As a new or seasoned investor, you know that the right property management service can make a significant difference in your investment's success.
However, I frequently receive calls from investors who prioritise one factor above all: the management fee. While it’s important to be cost-conscious, selecting a property manager based solely on their fees can be a costly mistake in the long run.
The Pitfalls of Choosing Based on Price Alone
Many investors fall into the trap of opting for the lowest management fee without fully understanding what that choice entails. While it may seem appealing at first, choosing a property manager based solely on price can lead to a host of issues.
Here are some critical questions you should be asking instead:
Understanding the qualifications of your property manager is crucial. In New South Wales, property managers are required to have specific licenses and qualifications, but not all property managers are created equal. Ask potential managers about their training, what continue training do they do other than the requirement of CPD, do they invest in regular training to their employers invest in their training and skill set what certifications do they obtain to stay current with industry standards and legislation.
Experience matters. It’s not just about the number of years in the industry, but also the consistency of that experience. A property manager with 3 years of experience but who has changed offices every 6 to 12 months might not provide the stability and knowledge you need. Look for someone who has spent a significant portion of their career at one company, as this often translates into a deeper understanding of the local market and better service, but also shows resilience and dependability.
Inquire whether you will be working with a dedicated property manager or a team. If your only contact is a single manager who takes a vacation, you might find yourself in a bind, waiting for answers until the staff member is back from leave, A well-structured team can provide continuity of service, ensuring that someone is always available to address your concerns, even when your primary contact is away.
Property management is about more than just collecting rent; it also involves handling repairs and maintenance efficiently. Ask about the processes they have in place for addressing maintenance issues. A low-fee service may not prioritise repairs, potentially leading to bigger issues down the road. Ensure that the property management company has a solid plan for maintenance to keep your investment in top shape.
Typically, lower management fees correlate with fewer property inspections. Many cheaper services may only offer one or two inspections per year. This lack of oversight can be detrimental to the health of your property, Regular inspections are essential for identifying maintenance needs early and ensuring your property remains attractive to tenants.
While lower fees may seem attractive, they can often lead to subpar service and increased costs in the long run, By focusing on the right questions and understanding the qualifications and experience of your property management team, you can make a more informed decision that ultimately protects your investment. As the Head of Property Management at LJ Hooker Cessnock, I have seen firsthand how choosing the right property manager can impact an Investor's portfolio.
With 16 years in this office here at LJ Hooker Cessnock and a total of 25 years in the industry, I urge you to look beyond the management fee and consider the full value that a competent property manager brings to your investment, Invest wisely, and remember that the cheapest option isn’t always the best one.