What does a property manager do?

Property investors own more than 2.2 million dwellings in Australia, with the vast majority rented to tenants.

Although estimates vary, it's thought around two-thirds of these properties are administered by property managers who can take the legwork out of looking after your rental property.

What is a property manager?

A property manager - also known as a tenancy manager, or simply an agent - takes on the day-to-day tasks of managing a landlord's responsibilities.

Property owners act as the liaison between the tenant and the property owner and can assist in ensuring both parties meet their obligations set down under tenancy laws.

What does a property manager cost?

Property managers charge a percentage of the rental income collected, anywhere between 5-12% depending on the state or territory and the level of service provided.

There are three types of fees commonly charged by property managers:

• Management fees: the fee associated with the day-to-day management of the property, such as rent collection, liaising with tenants and body corporate, conducting reviews and inspections organising maintenance and so on
• Letting fees: the fees charged for finding a new tenant is usually between one and two weeks' rent. This fee covers things like advertising, processing and screening rental applications, negotiating leasing terms, submitting legally required paperwork
• Other fees: other costs can vary from agency to agency, but cover things like lease renewal fees, tribunal representation fees should problems arise with the tenants, statement fees and more

Property management fees by state

Here's a breakdown of the approximate average property manager charges across the country for management fees:

Metropolitan areas, particularly in larger cities, tend to have generally lower rates because of competition between property management agencies. Sometimes fees can be higher in regional and rural areas.

What does a property manager do?

There's a huge range of responsibilities and tasks a property manager should perform to ensure the smooth running of a landlord's rental property.

Key responsibilities include:

• Advertising the property on rental websites and hosting inspections
• Finding and screening potential new tenants (and pets, if applicable)
• Organising the collection of rent and ensuring the correct amount is being paid, on time
• Preparing and finalising entry/exit condition reports
• Handling required paperwork
• Managing day-to-day interactions with tenants
• Inspecting the property on a regular basis
• Responding to requests for repairs and maintenance and arranging tradespeople

Do I need a property manager?

Property managers are certainly not mandatory and some owners may prefer to handle affairs for their rental property themselves in a bid to maximise returns or maintain better control.

But property managers come with specialised and up-to-date knowledge of tenancy laws (which differ between the states and territories) and can handle the required paperwork and ensuing issues to ensure legal compliance.

They also generally have access to databases that record tenants' rental histories which can be invaluable in screening prospective tenants.

Property managers are also generally aware of rental trends in the area and can alert owners as to changes in market rates for similar properties and other factors affecting rental earning capacity.

Yes, they cost money but that should be balanced against the time, stress, and funds they can save.

What to look for in a property manager

There are thousands of active property managers in Australia. But some will definitely be better than others.

In most states and territories, property managers require some formal qualifications and need to be registered. Often, property management services are connected to real estate agencies but some may operate as independent businesses with appropriate licensing in place.

To find a good property manager, it's wise to seek local referrals and check online reviews. Just as you did when you purchased your property, it pays to shop around to compare managers, services offered, and fee schedules. Experience and local knowledge can also be important considerations.

When considering a particular property manager for your property, the Real Estate Institute of Australia recommends asking them questions like:

• What qualifications/experience do you have?
• What are your processes in choosing good tenants?
• Can you explain your charges and how much will I be paying?
• How much would you market the property for, and why?
• How can you optimise my rental income and capital growth?
• How many other properties do you manage, and how much time will you have to devote to mine?
• Why should I pick you over other property management services?

Ideally, you should shortlist more than one potential property manager and select the one that best answers these questions.

How a good property manager can help tenants too

The ideal tenant-landlord relationship should be symbiotic in nature. A good tenant is one who is respectful of the home they live in and pays their rent on time. A good landlord is one who respects the tenant's right to live there in peace and in privacy and attends promptly to any issues that may arise.

One of the key roles of a property manager is to act as a go-between - if the tenant has any concerns or issues with the property, they will be much happier if they can contact a good property manager who'll promptly respond to their concerns.

A happy tenant is also much more likely to stay in that property for an extended period of time, meaning a landlord doesn't have to pay extra fees to locate new ones and risk having the property empty for any period of time.

But in addition to keeping good tenants happy, a property manager should also be adept at dealing with bad tenants. This means following up on missed rent, completing inspections, and issuing warnings if necessary.

Pros and cons of property managers

Pros

• Can save time
• Can save money by identifying issues with the property
• Can source and screen tenants in a timely manner
• Have access to databases of prospective tenants' rental histories
• Have a network of trades and maintenance people
• Can make objective, rational decisions as they are not emotionally attached to the property
• Have a better idea of market rents and more attuned to changes
• Can protect capital growth through repair and maintenance of the property

Cons

• Fees eat into rental property returns
• May not be on top of issues that affect your property, your tenants, and you
• Your property may be just another in a large pool
• May be a poor communicator and fail to inform you of all issues
• Loss of control of your own property
• A bad property manager may damage your relationship with tenants