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The Rental Property Agent can make or break a rental property as an investment. Knowing what to look for in an agent and getting the right one can take the hard work out property investment. In this article we look at the key attributes of good agents and how to look assess them.

An agent getting $25-32 per week income for the average 2 bedroom apartment in Sydney can afford to devote a maximum of 30 minutes of junior time per property per week to remain profitable. The reality is, most agents manage so many properties that your asset worth $300,000 to $400,000+ gets little attention.

Agents find you tenants and provide a rental management agreement for your property. They do not provide an asset management service covering keeping the property in tip top shape, communication with the body corporate and making sure your tenants are well looked after. They are generally a reactive service responding to tenant complaints.

Dinner party conversations that put people off buying property usually have a story like this: A careless agent rents a secure apartment to a family and doesn’t check their references thoroughly. There are three people mentioned on the lease and there is good family income. The owner willingly approves. However reality develops into; Too many people living in the apartment, they are noisy, damage public areas and eventually they don’t pay their rent.

Rental management agents are generally less experienced young women and men who desire a career in real estate and are learning about the business from scratch.

Make sure your Agents provide:

• Assessment of tenants’ characters: With experience many people can tell a reliable person after a few minutes conversation. However, checking references with some searching questions is still mandatory, you never know what you will learn supportive or not. Your income is reliant on their assessment.

   

• Able to effectively debt collect, if required: Good tenants sometimes have issues with rent, however bad ones regularly do. Make sure your agent is a member of Tenant Reference Australia. They can then check your tenant’s rental record before they lease your property, the small fee is money well spent.

   

  Being able to address debt collection so that the money is received is crucial to support owners, especially in light of recent interest rate rises. Any issue that escalates to involve the tenants’ tribunal is costly and generally favors the tenant.

• Able to assess caring for the property versus trashing it: Most agents do periodic inspections however good ones ask questions, listen, look, record and give feedback to the tenant. They also report this information to owners. Just as importantly they collect information on how people live versus how they present. This is invaluable experience for the agent and makes them more valuable to you.

   

• Pass on rental payments to owners’ in a reasonable period of time: Some agents retain rental funds and use them to gain interest for the month when the owner could well use the money. Check what their policy is.

   

• Pass on tenant requests and repair information in a timely manner: Repairs that are needed can save emergency services and costs. Some agents treat tenants as uninformed and ignore timely suggestions. Sometimes these suggestions would make the property more attractive for them, and presumably other tenants. This is good business.

Items that are not covered:

• Great tenants care about where they live and as a result the property generally costs less to maintain. They report problems in a timely fashion and are more considerate of appliance, fixtures and fittings, and interior decorating.

   

• Many owners think getting a rental agent for less money means they get better value. This is untrue, the less interest the owner has in the property the more they need a good agent to provide this service. Paying 8-10% is good value for the contribution of a good agent.

   

• Changing tenants is the most expensive item in most rental agreements. When vacancy rates are higher it can take 2 weeks to find a tenant and cost 2 more weeks income to pay for the service. Keeping tenants for longer is cost effective. Tenants are your customers, look to reward good tenants, for example, a free weeks rent at Christmas. Unfortunately our standard lease documents don’t encourage this.

   

• On site managers generally cost more to manage the property but good ones are able to decrease the maintenance costs and increase rental returns by providing a well run complex. These in turn increase capital gains.

   

• The body corporate effectively provides property and asset management with advise from their strata manager. Contributing to the body to reduce costs can change a property from unprofitable to profitable. It can also increase the attractiveness for tenants and increase capital gains.

The tenant is an essential ingredient in the affordability of an investment property. Many owners don’t give this enough attention. Recognize that asset management is different from rental management. Choose your agent carefully to create a gem of an investment rather than an expensive hassle.

Written by John Moore President of the Property Investors Association of Australia Inc.