All Topics / General Property / Property Managers… What Value do they add?

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  • Profile photo of smorossmoros
    Member
    @smoros
    Join Date: 2003
    Post Count: 19

    Hi All,

    I am assuming most people on this forum, either have property investments or are interested in the concept of IP’s.

    What value do property managers or Agents really add, other than taking a weekly percentage from your rental income?

    How often have you had to use you property manager or agent for things other than finding a tenant?

    Do you really need them on new IP’s?

    Can you do without them?

    In summary I have a property manager on all my properties, but I am curious to hear what all of you have to say about the advantages and disadvantages of property managers and agents…

    Regards,

    Steve

    Profile photo of ANUBISANUBIS
    Participant
    @anubis
    Join Date: 2003
    Post Count: 559

    Hi Smoros

    I have never actually used a PM – we manage ours ourselves which has never thrown up any problems. From being on the other side of the fence (we don’t own a PPOR) as a renter I don’t think they are worth anything.

    In 4 yrs we have had not a single inspection, so it’s hard to see how they are protecting the investor. I can check the bank balance as well as they can for rental payments, I can call a tradesman for repairs etc etc etc.

    I may be biased against them but I think the only advantage thye may offer is in finding tenants.

    Profile photo of fulloutfullout
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    @fullout
    Join Date: 2003
    Post Count: 233

    Hey I got a PM who never gets back to me when I fax her some request for quotes and questions. Usually I have to send 2 or 3 faxes to remind them, and the reply comes back a few weeks later.
    hrrrrrrrrrrr
    The last repair i had to fax once, then call her the following week, then another fax the next week, and she got back to me the week after! NOw I dont even know if the repairman did or did not proceed with the repair as the PM didnt get back to me after that!

    Does anyone know any good PM who is proactive and good in the Latrobe Valley area like Morwell/Churchill and Traralgon?
    PLs recommend

    ***********************

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    Hi Smoros

    I have never actually used a PM – we manage ours ourselves which has never thrown up any problems. From being on the other side of the fence (we don’t own a PPOR) as a renter I don’t think they are worth anything.

    In 4 yrs we have had not a single inspection, so it’s hard to see how they are protecting the investor. I can check the bank balance as well as they can for rental payments, I can call a tradesman for repairs etc etc etc.

    I may be biased against them but I think the only advantage thye may offer is in finding tenants.


    Hi Polar_bear,

    I agree with you, their main value is to find tenants only!!!

    The only problem with managing your own properties, is that once you start to have a few rented properties, it will be difficult to manage and work a 9 – 5 job at the same time…

    Steve

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    Hey I got a PM who never gets back to me when I fax her some request for quotes and questions. Usually I have to send 2 or 3 faxes to remind them, and the reply comes back a few weeks later.
    hrrrrrrrrrrr
    The last repair i had to fax once, then call her the following week, then another fax the next week, and she got back to me the week after! NOw I dont even know if the repairman did or did not proceed with the repair as the PM didnt get back to me after that!

    Does anyone know any good PM who is proactive and good in the Latrobe Valley area like Morwell/Churchill and Traralgon?
    PLs recommend

    ***********************


    They should be sacked as your agent… the one thing they never forget is to take their percentage…

    Profile photo of fulloutfullout
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    @fullout
    Join Date: 2003
    Post Count: 233

    polar bear,
    how does your tenant pay u each month?
    also, say i terminate my PM now, can i still get the tenant to stay on?

    ***********************

    Profile photo of TeacherK6TeacherK6
    Member
    @teacherk6
    Join Date: 2003
    Post Count: 164

    Personally i couldnt manage without my PM’s

    I work 3 part time / casual jobs, and 3 of the places i own r in parts of regional NSW.

    Im not a local, and if something needed repairing or attention then it would be hard to arrange that from sydney.

    And the mainstream agents usually give booklet upon booklet of all the “services” they provide..

    To Fullout, i once tried to terminate a PM, the tenant paid always on time and never gave trouble, so when i was changing a tap washer (local property) i suggested it to them, along with a small reduction in rent… which she (the wife) agreed to…

    So i put it in writing and passed it on to the agent… by the time the agent was through with the tenant, she had talked the tenant into requesting that the agent remains the PM ( the tenant was newly married and hubby was a ship captain away months at a time) im sure the agent gave the tenants all the “horror” stories of what i could do to them without a PM.. like kik them out or not follow up repairs…

    After all, it is tax deductable lol !

    Jason :)

    Profile photo of ANUBISANUBIS
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    @anubis
    Join Date: 2003
    Post Count: 559

    We collect rent via bank account. We set up an account specifically for the rent and the tenants get a deposit book. We can check online anytine whether it is paid or not.

