From pandemics to cash rate rises to inflation, the property market is seeing change like never before.
And in an industry so fraught with change, it can be hard to keep on top of the game when it comes to providing the best property management services for your clients.
The beginning of a new financial year marks the perfect time to relook at the industry at large, identify some of the challenges and forge a way forward for a successful year ahead.
Below, we’ve listed some of the key challenges of property management in Australia but also some of the best opportunities to evolve and grow your business.
The key areas of property management
A property manager keeps several balls in the air at one time – offering services and performing tasks across a multitude of rental properties.
Here are some of the key activities a property manager undertakes on a daily basis.
Setting the rent for a rental property takes into account several variables such as location, size of the property, age of the property and much more.
Researching and knowing the market is key – and a good property manager will do just that.
If you set the rent too high, you will limit your applicant pool. Too low, however, and you risk losing profits and not getting the right tenants.
Collecting rent and chasing arrears
Your clients will expect to receive the rent from their tenants on-time and in full.
To do this, you must ensure the process for payment is very clear for tenants.
Most property managers will use a direct debit system to manage rent payments.
However, when tenants don’t pay and you need to chase arrears, it can get messy. And not staying on top of arrears is the number one reason landlords leave their property manager for another company.
Set clear expectations for tenants and outline the ramifications if tenants don’t pay on time. Be stringent on your timelines and due dates, and be helpful but firm.
If you use automation software for your rent and arrears a lot of these processes will be automated for you, saving you time and money.
A lease or tenancy agreement is a legally binding agreement between a landlord and tenant.
As a property manager it is your responsibility to prepare the lease agreement and all relevant documentation in accordance with legislation.
Property maintenance is a routine part of being a property manager.
It is important to act quickly to reasonable maintenance requests from tenants to keep the property in good working order and to ensure tenants are happy, as this will help ensure a long tenancy arrangement.
You should maintain a list of reliable vendors who offer the necessary services at an affordable price, and investigate setting up a referral network with quality suppliers.
Routine inspections are key to ensure a property is kept in good condition by the tenants, and to ensure any maintenance issues with the property are identified and addressed.
The details you record at a routine inspection will also be used as evidence if a tenant dispute was to arise.
With property management comes a fair amount of administrative work in order to document all aspects of a tenancy agreement, rent, ongoing maintenance and disputes.
Automation software and office administrative support can help assist with these tasks to ensure the day-to-day operations of the property management business run smoothly and efficiently.
The Queensland Government’s Housing Legislation Amendment Act 2021 came into effect in October last year and brought about several changes, which will be rolled out over a three-year period.
- Effective from 1 October 2021: greater domestic and family violence protections for tenants and residents.
- Effective from 1 October 2022: changes to renting with pets, ending a tenancy and repair orders.
- Effective in 2023-24: minimum housing standards
It is essential property managers stay on top of any legislative changes and communicate these changes with landlords and tenants.
The key challenges of property management
The property management industry is facing some big challenges – technology has become a major disruptor in the sector, and finding quality staff is becoming a huge issue.
Take a look at some of the key industry challenges and how you can adapt and come out ahead.
Hiring and maintaining quality staff
As a highly people-focused industry, property management faces some very unique challenges. But the biggest challenge the industry faces is common to all sectors – staffing.
Finding, hiring and maintaining a quality workforce is a challenge like none other.
The right people on your team will be the make or break for your business, especially in a post-pandemic world where service, good communication and reliability are essential.
Lack of support, dealing with aggressive or abusive behaviour from tenants, and mental health issues have led to a notable exodus from the profession.
Property management is about people. Employers need to extend this premise to their employees and ensure all staff feel supported in their roles and feel that their contribution is valued.
Whether this means investing in technology to facilitate processes, offering career progression pathways or offering ways to support employees’ mental health, investing in your people is key, as underperforming staff or a high turnover rate can negatively affect your business.
Finding and keeping tenants
Although we are experiencing a very tight rental market at present, finding and keeping the right tenants for your clients’ investment properties can be difficult.
