Puzzle Finance Blog

Landlords hold the key

Competition for rental property contracts in Victoria is razor-sharp and landlords are being offered some of the best sweetener deals in the country. For anyone who owns investment properties, it is a great time to shop around for new property management deals.

Many estate agents are trying to boost income from ''rent rolls'' to compensate for their reduced revenue from sales. To get business through the door, some are heavily undercutting the prices charged to landlords by specialist property management companies.

A growing number of buyer advocates, who provide property selection services, are also offering to find and vet tenants, collect rents and take care of repairs.

Elwood-based Advantage Property Consulting is one buyer advocate that has segued into property management. Managing director Frank Valentic says agents have been offering free management services for six months, or not charging letting fees to find tenants, and paying for landlord's insurance. Others will manage properties for 4 per cent of the annual rent, he adds.

Victoria's average management fee, at 6.3 per cent, is the lowest in Australia, according to the Real Estate Institute of Australia. Booming Western Australia has the highest, at 10.8 per cent, while in Queensland it is 8.1 per cent.

The REIA estimates 23 per cent of all occupied rental properties throughout the country are self-managed. Other industry commentators put the figure as high as 40 per cent, with some DIY landlords paying an agent a one-off letting fee to find a tenant and then going it alone.

Keeping a lid on costs is a lightning-rod issue for investors. But while paying a 4 per cent fee sounds tempting, you need to think about what is and is not included in the lower management fee.

Metro Property Management's Virginia Sear says anyone evaluating property management contracts needs to assess the quality of service and inclusions, not just price.

The communications manager of the Real Estate Institute of Victoria, Robert Larocca, could not agree more. ''In the same way that you select an agent to sell your house, you really do need to look at factors other than price,'' he says. ''We are seeing higher vacancy rates at the moment, whereas two or three years ago it wasn't difficult to ensure a very high level of occupancy.''

When selecting a manager, check out the staff and look at their experience. One of the big complaints made by landlords about property managers is staff churn. You want a stable manager who will be in the role long term.

Mr Valentic says landlords do not have to go with a firm that is exclusively engaged in property management. ''The decision always comes down to the personnel,'' he says.

Getting it right

A good tenant is worth holding on to. But watch out - if you charge less than the market rent, you're giving money to someone else each week.

A property manager should be on top of comparable properties and managing your rent reviews. Rent increases need to be regular and in line with the market.

When situations go bad, a good manager is invaluable. Tenants operating illegal drug-making facilities, for example, have led to big repair bills for more than a few investors.

A competent manager will inspect properties regularly and act as the link between the owner and the tenant, so the owner isn't exposed to uncomfortable situations.

Self-managing properties can work well. Do-it-yourself landlords need a sound knowledge of state legislation affecting rental properties. It also helps if you live near the property.

Posted by Chris Tolhurst - Domain (The Age) on 9th February, 2013 | Comments | Trackbacks

Bookmark and Share

The trackback URL for this page is http://www.puzzlefinance.com.au/trackback?post=26671245


There are no trackbacks for this post


There are no comments for this post

Post a Comment

HTML is not allowed in comments, http://... will be automatically linked.

Name (required):

Email Address (not displayed):

Comment (required):

To help prevent spam, please enter the word hand here:

Puzzle Finance Blog

About Puzzle Finance


September 2017
August 2017
July 2017
June 2017
May 2017
March 2017
February 2017
January 2017
December 2016
November 2016
October 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010


Purchase or Rent (1)
The Age (1)