Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Tuesday 30 June  2009

How to Choose a Property Manager

Paying a Property Manager, for many owners, is like eating out. You can cook a meal yourself and clean your own dishes so why would you possibly pay someone else to do it for you. Often when paying someone to do a job for you it is in the expectation that they will do it better than you could and therefore we become especially vigilant as to the level of service we are getting.

Even chefs eat out occasionally and relish the chance to be waited on and have the meal made for them, while they get on with more important things like socialising, relationship building and having a life.

Of course most owners can look after their own properties, some better than even the best Property Manager, but unless their working time is worth less than $15 per hour they may as well have a Property Manager doing it for them.

On average, in Christchurch, a managed property will earn around $25 to $30 a week for a Management company and that company, on average, may attribute two hours of combined work to that property by the combined efforts of its staff members. Unless the Property Management company is a well-oiled systems based machine it does not work for anyone.

New Zealand’s DIY mentality is slowly making way for the “Get a Life” school of thinking. Australia has 80% of its residential rental stock managed, whereas we are still around 25-30%. As life gets busier and portfolios start to grow there comes a time for investors to have to go looking for someone to lend a hand. Many, withhold early advice, build their portfolios based on no financial buffer due to extracting the maximum tax advantages. Unfortunately as each acquisition eats more and more into a landlord’s family time (as he drives around the city on a Saturday morning mowing lawns) by the time he is screaming for management there is no buffer to pay for it and the attitudes in the opening sentences of this article prevail.

We advise our clients to set up their portfolios from day one with the ability to pay out that extra (tax deductible) $25-$30 per week even if they don’t intend to use it until much later. This follows the philosophies of Michael Gerber in his best seller “The E Myth” which suggests all small enterprises should be set up from day one as if you are going to package it up to franchise i.e. it doesn’t rely on you to exist.

So how do we find a good Property Manager? The industry itself has very quickly become a professional career choice for many, young and experienced property orientated people. The recent Government side-step, to supplying the profession with regulated standards for the protection of the New Zealand public, does not extinguish the compulsion of good managers to create their own standards based on the very high regulated codes of the Real Estate Institute.

The days are numbered for private managers who refuse to run Trust Accounts, implement transparent systems and subscribe to Codes of Conduct as prescribed by some members of the local Property Investor Associations. These members are making an attempt to self impose regulations, that the Government won’t, to bring these standards in line with those imposed by the REINZ on its members.

There are a few short questions that can be asked of a potential manager that shows their attitude to professional standards. They are;

- Can you show me the Code of Ethics and Practice you work under?

- Do you reconcile every cent of my money every day?

- May I view your written policies on arrears collection, bond refunds, inspection processes, staff communication, KPI’s etc?

- What Property Management tertiary qualifications does the company owner have?

- How often each year is your Trust Account audited?

- What percentage of your properties rent through your own website?

- How many of your staff know what it’s like to pay a mortgage?

- And many more.

If you are not satisfied with the answers to these questions you may not be talking to someone who is joining the move to make Property Management a respected profession, and you should move on to interview your next manager.

More and more the cost of engaging a manager for your property is part of the due diligence cost to be explored for each and every acquisition. I have seen too many, so called experienced, investors paint themselves into a corner whereby they have no choice but to manage their own. On the day they reach their goal to retire early, they are merely swapping their old job for one of a janitor. Get a life, get a manager.