21 Jan 13
Building a portfolio of investment properties is a sound strategy for creating wealth over the long term. As long as the investor understands that this is a long term commitment and not a get-rich-quick scheme, there are many rewards to be had. Tax relief through negative gearing, a regular cash flow and capital gain in a rising market are just some of the benefits.
Having these investment properties managed in a professional manner is an absolutely essential component of the strategy. Most people realise this when they buy their first property, and look around for a reputable property management agency. However some investors try to manage the property themselves, thinking that by doing so, they are saving money.
Self-Managing Rental Properties is Time Consuming and Difficult
They soon find how difficult it can be to find a good tenant who will pay the rent on time. After receiving call-outs at inconvenient times to make minor repairs or being unable to evict a non-paying tenant, they realise that modern-day property management is a job for a professional. The legal obligations, official documentation and record keeping required to satisfy all regulatory authorities including the tax office is now too complex for a non-professional to manage.
Some of the Benefits of Professional Management
Of the many benefits that come with professional property management, one of the most important is keeping the property rented. High vacancy rates mean loss of income for the property owner, and also for the management agency. This does not mean, however, that an agency accepts any tenant, just to keep the property rented. They have rigorous selection processes to ensure that they attract tenants with good references from prior rentals and a sound credit history. They also require proof of a regular income that can support the rent being asked.
Professional agencies also understand the importance of consistent and high quality marketing of their rental stock. The internet is now the major marketing resource for the industry. They invest substantial money in creating websites that are ranked highly by search engines. Rental properties are advertised through high resolution photos, descriptive language and most have an on-line application process that makes it easy for prospective tenants to make the first contact.
Staff training is another area where the benefits of professional management are immediately evident to the property owner. The best agencies invest time and money in engaging and training competent staff, and have an on-going program to keep them up to date with changes in the industry. As a result, they have thorough knowledge of the forms and processes required by legislation, and ensure that the interests of both the tenant and the owner are looked after.
Property management for an agency is the backbone of their business. The market judges their performance against the service they provide for both the property owners and the tenants. Most successful investors use a property management agency with a good reputation for service and find that the return on their investment is much better than if they had self-managed.