How good property managers can be ‘tenant-focused’ while being an ‘investor’s advocate’

Thom said: "[We’re] trying to change the way that we approach those traditional property management tasks, make them a little bit more efficient, but also have [more] focus ... on the investment side of things and the performance of the property.”

Property managers, after all, are in a good position to influence the growth of assets.

“A good property manager is worth their weight in gold and they're often people that are right alongside you throughout that process of owning the investment property,” according to Nick.

The property professionals share their thoughts on choosing the right property manager, finding the best tenants, and becoming a good landlord:

 Should property managers strive to work for both camps—tenant and owner?

Thom Richards: I think the most important thing is transparency ... You just need to make sure that both the tenant and the owner are on the same page [with] what they want to achieve. And [you have to be] a mediator at the end of the day. The owner’s job is to get the most money out of the property—it's why they bought it in the first place.

Nick Bouris: You need two to tango, right? And although the landlord is, strictly speaking, your client and the ones that are paying your wages … [you have] to remember that you need a tenant in and ... the tenant needs to be happy in order for the landlord to get his rental income and, by extension, pay your management fee. If you take a holistic view [of] it like that, then you can definitely justify being in both camps at the same time.

What should you look for when choosing a property manager?

The main thing is turnover ... because if they're turning over tenants, generally, the tenants aren't that happy being managed by that particular person … For me, if the agency is turning over a lot, it could have something to do with the poor management … One of the biggest factors is that agents or owners aren't adhering to their requests quickly enough.

The flip side of that would be if someone hasn't got any tenant turnover. They're probably not doing a very good job because they're probably not putting positive pressure on rising up rents in line with markets … It's a fine line balance.

How should property managers deal with the increase in rent price?

Ideally ... they're actually being open and communicating with their tenant. They're advising them what the market's doing, they're letting them know that "Okay, well maybe the market is $30 away from where we are, but you guys have been great. How about we agree to a $15 increase or a $20 increase and we re-sign a new term?" so they're not getting that turn. They're still increasing the value of the rent that's coming in the door.

What is the best way to deal with tenants bringing up personal problems to delay paying rent?

That's a classic question and, I think, one that's [also for] broker than just property [manager]—having someone in the middle as a broker so that you're not the guy [hearing the issues] directly coming from the person asking it … [Having] someone in there that can point to themselves as an intermediary and say that they're only acting on behalf of someone else is important because then you can really step back and play hardball.

An amenity for the investor to not be connected with the actual tenant is a positive point for using a property manager.

Absolutely. Sometimes the reasons for pushing back might be less than adequate, but a lot of times, they are reasonably founded reasons. Some of the people might be experiencing hardship, their daughters are having surgery or some other major non-trivial reason for them not wanting to pay more. Without trying to sound like a cruel-hearted bastard, you want to be able to step back from that and not really hear those things and just put your directive forward.

Is there a good enough reason for investors to forego hiring property managers?

Personally, I prefer to have a manager … One of the biggest demographics for self-managers is ... retired tradies … because they've got the skills to look [after their] property themselves. They're usually on call, so they can actually attend to an issue that the tenants got quicker than an agent can facilitate … [They could] go down the path of collecting quotes and facilitating times to inspect the property and make the repairs … They can shoot over there at a moment's notice, they collect the rent straight from the tenant, and they give them a helping hand if they need things—a lot of them are quite hands on.

Some people just prefer the control. They like to know what's going on [and] they like to have direct lines of communication with people living in a really expensive asset of theirs.

I think, in any case, you've got to justify whatever you're spending on your investment … So, if you're spending your own time, what's that worth to you? If you're spending the management fee [like] 5 per cent, is using that management team getting you a return comparable to 5 per cent or greater … ? I would hope so … You got to think about this thing as an asset always and justifying whatever input is going into it, whether it be your own time or property manager's time or a combination of the two.

What makes a good landlord?

I think it comes down to good investor EQ, like having the apathy, the sensibility, the human touchpoint to be a good landlord but being a realist about it. How does that fit with the framework of you trying to make a return here, right? You're trying to get money in the door and seeing the gap in the valley … I want people to enjoy living in the places that I own.

Tune in to Thom Richards and Nick Bouris’ episode on The Smart Property Investment Show to know more about the best tools, tactics, and tips to manage your properties and make the most out of your investment.