The objective of this step is to equip you to see the need for property management and be able to select the correct property manager.
Not all property managers are equal. How do you find, evaluate and appoint your property manager?
A property manager is the person or company who will look after all aspects of your investment property. They will be responsible for sourcing tenants (new tenants are presented to you for you approval of course), doing credit-worthy checks on prospective tenants, collecting rental, paying your levies and rates, arranging maintenance, property inspections, credit control, and providing you with financial and physical reports and an annual tax report summary.
Ask these questions when choosing a property manager
2) Local is lekker! Make sure they are active in the suburb that you have invested in.
3) Ask your potential property manager for recommendations on how to maximise your rental while ensuring that you have minimum vacancies. You should discern that they have an understanding of your requirements of maximum return on investment while minimising vacancies.
4) Tenant sourcing. Establish that they have adequate systems for sourcing tenants and that they do appropriate credit checking. It is essential that they are registered with the appropriate credit bureaus.
5) Credit control. What measures do they use to ensure prompt painless credit control? Ensure that they have an effective system in place. Please note that this is a question to ask the references!
6) References: A property manager worth his salt should be able to provide adequate references of long term clients. Contact the references.
7) Ask the property manager what types of properties they specialise in (for example, holiday accommodation, clusters, houses, townhouses, or flats)
8) Transparency. A property manager who hides things for you, will hide things from you.
9) Talk money. When can you expect your rental to be paid and what is the lead time between the tenant paying his rental and you receiving it in your account?
10) Monthly reporting. What monthly reporting is provided to you the owner, and how are the tenants invoiced? Note that a professional service gains respect from your tenant.
11) Annual reporting. Ask how the annual finances are reported and how they will assist your tax return. Do they provide information in a format that is Receiver of Revenue friendly? Do they show an understanding of taxable expenses.
12) Communication. Look for a property manager who communicates well with you and by inference, communicates well with your tenants. Ask what normal monthly communication both you and your tenants can expect.
13) Costs. Ensure that you are paying market related fees. Take note that there is no industry standard for leasing commissions and management fees. Both property management fees and tenant finder’s fees/letting commissions are payable by the landlord. Ensure that you have a proper understanding of the costs and their impact on your monthly cashflow.
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