exciting and daunting. It’s a great way to earn ongoing income and take advantage of some of the tax breaks offered on property expenses.
But the business of being a landlord involves risks and responsibilities and requires active management, as well as the very important decision on who will manage the property.
A professional property manager? DIY property management? Or an online property management platform, like Cubbi? Which property management style is right for you?
The goal of professional property management is to secure the best tenants, minimise vacancies, care for the investment and help maximise rental return.
And the duty of professional property managers is to inform landlords of the risks, and their responsibilities and obligations to the tenants and the condition of the property.
Typically, before landlords decide on who will manage their property, they meet in-person with a property manager to understand how they work, their communication style, level of expertise and management fees.
Ideally, the property manager and landlord go on to build an open and trusted working relationship.
But now with more options in the market, it can be confusing for first-time landlords to know which property management style is right for them.
Here are some of the things you should consider before making your decision on who will manage your property:
Secure the best tenants
Targeted marketing and thorough tenant screening help to find tenants, and clear, concise, and ongoing communication helps to keep them.
When landlords place a troubled tenant in their property without doing their due diligence, the mistake can be costly. If eviction notices are needed and ENCAT action occurs it can cost up to three months’ rent, plus the cost of any damage that may have been caused by the distressed tenant.
Consider whether you or your preferred property management service can devote the necessary time and resources to secure the best tenants for your investment property.
Tenant retention should be the top priority for every landlord. Without tenants, a landlord is without income. And just like in business, keeping good tenants is more cost effective than finding new ones.
The simplest and most effective way to retain existing tenants is to be nice to them: deliver exceptional customer service, engage with your tenants, keep them informed and respond to their needs in a timely manner.
Of course, almost all landlords will experience tenant churn. When this happens, you should know the right rent to set and when to advertise your property – you don’t want to advertise before you can gain access to your property, otherwise, you won’t know its current condition. It also pays to understand rental seasonality in your market, as it can impact how quickly your property is leased.
Care for the investment
Regular property inspections are essential in ensuring your investment is being looked after and any necessary repairs or maintenance are addressed.
When carrying out routine inspections you need to know what to look for – are there any pets, are there more people living on the property than stated on the lease agreement, or has furniture been moved to hide possible floor or wall damage? Are there hidden repairs or long overdue maintenance issues that could become quite costly, if unattended?
A well-maintained property increases its value. When the time comes to extend the lease or increase the rent, it’s a good idea to consider the condition of the property.
Maximise rental return
Every landlord hopes their investment property appreciates and that they see increases in their rental return.
The best place to start is your local rental market. If you know the market rate and the type of tenant you hope to attract, you’ll have a better chance attracting them by setting the right rent. Maintaining your property (fixing anything damaged or broken) and keeping gardens or lawns presentable appeals to a broader reach of people, which positions your in higher demand.
Know the law
Managing a property is akin to managing a small business – which is why professional property managers exist. To stay in business, landlords need to understand their landlord responsibilities and duties, the rental law and policies and stay up-to-date on fair trading laws and practices.
One of the most important landlord responsibilities is to guarantee the safety of the property and ensure no injury or damage is caused, not only to the tenants but also to the neighbours or public.
Different styles of property management will work for different types of first-time landlords.
The key takeaway is that property management isn’t an out-of-the-box, one-size-fits-all solution. Professional property management, done well, is about the landlord and the tenant and tailoring a service to meet the needs of people connected to each property.