Set up your board of directors

Having a good property manager is like having a board of directors for your property investing business.

A good rental manager is kind of like your custodian board of directors. You, as chairman, take a sabbatical, heading off to the next thing to take up your time, while leaving them with a book of rules.

The rules include:

• Obey the law

• Get $500 per week rent

• Take care of any issues less than $250 and don’t bother me with them

• Check on the property regularly

• Process the candidates for tenancy and tell me who you recommend

• If the tenants do anything wrong represent me at the tribunal

• Handle all those pesky bills for me – rates, strata fees, water bills etc

As you can see, the real estate agency has multiple roles and we can complain about them and give the profession a hard time, but really, choosing the right agent is really important and vital to the running of your property investment business to keep it on track and under control.

What you need from your rental manager is for them to act as your ‘board of directors’, to manage your business while you move on to the next thing. When you think of it that way they’re well worth having as a key member of your team.

However not all rental managers are the same and if you can’t get a direct referral, then you need to interview them to find a good one. Some just get it and think strategically and others… well, they’re aspiring to be one day selling property and they’re doing their time in the rental department. You need a professional property manager on your board.

I have recent personal experience in appointing a property manager. In 2011, I interviewed four property managers from different companies. The range of rents they quoted me was $750 per week to $1000 per week. From my research, the median rent for a three-bedroom house of the standard I was offering the market was $780 per week to $835 per week. All the agents wanted to start at the highest predicted price in the range and over weeks reduce the price if there were no takers – all except one. He asked “Do you want to rent this straight away or are you prepared to wait to get the highest rent?”

We wanted to rent straight away so he suggested putting the property on the market at $795 per week. This is where the strategic thinking comes into play. His thoughts were that most people search the internet with ranges that are specific and don’t include any negotiation – for example, they might look for properties between $700 per week and $800 per week, so if we list at $835 per week, even though we’re willing to be negotiated down to $795 per week, several potential tenants may have missed seeing the property and we wouldn’t even have a chance to negotiate.

Clever property manager! He got the management contract and we rented in the first week. Not only that, one applicant offered $830 per week to get the property as it was superior to others in the price range. Thus we also got the higher rent.

If you intend to become a successful property investor owning a number of properties, it’s essential that you make the selection criteria for your property manager top priority. How you work with them and how they perform is integral to the success of your investments.

What has your experience with property managers been? Have you found a good one and have you got any tips for finding a good one?

Jane Slack-Smith is the Founder of Your Property Success, an online property investing education portal committed to affordable education.