Believe it or not, if you are reading this, and you manage your investment property privately, you have probably experienced at least one of the following reasons as to why a professional agency is contracted to manage a private property.
Over the last 5-6 years, and especially within the last few years, the industry has changed significantly. The recent amendments to the Residential Tenancies Act brought about the most significant change to the Act since it came to Royal Ascent 35 years ago.
Something has also changed within the last 35 years, particularly after 2008. Access to information! Not only is the industry unrecognizable to those seasoned landlords and property managers, with the age and accessibility of the internet and smartphones, everyone has become an expert on what is lawful and now what is deemed to be an unlawful act.
In 2008, I remember having to go to the local library in Auckland to obtain a specially printed copy of the Residential Tenancies Act. Our team in the CBD wanted to be experts in the law, and that is what we need to do to learn. However, very few else did this, nor did most owners and tenants even know that the Residential Tenancies Act existed!
Despite all the changes over the years, landlords are often confronted with very similar reasons for asking a professional to manage their property. Here are the ten top reasons for moving away from privately managing your property.
- The lines between friendship and renting have become blurred. One of the main reasons why a property is moved from private management to a professional is that the owner has become too close with the tenants, and they now cannot bring themselves to make the tough decisions. One of the best parts about this industry is the fantastic long-term relationships you build with tenants and owners; however, it is always essential to keep the tenant-landlord relationship professional so that all parties know where they stand.
- I rented my property out to family or friends, and everything is now a disaster. Do you remember when your parents told you never to go into business with family or friends. Well, the same goes for renting your property. Sadly, we often see close relationships all but destroyed through renting this way. Once again, it is best practice to keep family, friends, and business separate. If you do go into a rental situation with close family or friends, approach it as though they are strangers and follow the same process as you would with anyone else.
- I feel too uncomfortable with completing regular inspections. When your insurance policy requires you to do quarterly inspections, the reality of such an undertaking can be quite different to the perception. When there is no buffer between the owner and the tenant, it can be pretty awkward, and sometimes you feel as though you are participating in an episode of Big Brother! Professional agents are trained on ways to conduct themselves during inspections to ensure we respect the tenant's privacy, check everything carefully, and be efficient.
- The rent has not been increased for years, and I do not know how to ask the tenants. You would not believe how many times we have taken over a property where the rent is the same as in the 1990s! As awful as you feel about conducting a rent review, you are doing the tenant a disservice by not keeping the rent aligned with market rates. Sadly, often when properties are sold with long-term tenants and need to relocate, it can be almost crippling to adjust to market rates. Regular reviews and fair rates are the best way to maintain a happy medium.
- We agreed that the lawns and landscape were the tenant's responsibilities. This is a common grey area and can be the source of many disputes. Often when a property is taken over, it can feel like you are stepping into a scene from Jumanji. Many tenants have the best intentions at heart, but the reality of maintaining lawns and landscapes for a property they rent can quickly become nonsensical. This can be resolved with careful management, and it can be a weight off everyone's shoulders. Maintaining pools can also be a shortcut to the tribunal or expensive remedial work, and these areas need to be clearly defined from the outset.
- The rent has fallen so far behind; I do not know what to do. Once again, this is a top contender for one of the main reasons a private owner contracts us. Often, the first obstacles we have to overcome when taking over a long-term tenancy is to chase rental arrears. Any professional agency worth their salt would not be afraid to take on a challenge and will be able to negotiate a reasonable outcome for all parties in these instances. Don't be surprised to hear that it is common to take over a privately managed rental with more than $5000 in unpaid rent.
- When I lived in the property, everything was fine. Now it's not. Isn't it amazing what you put up with when you live in your own property! Often, we do this subconsciously and don't even know the issue exists. When a new tenant moves in, they see the property with a fresh lens and pick up what you may have considered acceptable. We often see private investors turning to professional agencies as they find the maintenance overbearing.
- They seemed lovely when they moved in, and now they seem entirely different. Professional agencies spend tens if not hundreds of thousands of dollars annually to utilize leading management software. We do this to make sure that the overall rental experience for all parties is positive. Believe it or not, many tenants with poor track records target private owners as they do not have access to the tools and vetting processes agencies have. Only preferred candidates are subjected to thorough checks, and it generally makes all the difference.
- Securing tradespeople is difficult, and when I do, the problem is worse, or it is expensive. Any reputable property management agency will know that the backbone of their business is the relationships they have with tradespeople. A private owner has little to no chance of getting a plumber to a property at 5:30 pm on a Friday, but a professional agency does. Sandwiched between insurance policy requirements and owner responsibilities, many private owners engage professionals to take over the burden of maintaining their property. Believe it or not, pipes burst at all hours of the day. Furthermore, often an agency will secure better pricing than one-off requests.
- My tenants are untidy, and I don't know what to do or say. Only experience will help you define the difference between 'cosmetic' and 'beyond wear and tear' living habits. One of the tricky aspects of managing a property is having to follow up on an inspection where damage is done to the property because of living standards. Nine times out of ten, people are unaware that houses need to breathe or that a gas heater with no exhaust generates a lot of moisture and condensation. An agency knows how to approach these sensitive topics professionally to maintain the property and educate people in the process.
Whatever your challenge may be, we always welcome any opportunity to speak with owners who have done it on their own for years and need professional advice. Whether the translates into the management of the property or not, we are here to help.
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