While you will most likely have a plethora of applications, screening and vetting tenants is a very time-consuming process.
But going above and beyond to find the right tenants for the investment property in the first instance, will save time and money in the long run.
And maintaining good relationships with your tenants is key to ensuring a good property manager/tenant relationship and to ensure any issues that pop up are rectified quickly and easily.
This is where good communication is key. Keeping tenants and property owners informed at every step of the initial transaction – and on an ongoing basis when it comes to rent, inspections and maintenance – will result in a long and fruitful relationship for all parties involved.
Managing tenant complaints
The Voice of Property Management Report 2021 found dealing with aggressive and abusive behaviour from tenants and owners to be one of the industry’s biggest challenges.
The tight rental market, high cost of rent, inflation and even the recent flood events have all put pressure on tenants.
And for property managers dealing with tenant complaints, it can be a tough task to keep on top of.
The recent report also stated that 53% of property managers are struggling with their mental health, and with the nature of the role meaning property managers are constantly on call, it can be a lot to deal with.
Setting clear boundaries and managing tenant expectations are key to ensuring property managers have the time to ‘switch off’ after hours.
It is essential that employers foster a culture where work is performed in business hours and to support their employees in managing tenant expectations.
The key here is, again, communication.
If tenants are informed clearly of how complaints and requests can be made – and property managers get back to tenants promptly – then many issues can be rectified before they become a problem.
The profit margin for property management is generally quite small, due to increased competition and consumer expectations.
But there are several things you can do to increase your profit margin. Some examples include:
- Automating processes: property management software can help streamline processes such as digital document signing, digital rent payment processes, workflow management systems, digital complaint and request management and virtual inspections.
- Review your fee structure: offer value for money and you will be remunerated for it. Here, quality service for property investors and landlords is key. Regularly review your fee structure and be aware of what your competitors are charging – but the goal is to give your clients the best value and service for the fees you charge.
- Set up your supplier network: creating referral agreements with vendors such as plumbers, electricians, locksmiths and the like is key to ensure maintenance issues are rectified swiftly but also to receive discounts on services provided.
The key products and services for property management
Now that we have taken a look at the key challenges and the key areas of property management, we need to take a look at some of the services a property manager provides.
Real estate photography
Good real estate photography is essential to make a property stand out from the crowd and position the property in the best light possible.
This will make the property more attractive to prospective tenants, resulting in more views on the property and more applications.
Advertising the rental property
Establishing a property’s online presence is essential.
It’s important that the property is positioned on the first two pages of the search in order to get the most interest from prospective tenants.
You can even boost listings to have them featured more prominently in order to attract more views.
When advertising a property for rent it is important to detail the process for the landlord so they understand what they are paying for and why.
A good property manager will effectively advertise a property while remaining completely transparent about the costs and approach.
Devices and software
Having the right electronic devices (smartphone, laptop/desktop computer) and property management software is essential to effectively manage a large rent roll.
This will ensure processes run smoothly and communication between property manager, landlords and tenants is clear and effective.
Having the right equipment will save you time and money and help you do your job more efficiently.
Safety and security
Property managers need to ensure landlords are aware of their obligations to ensure a property is safe and secure for tenants.
This includes things such as smoke alarms, window safety (for higher windows), fencing around swimming pools, locks and more.
As a property manager, it is essential that you are aware of all the necessary safety and security laws for rental properties and to inform both landlords and tenants of their obligations.
Regular pest control needs to be a priority for rental properties to ensure tenants feel safe and comfortable in their rental property.
Action by property managers needs to be taken as soon as any pest issue arises.
With the amount of rain and flooding experienced this year, mould is becoming a serious issue in many properties.
Staying on top of any mould is essential for the health of tenants and for good property maintenance.
With all the challenges that property management brings, there is also an abundance of opportunity.
A successful property manager knows that their success is dependant not only on the solutions they provide, but the level of service they bring to their clients.
Property owners and investors are looking for the expertise and knowledge that an experienced property manager brings.