My Ultimate Guide to Avoiding Property Management Fails

17/11/2021

When Property Management fails to fulfill its role, it can certainly have a domino effect. Issues in management can work their way through all staff and vice versa, leaving a trail of poor attitude, zero care factors & staff that are generally unengaged. The internal dominoes roll onto the entire client experience which then naturally impacts landlords & their tenants alike.
So what’s the outcome for clients & tenants, issues with responsiveness, attention to detail, or any attention at all.

Aside from the internal politics of an agency, of which a lot goes on, the management of an agency in effect has a huge role in the staff that they keep so how an agency is run is the start of where Property Management can all fall apart.

“As an owner, you need to be able to pick out who may make a good Property Manager. Read to the end for how I would start my search.”

So, Pitfalls! Here is where and how it all falls apart, from a Property Manager simply not caring, being overloaded with Properties to clients shopping for the cheapest agents.

Not planning, Too Busy & Poor Organisation

Planning is essential for any job that involves a large workload. Property Managers are working on a multitude of tasks at any one time- seriously. Repairs, mixed in with arrears, vacancy and Routine Inspections. A Property Manager can certainly have many days where every part of their Job Description can be involved.

It is a busy job, so pre planning, being highly organised and moving quickly are all musts. Every Property Manager need their own systems to manage their tasks in a way that works for them individually.

 

Not being thorough with the tenant selection process

Thorough Reviewing now saves a lot of work & heartache down the track, Proper tenant selection benefits the Property Manager as well as the owner.

Putting any tenant into a property might seem opportune at the time to save the short-term pain of vacancy, but just wait on the time spent trying to clean up a tenancy gone wrong. Risk management is a HUGE part of a Property Managers role and this is always a factor in this process.

The number of agents not conducting proper reference checks on tenants is terrifying and I can say that first hand when a tenant of mine is moving to another rental, and no one has contacted me for a reference.

 

Failing to communicate with landlords 

Communication is the primary factor determining a property manager’s success. This isn’t surprising for an industry based on managing relationships with landlords and tenants. Property Managers have to keep on top of calls, emails and SMS communication with landlords & tenants and document any important correspondence at the same time.

Responsiveness is important for all but so is the proper communication of things such as condition reports, inspection reports & being an appropriate intermediary between a landlord & tenant. That is, passing on information but also adding value in providing recommendations & solutions to all parties. This means, a lot of the time, communicating on difficult issues and outcomes that are less than ideal for one or both parties.

Breakdowns in communication can easily result in Damaged properties, damaged relationships & damaged reputations.

Good communication though leads to long-term tenancies, lower vacancy rates, and genuine client satisfaction.

 

Not documenting important information

Property managers manage a large number of formal agreements with clients and leasing agreements with tenants. Aside from these they need to maintain and manage records, logs, ledgers and note notes notes!

File notes, Reminders, preferences & task management, the number of records needed would amaze most people. What a Property Manager records can be crucial when called up, Notes documenting a conversation or files notes of actions taken can be of huge significance when protecting themselves from liability but also protecting an owner or tenant from a wide range of possible issues. Proper documentation and record-keeping requires not only organisation but systems, internal policies & procedures, without these, an agency will fall short time and time again and a Property Manager is doomed to be blamed, stressed & eventually burn out.

 

Lack of attention to routine inspections and maintenance 

I’m not going to lie; I’ve been caught out here before. When you schedule too many Inspections in a set timeframe, the inspections become rushed, and critical issues are overlooked. It’s happened to me but you live & learn to set realistic expectations on how many inspections can be done in a set time frame and really not rush them or get caught up on your Inspection run. See for a Property Manager when you’re out and about doing appointments, you’re usually likely getting back to a whole day’s work waiting for you, and then some.

The other end of the scale sees routine inspections not being done so it’s extremely important to inspect properties on a regular basis so you can identify and fix minor problems before they become worse. Tenants need to be invited/ asked to report issues at or before these inspections, even if an owner doesn’t want to address a maintenance list it needs to be passed on to the owner.

 

Being too tolerant with rental arrears 

Another common property management pitfall/shortfall is not promptly attending to rental arrears. This is where procedures have to come into play, a not negotiable procedure that you carry out no matter what conversation has been had or promise made.

Contact has to be made & documented from the first days in arrears, sure it all starts off nice as a courtesy reminder, as it should. These “nice” reminders tackle most arrears before they get out of hand.

Failure to pay rent is THE main reason for abandoned properties, evictions & tribunal hearings. Agents need to be able to display the steps that they have taken to follow up, manage and communicate arrears and warnings to tenants that fall behind.

