Despite many calls for change from industry leaders, the property management industry in New Zealand remains unregulated. With a very low entry to market, the number of property management companies have skyrocketed. The last census figures (2018) showed that there are nearly 8000 operators in the industry. (Probably significantly more today).
If you hire a property manager, it pays to select carefully. Treat the first meeting like and interview.
Here are a few pointers on how to make your selection.
1. Voluntary membership
Membership gives operators professional support and puts important structures in place (e.g. dispute procedures).
While membership won’t guarantee performance, neither does non-membership indicate failure, but we do recommend that you ask about Prominz membership and explore further if they are not a member.
Given the introduction to this article, find out how experienced the property manager is. Property managers have to deal with a wide rant of situations. Those that have only ever dealt with tenancies that run well may lack the experience to deal with situations that fall outside of the norm. Ask about specific instances where the property manager had to deal with situations that are challenging. A good technique is to ask them to be very specific and to find out whether they themselves were the person dealing with the situation or whether they had help from others.
When interference from the property manager is required, you want them to be “hands-on” and proactive.
While geographic reach may not be important if you have properties in only one area, a property management company with a wide reach will have two things going for them. They are likely to be more experienced and they probably have a ready pool of trusted tenants on their books for your property. That tenant database is important because it makes tenant selection easier.
While you may want the personal touch that a small property management company, larger companies with the right systems in place will not sacrifice the personal involvement. They will in fact put that at the forefront of how they operate. At most levels, property managers deal with people, and while they should run as a business, managing that personal involvement well remains paramount.
- Ask how hands-on they are and explore a few scenarios, e.g. how and how frequently they conduct inspections
- Do they personally attend tenancy disputes?
- How do they conduct the tenant vetting process?
- Do they handle after-hour emergencies?
Like any good business, a property management company should have solid business systems and processes in place.
Check with the property manager on those processes:
- How they deal with arrears
- Do they conduct pre-move-in and exit inspections?
- How are the inspection results recorded?
- Do they have a rent increase policy?
Check whether they offer any guarantees. Property managers that are confident in their performance and results will be keen to offer some form of guarantee, be that to cover rent for a period where the tenant defaults or to replace tenants within a guaranteed timeframe. A guarantee indicates that the property managers have “skin the game”.
7. The company
Finally explore the values of the company. Find out what makes them unique e.g. a “Green Policy” or whether they have good staff incentives. These policies strongly reflect back on how they will manage the landlord tenant relationship and how they will treat you, the most important client.
Finally, we note that loyalty in business is short lived. Companies get hired and ditched at a whim. In the end it’s an easy process to change property managers. We want you to ask the difficult questions, select carefully and form a long and meaningful relationship with your property management company.