Property Management Services earn more for Landlords

Property Management Services earn more for Landlords

LANDLORDS WHO use the services of a property manager are 15% more likely to earn positive rental returns compared to those who try to self-manage, new research has found.

A Study by research consultancy group, BDRC Jones Donald, shows 51% of landlords with professionally managed properties earn positive rental returns, compared with only 36% of those who self manage. The BDRC Jones Donald Australian Private Property Investor Study is the first of its kind in a decade.

According to Nicole Polley, senior property manager at Ray White Waterford in Queensland, this information will be vital to securing rental listings.

"This is not surprising information to me" she said. A property manager offers a landlord services that are of a much higher standard than they could possibly provide themselves, and so they will achieve a much higher return".

Adam Blight, state operations manager for property management at Harcourts South Australia and general manager of Harcourts AMPM in Adelaide, agrees.

"The property is well managed, the rent is reviewed every six months, and whereas private owners tend to get emotionally engaged with the tenant, an agent takes emotion out of it", he said. "Each PM sees the property as a business, and our aim is to look after that business and make sure the landlord is getting the most income out of it".

According the Mr Blight, in the last six months 15% of new clients that Harcourt’s AMPM has acquired have been from landlords who have self managed previously.

Ms Polley said her office has also taken over the management of at least four self managed properties in the last three months.

"It is normally the case that the landlord thinks they can manage a property more cheaply than paying a property manager, and this can lead to trouble for then", she said.

That trouble can include legal issues.

"Landlords who self manage property put themselves at risk of acting outside legal spheres", she said. "If they are not well aware of legislation, they may be breaching parts of it when writing up an agreement or contract.

"Also many landlords do not know how to professional deal with the recovery of debt, so often that debt will accumulate into a much larger sum. They need someone to stay on top of that".

According to Ms Poley, these risks should be highlighted as a strong argument as to why a landlord should employ a property manager.

"We are already one of the most expensive agencies in our area, so we know when we go into a listing meeting we must have all the policies and procedures ready to back up the reason behind our charges", she said.

The national study surveyed 500 Australians who own one or more rental properties. It sought to identify their outlook on the market, intention to buy or sell, overall profitability and the use of financial and insurance products.

"The Australian Private Property Investor Study found that a majority of private investors rely on the professional advice and support of real estate agents to maximize their investment returns," BDRC Jones Donald managing Director Dr Roger Donbavand said.

The study also showed that landlords are receiving positive financial returns, with 26% breaking even on their investment, 35% supplementing their normal income from their rental returns, and 6% living solely off rental income.

SOURCE: Residential Property Manager Magazine Issue 2.1. Jan 2013