31 March 2016 Good property management The importance of good property management Your key to hidden investment profit It’s very easy to fall into the trap of thinking that your property manager is doing you a favour, and to not want to bother them with small issues. But it’s amazing just how much money small issues can cost, especially when accumulated over the life of your property investment. Be aware, and ensure that your property manager doesn’t become complacent. Key issue #1 - Maximising rental income The initial market rent set by the property manager for your investment might be correct, but over a longer period, things can slip. they may not stay current with rent movement they may legitimately want to protect a quality tenant they may take the easy option of offering your property at a more saleable rent or it may simply be a case of the old property manager having left, and the new one being unfamiliar with the market. The thing is, like any investment, it pays to stay on top of market trends, so regularly communicate with your property manager and quietly insist that they justify the rental value each 6 to 12 months, and adjust it accordingly. Key issue #2 - Minimising vacancy period Make sure there is minimal delay between the tenant’s notice to vacate, and the advertising of your property. You want a new tenant to see your ad, apply for the property, be appropriately reference checked, leave their old property, and move in – with minimal delay. Set the rent appropriately for the current market – without being greedy or unreasonable. Maximise rents, without creating vacancy. Ensure that your property manager promptly attends to maintenance issues, and keeps your property looking as tidy and presentable as possible. Key issue #3 – Optimal length of lease Year-long leases invariably lead to a more stable tenancy (with less vacancy), and lower initial rental costs. PMs generally charge one week’s rent to find and sign a new tenant. The less frequently this happens, the less the total cost to you the investor is. Key issue #4 - Minimising non-chargeable wear and tear Wear and tear is inevitable. It is the property manager's task to conduct and document regular property inspections, to note any unreasonable wear and tear, and to charge the tenant accordingly. If the property manager/property manager firmly communicates this policy upfront, tenants generally look after your property better. Key issue #5 – Property management fees These tend to vary quite widely – between agents, and from State to State. The key is to sensibly negotiate as low a fee as possible. Even 0.5% saving makes a huge difference. Importance of good property management We’ve touched on five key issues to consider when it comes to the diligent management of your investment property.and by keeping a steady focus on these five items you should: save unnecessary costs reduce costs and undue vacancies between tenancies hopefully enhance your long-term investment returns. Note: While the five key issues are intended as a guide only, your individual circumstances should naturally be taken into consideration . This is why we also recommend you obtain independent professional advice relevant to your financial circumstances.