Once you have found the investment property that you intend to purchase, a few important things should be at the top of mind for every property investor.
When thinking of appointing a property manager to manage your property, many property investors initially think that fee is the first and main thing to take into consideration.
Of course, we are all price conscious these days and it would be unwise not to consider fees. However, when viewed in the context of the dollar value of the management fee annually against the sale value and capital appreciation of your property, capable and professional property managers’ fees are a modest tax-deductible expense.
All too often property investors fall into the trap of appointing a low fee property manager thinking that this is a saving. In fact is it false economy as there are a myriad of factors that must be considered when appointing a property manager. A low fee property manager may, at the end of the day cost you money through extended vacancy, the inability to train and be aware of industry trends and legalities and being unaware of how their actions affects your bottom line.
Things to ask a property manager before appointing them are:
- Are they aware of prevailing market conditions, tailoring lease terms to meet the peaks in the leasing cycle? A standard lease term may cost you more by ending at the bottom of the leasing cycle.
- Has the property manager asked about your investment goals and expectations? A good property manager should be aware of your needs and expectations for your investment to reach its full potential.
- What advice have you been given about the compliance and legalities that are imposed upon property investors before they lease a property? Not being aware of your obligations can expose you to legal action and compensation.
- How have they determined a market rent and how often are rents reviewed?
- Have you been informed what may need to be done to the property so you can realize its full income earning potential?
When appointing a property manager, do not dwell on fees. Look and ask questions about how the property manager can maximize your income and minimize the expenses of your investment property.