Early intervention is key when it comes to managing rental arrears.

 

Discounting fees and managing too many properties

Agencies take on new business as it comes in and don’t necessarily concern themselves with remaining sustainable. Unfortunately, instead of keeping to proper staffing levels, many Property Managers are overloaded with more & more new clients as time goes on.

The more an agency discounts their fees, the more new business they need to turn a profit and the more properties that a Property Manager needs to manage.

At this high rate, a decent service cannot be offered. THIS is the primary reason why the industry has such a high turnover rate and good Property Managers are so hard to find. They simply are overworked, overstressed, and leave. It’s happened to me and it’s happening to friends & colleagues of mine in the industry.

Sure, it’s tempting to take on every property that comes your way, but not all Properties we manage help us to be profitable, not where they command hours and hours of our attention due to being in poor condition & poorly maintained.

This further contributes to burnout and subsequent resignation of property managers. In the end, the company is left with mostly new and inexperienced staff, resulting in poor service overall and Landlords paying for the fact that critical information about their property is lost along the way, amongst other pitfalls this causes.

Thanks to the low service fees offered it is clear that large portfolios for Property Managers do not work and long-term investors are becoming more and more aware that a fee saving is not a benefit to them in the long term. If the race to the bottom for fees and fixed fee management continues we’ll see more and more Property Managers leave the industry, and who could blame them.

If you’ve read this far then you deserve my tips on how to select a good Property Manager;

  • Go with your gut, if you’re intuitive like that, after meeting face to face

  • Ask family & friends for recommendations

  • Speak to several Property Managers, are they personable & knowledgeable

  • Check out Reviews, Google at the very least tell a tenant & landlord perspective

Lastly, when this was first asked of me, I honestly resented the request but I see it differently now;

  • Several prospective clients have asked me for contact details for a couple of clients to speak to, I actually think that’s a great idea. If a Property Manager has nothing to hide then they’ll be able to provide a couple of landlords who are willing to provide a live reference.

Avoiding Tension in Tenancy

28/10/2021

Unfortunately, it’s well known that some tenancies can be full of drama with strained relationships between the landlord & the tenant, which means also the agent if there’s one in place.

There can be so many reasons for disputes to arise that sometimes every conversation or email can feel like traversing a minefield. I don’t actually have any minefield experience but far out do I know how quickly a tenancy can go sour.

It really doesn’t need to be this way though. I think the tone needs to be set from the beginning and along the way, it’s about getting people’s expectations to meet reality, because realistically- we can’t always get what we want. But you can get what you need.

Is that a song?

Anyway, across these last 18 months of tense times it’s become very noticeable in the tenancy space that not everyone is thrilled at how things are going. Landlords in Sydney are dealing with a rental market most have not experienced before in their time. Whilst many have been through the hail storms, floods, etc, for the most part, landlords have never had to discount rent or increase their capital expenditure, all the while until now having little government assistance and their outgoing costs stand firm. Of course, this has seen frustration rise.

On the other end of the scale, tenants have needed financial assistance in many cases or seen the need to move house, many have not been able to access government assistance or assistance from their landlords despite media reports of so much being available & misconceptions about landlords being able to provide tenants help. It hasn’t been that straightforward, so we have frustration on both ends.

I have some experience in “trying” to keep things light, helpful & really real between landlords & tenants so here are some of my tips on how to “try” to get things running smoothly from the get-go.

Why the focus on this topic?

Well firstly because of humanity & it’s just nice to be nice, but also, why wouldn’t you want some kind of mutually beneficial relationship to be respectful & courteous.

Also, tenants who are happy respect the lease, the property, and the landlord who respects them. Landlords respect when rent is paid on time and their property is being well cared for because it gives peace of mind- which is priceless.

Legalities

Get them right from the outset.

There’s a Lease, it outlines everyone’s contractual abilities, what they are supposed to do and when. Everyone has the opportunity to read it, or be educated about the lease along the way. Aside from the lease, there are other legalities to cover, an agent who knows the Act & Regulations will show you all the way.

Once you have agreed to any specifics, terms etc lay those out in writing & be sure you are happy to live with the terms you’ve agreed to, or risk being regretful!

Communication

Two-Way Communication is everything or a party in between who can pass it on and make recommendations / deliver unwanted news / negotiate etc.

But communication is key, we need tenants to report issues, we need them to let us know when things are done or not done. Tenants remind us sometimes of loose ends or simply what’s going on in the street or building that can impact the property.

