Are those property management fees too good to be true? Here's what to ask

McIntyre Property’s Amanda Gordon has lost count of the clients who have come to her after making one common mistake when choosing their property managers.

When looking to list their property to rent, many landlords ask only one question: “What is the fee?”

Amanda says if an agency offers fees notably lower than its competitors, value is likely recuperated elsewhere – usually in the quality of service.

“Places with the lowest fees tend to have a very high turnover of staff and quite often, a young person has jumped into real estate thinking it’s an easy gig and was thrown into a property management role with no experience,” she says.

“They’re often assigned far too many properties to manage and suddenly they have a whole lot of owners and tenants to manage. Nobody calls a property manager to say: ‘Thanks, just wanted to say you’re doing a great job’. You’re always solving problems, putting out fires – that’s the job.

“Inevitably landlords find themselves in a situation where they’re dealing with a new manager every three months, they have to re-explain issues and bring them up to speed all over again, while the problems in their property remain unaddressed. It’s just not a good experience for anyone.”

Amanda says when choosing the person in charge of managing what is, for most people, their most valuable (and expensive) asset, the old adage applies: You get what you pay for.

The proof is in her property management client list or “rent roll”, a large portion of which consists of those who started at agencies with lower fees and became fed up with unresponsive property managers and long lead times to solve problems.

“For some it was taking a week or two just to get a response to an email enquiry – if it came at all,” she says.

“When we take over managing their properties, one of the first things we do is check in with their tenant – and they’re always happy to see us. If the owner hasn’t been getting a response from the property manager, you can bet the tenant is even more frustrated.

“Nine times out of 10 when there are problems that remain unresolved, the landlord doesn’t even know about them. Urgent jobs are generally acted on very quickly, but niggling maintenance issues tend to fall through the cracks.”

Rent rolls, often created by those with sales agent backgrounds who take the opportunity to assume management of the properties they sell, can be valuable commodities for agents to sell.

Amanda says agents looking to quickly grow their rent rolls often offer low fees – sometimes at the expense of the clients on them.

“I’ve worked at places where they’ve purchased rent rolls and they’re a mess, with incomplete jobs and chaotic documentation. At the end of the day, it’s the owners who suffer,” she says.

Price is important. But to avoid the potential pitfalls of making a property manager decision based solely on price, landlords can undertake some fairly straightforward due diligence to determine the quality of service they’re signing up for.

Amanda says a good property manager should respond quickly to enquiries, efficiently handle maintenance issues for renters and thoroughly scrutinise prospective tenants.

“The thing most people comment on when they come to us is so simple – an actual person answering the phone when they call, and a good old-fashioned conversation with a human who can help you. You can call 10 agencies now and 80 per cent of the time that won’t be the case,” she says.

“You also want an agent who keeps you in the loop. We invite our clients to inspections – some coming from other agencies haven’t clapped eyes on their property for years. Others come over with properties that haven’t been inspected in a year.”

Importantly, a good agency should have a proactive approach to chasing tenants in arrears.

“I have had clients come aboard because they’ve just found out their tenant hasn’t paid rent in months. That’s a serious concern, not only because of that income, but it potentially voids their insurance,” Amanda says.

When it comes to maintenance, repairs and capital works, a good agency will also go the hard yards to ensure its clients get a fair deal.

“I had one client who had received their own quote of $10,000 for a job and I found her someone else who did a great job for only $5500,” Amanda says.

“We have the experience, we know what things cost. That’s part of what you’re paying your property manager for.”

For more information contact McIntyre Property.

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