    I don’t see any problems with terminating the PM – just keep your tenant informed.

    I work fairly long hours and have 6 IP’s on the go and don’t find it a drain on my time at all. They contact me if they have an issue – issue gets fixed by tradesman. A few phone calls a few minutes, pay the bill.

    Even searching for new tenants isn’t too bad get them all there within a certain time window and ask them to fill in an application if necessary – a few reference checks and sign the lease.

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    We collect rent via bank account. We set up an account specifically for the rent and the tenants get a deposit book. We can check online anytine whether it is paid or not.

    I don’t see any problems with terminating the PM – just keep your tenant informed.

    I work fairly long hours and have 6 IP’s on the go and don’t find it a drain on my time at all. They contact me if they have an issue – issue gets fixed by tradesman. A few phone calls a few minutes, pay the bill.

    Even searching for new tenants isn’t too bad get them all there within a certain time window and ask them to fill in an application if necessary – a few reference checks and sign the lease.


    Hi Polar_bear,

    What do you do about the Bond?

    Steve

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    Hi all,

    What percetnage does you PM usually ask for including GST? The lowest i have payed is 5.5%, but if you include the amount they charge for postage and handling, and other generic charges, they are actually getting alot more the 5.5%[:(!][:(!][:(!] I would like to cut them out of the equation, but still not have to do all the work[?][?][?]

    Steve

    Profile photo of melbearmelbear
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    @melbear
    Join Date: 2003
    Post Count: 2,429

    Hey Steve

    My long term goal is to have an employee who manages all my properties for me. Then I will pay them a salary (which is what PMs are on anyway – the agency takes the commission). I will also be ensuring that they are interested in investing, and aim to help them/invest with them as a partnership so in the end they will manage our properties.

    If you manage yourself, you can collect a bond of between 0 and 4 weeks rent. You then still have to lodge this with the bond board in your state as the agents do.

    Check out suzi bilosh’s book Aust Landlords Handbook. she manages (I think) 7 or so of her own properties and sets out what you need to do. Or else you could do the Property Managers course that is run by the various Real Estate Institutes. I did, and it made me realise i would never want to work for an agency – too many long hours!!

    Cheers
    Mel

    Profile photo of MichaelYardneyMichaelYardney
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    @michaelyardney
    Join Date: 2001
    Post Count: 616

    This is interesting because I used to think like many of the readers who have posted above. When I bought my first few investment properties about 30 years ago I thought I could collect the rental as well as anyone, but I have changed my mind over the years.

    If all your PM does is collect the rents then you are right, you probably could do it yourself, but if your property manager adds value, then that’s a different matter. Especially when their fees are tax deductible.

    Now I must admit I am biased….

    Pamela my wife is a director of Metropole Property Management, Melbourne’s best property management company. Today alone she picked up 6 new rental properties from landlords who were unhappy with their PM.

    But that’s not the main reason I disagree with most of you.

    Recently I heard someone say that he could have either made himself a sandwich at home (cost about $1) or he could go to Subway and have them make him a great sandwich for $5. While he makes great sandwiches himslef he chooses to go to Subway becuase he hates the preparation before and the cleaning up afterwards.

    Once you own a few properties you will find you can do better things with your time than collecting rentals.

    Other reasons I think you should use a PM include:-
    1. A number of surveys have shown that people who manage their property on average achieve a lower rental.
    2. Tenant Selection – as a landlord you do not have access to the National Tenancy Database to do tenancy and credit checks on prospective tenants.
    3. Are you able to prepare the lease documentation in a way that will stand the test in the tenancy tribunal? Do you know the special clauses that you can legally add that protect the landlord. Pam has 5 of them.
    4. Have you got the forms and the knowledge to handle bond payments correctly.
    5. Dispute resolution with tenants – this is hard to do yourself.
    6. Appearances at the Tenancy tribunal – again hard to do if you don’t know the legislation.
    7. Repairs and maintenance – even new properties have problems and having good reliable trades people is critical.
    8. Arrears control – most landlords have real problems with this. Pam issues a notice to vacate at 14 days (after 3 letters). Boy does this make them pay up.
    9. Do you have the negotiation skills and the market knowledge to minimise vacancies
    10. By the way private individuals cannot advertise on sites like realestate.com.au which is the biggest source of tenants for most agencies. Doing it yourself means you could miss out on a heap of good prospects.

    If you want to download an interesting report outlining 12 probing questions to ask your PM click on this link.
    http://www.metropole.com.au/reports/bonus_report2.htm

    Michael Yardney
    Metropole Properties
    http://www.metropole.com.au

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    Hi Mel,

    I don’t manage my IP’s myself, however i just struggle to justify the money the PM’s get paid. Again not all of them are bad… But most people do not have much choice, there are two option, use them or do it yourself!!