So yeah, we need to be available and responsive to all of that. Back to the legalities, it’s crucial that important conversations, actions, or agreements are laid out in writing. For this, you need to be cover multiple forms of communication between tenants, agents, and the landlord. Email, Text, letters, phone calls, and file notes are necessary, sometimes for the most mundane of things but still! Record keeping is your best friend so you know where everyone stands.

Mutual Respect

A tenant should respect the landlord’s property and similarly, the landlord should respect the tenant’s home. Anyone can be sensitive to the security & sense of belonging they have in a home. Whilst the property is usually an investment property so emotion doesn’t come into place, some landlords can share that emotional attachment, but it’s more likely the tenant’s attachment will be there.

So, whilst a landlord should see investing in property as an investment, we can’t take away the human factor involved across the “transaction”, and that’s something we always need to consider.

Mutual respect is as simple as following the guidelines that the lease provides on all sides, but just factoring in your tenant or landlord into all decisions made. How will this decision impact the tenant or the landlord? It’s only fair that this works both ways and isn’t always a “me” decision. Respect boundaries, the need for everyone to play their part, be cordial, and don’t overstep.

Keep it Real

By that I mean, always be open to discussion & negotiation. Tenants might throw a huge party & owners might not get around giving instructions for repairs straight away.
Set your expectations to realistic and I guess it’s helpful when everyone has realistic ones and exercise some patience.

For a landlord, you should expect that the property is going to be “lived in”. Tenants, you’ll have to expect the need for inspections & instructions a lot of the time.

Whatever wrongdoings may occur in a tenancy, sometimes it’s best to be clear in addressing that issue, forgive & carry on. We’re only human after all.

Build Rapport

This one may be for landlords more so, or something they should ensure their agent takes an interest in doing. For the human touch, it’s nice to have some kind of relationship across a tenancy. One where everyone is approachable and the idea of reporting a repair isn’t anxiety-inducing for a tenant.

Attending to Maintenance / Requests

It’s an insurance & lease Biggy either way but it’s also the biggest source of issues in a tenancy. If you’re a landlord then this can be where you risk losing tenants, and while you can always find new tenants, that always comes at a cost.

So while you should not be throwing money at repairs & maintenance senselessly, you and your agent should have a plan on how to address something that’s arisen and then keep the tenant informed as it progresses. Even delays or setbacks should be communicated because no communication becomes the source of frustration.

 

As you can see, all the above is linked, it’s not anyone thing that you need to do to have a smooth-running tenancy but it’s about consistency, responsiveness, and sticking to your obligations- that’s for all parties involved! But in my experience, landlords, your best bet is to take care of your tenants and they will take care of your property.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

Locked Down… but not out!

19/8/2021

At the time of writing this we are 6 weeks into our 2021 Greater Sydney lockdown.

So future readers, will we be out of lockdown at the end of August? PLEASE let it be.

As Real Estate Agents in this current lockdown we really have to be grateful for the most part that we can continue working, albeit a lot differently but we can still work and carry out necessary tasks. Considering how many others are faring we must be grateful for that.

It sounds odd to write this but dare I say that, luckily enough, we know what the deal is by this stage. We also know how lockdowns work, their impacts and we know what help is available and to whom.

For Sydney what’s difficult this time around is that it feels like a backward step, having seen the economy here and the general mood improves over the first half of 2021.

In my world, the Property Management one that is, we had experienced a great year so far in terms of reduced vacancy rates, rents starting to stabilising and starting to increase as well. After 2020 I felt that we’d found our feet for sure and I think the sentiment is simply that we’ve all had enough of life with COVID-19 around us.

There is certainly less panic and shock that there was last year so thankfully, we still have tenants looking for properties, and those properties getting snapped up. People are still looking for new surroundings, more workspace to separate work & downtime, and trying new suburbs. As we’re now pretty well versed with our “new normal” we are definitely well placed to be able to give our clients, current & new, some certainty surrounding their investment properties especially when their property is coming onto the Rental Market during the current lockdown. While there may be some added concern because of some restrictions, we can thankfully follow the daily updates of the Real Estate Institute of NSW & Fair Trading to know what we can & can do as things evolve.

So, what’s happening at The Management Agency;

  • Plenty of one-on-one Inspections to show Prospective tenants properties, By Appointment & vacant properties only
  • Routine Inspections are delayed until restrictions ease, unless absolutely necessary, realistically we might need a couple of months to catch up on these
  • Urgent Repairs & Maintenance
  • Maintenance where tenants are agreeable to access & under a strict set of circumstances
  • Working through any requests for assistance via the assistance packages available to tenants & landlords
  • A steady stream of new clients coming on board with The Management Agency through July & at currently at capacity into September

As for our rental market, we’re yet to see any real impacts on rents or vacancy rates but of course, we’re monitoring and making any adjustments that are needed. Vacancy rates & rents are currently holding steady from what’s been a consistent year in lettings.

