The buy-to-let market begins to pick up, so does the debate about whether to self-manage an investment property or pay a managing agent to ensure a steady income stream. The debate is particularly relevant in harder economic times, when some owners are reluctant to pay a monthly management fee. However, where many new owners fall short is in underestimating the time and effort taken by professional managing agents to ensure the property delivers a sound return on investment.
The key to a successful property investment is proactive management, and it goes further than just collecting the rent. It centres on the quality of the tenant and the standard of the unit being marketed. Potential tenants scrutinise the unit as well as the building itself before signing an offer to lease. Hence, in wanting to secure a sound income from the investment property, an owner must ensure that his or her unit has been well maintained. Screening and selecting tenants is also critical, requiring expertise and experience. Once the tenant has been selected, the key to retaining the business is establishing a good relationship through regular communication. An empty flat means a break in the income stream that can be disastrous for an owner looking for a steady return. Tenant relations become especially important when managing the problems relating to the property. Sometimes tenants face plumbing issues, water problems, power outages, painting of rooms and maintenance – and managing agents must handle these problems in their entirety, taking away the owner’s hassle. A managing agent will draft and finalise rental agreements, pay municipal accounts and maintain yearly expenditure and income, trial balance and the increment in rentals and turnover.
Owners should always have updated financial reports and be able to assess the return and success of their investment. Choosing the correct type and size of agency is also important. Property management companies range according to their dealing processes. Some handle only rental management, while larger companies provided a wider service that often includes sales when the owner is ready to offload the investment. At the end of the day, the right property manager provides peace of mind to the owner and the returns should far outweigh the management fee.
Published in the Sunday Tribune, 29 September 2013, Property Guide, page 2