    How long was the course and how much did it cost?

    Steve

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    There are some shockers out there as evidenced by the stories here. But when you find a good one and should something go wrong you will realise why you have one.

    Especially if the property is not conveniently located nearby.

    Sometimes it is best to pay an expert that works well with you. The difficulty is finding one! i think personal referrals are best for this sort of thing if possible.

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of smorossmoros
    Member
    @smoros
    Join Date: 2003
    Post Count: 19

    Hi Michael,

    Firstly, I would never waste my time collecting rent, i do believe this is bad use of time for most… but for some it may not.

    I do not disagree with your comments and i am sure metropole offer a great service, seems like a great company… My point is that PM’s do need to be paid as much especially when most of the time, specifically with new properties, they don’t really need to do anything… I kind of like the idea of PM’s offering various management plans to their clients… e.g. New apartment plans, Incident based plans etc.

    I know many owners of real estate businesses, they all say that a healthy real estate business heavily relies on the number of properties it manages… High profit, annuity revenue… Hence why metropole is seeking this market!!!

    What kind of rates do you charge at metropole? Let’s face it the property game is about making money, so other than providing good service how do you ensure that you offer you clients (Landlords) the best possible return… Keeping in mind the massive influx of new apartments in VIC which has directly impacted landlord’s seeking for premium rental returns.

    Regards,

    Steve

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    There are some shockers out there as evidenced by the stories here. But when you find a good one and should something go wrong you will realise why you have one.

    Especially if the property is not conveniently located nearby.

    Sometimes it is best to pay an expert that works well with you. The difficulty is finding one! i think personal referrals are best for this sort of thing if possible.

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.


    Hi Simon,

    Well said… I have only had issues with one PM, and that was the only one that was not a personaly referral. After a few incidents and a letter from my solicitor stating negligence, she cleaned up her act… But the point remains, they get money for jam in most cases!!!

    Steve

    Profile photo of melbearmelbear
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    @melbear
    Join Date: 2003
    Post Count: 2,429

    Steve

    I think it cost me $695 and it was held over two weeks, with about 5 half days, and one full day or something similar. Some ‘homework’ and an exam at the end.

    I did the course so I could ‘hold the hand’ of my sister’s friend who I was going to employ to manage my properties. Sadly, that arrangement hasn’t worked out, and my new aim is to steal a top notch manager from one of the firms when I have the $$ to pay them at least an equivalent – for probably 10% of the work.

    Cheers
    Mel

    Profile photo of smorossmoros
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    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    Steve

    I think it cost me $695 and it was held over two weeks, with about 5 half days, and one full day or something similar. Some ‘homework’ and an exam at the end.

    I did the course so I could ‘hold the hand’ of my sister’s friend who I was going to employ to manage my properties. Sadly, that arrangement hasn’t worked out, and my new aim is to steal a top notch manager from one of the firms when I have the $$ to pay them at least an equivalent – for probably 10% of the work.

    Cheers
    Mel


    Hi Mel

    Does this course class you as a qualified PM?

    Steve

    Profile photo of ErikaErika
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    @erika
    Join Date: 2002
    Post Count: 151

    Hi All
    I have been reading this thread with interest. It is amazing that the only thing that PM do is collect the rent. You should be so lucky if that is all they do. That means that they have chosen good long term tenants that fix everything themselves.
    I think of our property managers as part of our property investing business what they bring is their skills in that field yes we have had to sack some of them but my part in this business is looking for new properties. Would you do your own maintenance,conveyancing,building inspections, pest inspections? Why is it that everyone thinks they are just as qualified or have the time to PM?

    Profile photo of smorossmoros
    Member
    @smoros
    Join Date: 2003
    Post Count: 19

    quote:


    Hi All
    I have been reading this thread with interest. It is amazing that the only thing that PM do is collect the rent. You should be so lucky if that is all they do. That means that they have chosen good long term tenants that fix everything themselves.
    I think of our property managers as part of our property investing business what they bring is their skills in that field yes we have had to sack some of them but my part in this business is looking for new properties. Would you do your own maintenance,conveyancing,building inspections, pest inspections? Why is it that everyone thinks they are just as qualified or have the time to PM?


    Hi Erika

    It is interesting to hear different points of view on if people need PM’s. Personally i think we need properties to be managed, and for most people managing their PM themselves is not a viable option. My argument is that in most cases PM’s do not really earn their rates i.e. management fees, postage and sundries charges.

    What are your thoughts on this.. Also from your response i am assuming your are a PM. To your defense I have one PM that i would never change, but a large majority of them are knuckles!!!

    Steve

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