Aside from that, we are essentially working as per normal. Just like most other Sydney siders, we are trying to minimise our movements as well, with only the essential appointments taking place.

We’re here though, working from home as we always have. We just now have to be out of PJ’s and ready to go should someone want to see a property so that keeps us on our toes!

The new sign-off; “Stay Safe!”

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

Leases; To Renew or Not to Renew?

21/7/2021

Back in March 2020, I wrote about our New Leases in NSW following some changes to the Residential Tenancies Act & Regulations. Great timing huh, dealing with a pandemic and its impacts and making sweeping changes to how landlords and tenants view a Lease Agreement.

So it’s been a while now that these changes have been in but I still get calls and questions arising out of the blog I wrote about the changes. Titled To Renew or not to renew that blog can be read here.

As a quick summary though it goes through the Pros & Cons of this new legislation, and the potential impacts it might have (and has had) on owners and tenants, and the certainty that Fixed Term lease agreements once gave them that is now lacking. But I’ll summarise what the changes have done even further than that;

For Owners:

  • Resigning / Renewing a Lease to a New Fixed-term has little to no importance now because of how easy a lease can be broken
  • Owners see Periodic / Expired Agreements as more of an advantage as at least they are given 3 weeks’ notice of a tenant vacating. They also have not had to pay for a renewal to be signed.

 

For Tenants: 

  • Easy to Break a Lease but when they’d like some certainty of a Fixed Term Lease, they lose out with fewer owners offering them because of the reasons above.

 

So for Landlords, the options are;

    1. Not renew a Lease and have continuing agreement where tenants provide you with 3 weeks’ notice to vacate at any point

Or

2. Renew a Lease where tenants can break the agreement by paying a set break fee as outlined in my blog

So…

What has happened since these changes have come into place is tenants simply upping and leaving when they’ve found another property after a landlord has gone through the effort of finding them and the compliance measures that need to be fulfilled just before they get keys. The main concern for landlords is that you go through all of this and can now end up with a vacant property at any time. Realistically, the Break Fee isn’t covering the costs of reletting, vacancy in between tenancies, and so on.

Sadly now some owners only offer 6-month leases and no renewals, so whilst it was being heavily advocated that there be this leniency to Break Lease clauses when these reviews were being considered, who are the real losers here?  Long-term tenants seeking some certainty, or Landlords thinking that maybe investing in Property looks less attractive.

Speaking to the Real Estate Institute of NSW though, they’re sure that these terms are set to remain in place so like most things, pandemic included, we have to learn to live with them.

Am I being too dramatic about it all, too negative? Let me know in the comments below.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

 

 

NSW Renting with Pets – The Strata Update

19/5/21

I’ve previously written here about Animals in Rental Properties but throughout 2020 we’ve seen some changes when it comes to several highly covered Tribunal and court cases battling for Pet Owners to have the rights to keep pets in Apartments. We’ve also seen COVID-19 effectively increase the number of tenants seeking approval to keep Pets in Rental Properties.

In some high-profile cases in Sydney, we see appeal after appeal where ultimately, it’s up to the buildings individual Strata Committee to approve or decline applications for Pets. In Strata Plans it’s generally up to the owners to decide what By-Law they adopt for their specific building.

If a building adopts a Strictly NO PET By-Law then it essentially doesn’t have any Pet Policy in place, a No Pet By-Law is not a valid one.

In New South Wales, the default is no longer to ban pets (as it was prior to a 2015 law change), but instead allow pets after you obtain written approval from the strata committee, which can’t be unreasonably refused.

However, this doesn’t consider a strata property’s individual by-laws. Even when legislation provides for the occupier of a strata apartment to have a dog, cat, or even bunny, that doesn’t mean you have the strata committee’s approval. As with all by-laws, each strata committee gets to choose which by-laws it wants to incorporate into thier strata scheme.

Even if your building is pet-friendly, prior to bringing a pet into your strata property you’ll need to send a written request to the committee seeking permission.

The application could require information such as:

  • A description of your pet, including his or her size, age, appearance and breed
  • Details of your pet’s disposition, for example, is your pet docile or friendly
  • Records of formal obedience or other behavioural training
  • Records to demonstrate that you are a responsible pet owner by having proof of registration, microchipping, de-sexing and all necessary vaccinations
  • Records of keeping your pet previously either in a strata plan or other residence, including references from your former landlords or neighbours that specifically mention the behaviour of your pet

In the application process considerations made will be;

  • The By-Laws for the particular building
  • The type, size and number of Pets
  • The size of the property vs the size and number of Pets
  • If the Pet will suitably fit in with the Strata Plan

Whilst applications can’t be unreasonably denied, I think it’s fair to say that a large active dog won’t be approved for a small apartment unless for instance, its owner takes the dog to work with them.

If you are in a rental property, under the current legislation the owner of the property is allowed to exercise their discretion on whether or not a pet is permitted by tenants in their individual apartment or unit. When seeking committee approval, a tenant’s application to have a pet should be submitted to them by the owner of the lot, not the tenant themselves after the owner of the lot has approved the keeping of a pet in the property, so essentially this two-step process has to happen before the tenancy can be sure to go ahead.

So, is it worth looking into further, Yes and I highly recommend reading through the following Q&A link and the recent Webinar at the links at the end of this Blog?

For Tenants – find out what the owner’s position is on pets first, if a Property Description doesn’t stipulate just ask the agent if they are open to Pets. When you’re at the property look out for other pets in the complex and therefore the By-Laws are likely to allow Pets.

Obviously, if the property is a house or not in a Strata Plan then your only obstacle is the landlord. What I don’t suggest is getting a Pet first and trying to get approval after the fact!

 

For Owners – it may be worth looking into getting a tenant approved with a Pet, as I’ve written before most Pet Owners are responsible ones and can become long term tenants. For the most part, renting to tenants with Pets is a trouble-free experience! If you’re unsure of your Buildings stance on Pets, read through a copy of your By-Laws.

 

For heaps more info on Pets in Strata the following links are a must from the team at Lookup Strata:

A very informative Q&A on PETS in NSW Strata can be found here;

https://www.lookupstrata.com.au/nsw-pet-rules-for-strata/

A Webinar discussing everything Pets in NSW can be found here; https://www.lookupstrata.com.au/nsw-strata-webinars/

As a Property Manager I feel, and know for myself, how beneficial pets can be to everyone’s life so it’s important to me for The Management Agency to encourage Pets in Rental Properties. Of course, this applies where we feel the property is suitable for a specific Pet & of course the Landlord approves.

In the end, there are factors that determine outcomes that are out of our control and I personally wouldn’t condone approving a Pet in a property where I feel it wouldn’t be good for a Pet’s wellbeing. In any case, applications are always considered and handled on a case-by-case basis and I think that’s fair on everyone.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

Insurance that doesn’t Pay

29/4/2021

I’m like a broken record when it comes to Insurance, specifically Landlord Insurance.

I have written about it here on my blog, my #tuesdaytips on Social Media are constantly covering this topic as does my Client Quarterly Newsletter (Clients only, soz).

So why am I here again, out of pure frustration really?

Realistically, Property Managers aren’t inundated with work related to processing Insurance claims. It’s a good thing that claims are few and far between but it just seems that with some insurers everything is a battle.

Since COVID and the placement of the moratorium on evictions, halting landlords from evicting COVID Impacted tenants we know that insurance claims for Rent Arrears sky rocketed. Following that Insurers stopped offering new policies & have since increased premiums… I think we all understood why and the business case behind these decisions.

“Just because you have Building Insurance or other policies with an insurer, does not mean that they will be the best fit for your landlord’s Insurance”

My gripe though is more of a general one and while it might not be news to many it’s a warning to some about insurers exploring every possible avenue in which to avoid approving and paying a claim.

So that my rant isn’t an extended one here are some examples that come to mind as to why insurers have tried not to pay out legitimate claims;

Claim 1:

Rent Arrears following the Death of a Tenant.

The Period was the time between discovery and the family getting possession of the property back to the landlords

Issue:

Insurance did not want to pay the claim because we had not followed steps to chase the arrears or terminate the tenant for Rent Arrears.

We knew the tenant was deceased and terminated the tenancy under Death of Sole Tenant as per the normal processes. Insurance was not factoring in the moratorium or the fact that sending arrears notices was not necessary or very empathetic to the family.

Result:

Post some dispute resolution proceedings the claim was paid.

 

Claim 2:

Tenant Damage.
Tenant had been preparing food on the benchtops, leaving cut marks across marble.

Issue:

Insurance coverage did not cover damage that was accidental, Malicious only.

Result:

Insurance did not cover for what they called “Bad housekeeping”

 

Claim 3:

Rent Arrears COVID Impacted Tenancy

COVID Impacted Tenancy, the landlord had provided rent relief as per the NSW Govt Instructions however some months into providing relief the rent fell further and further behind. It was mutually agreed that the tenancy should come to an end. Arrears were left owing and a payment plan was not able to be negotiated.

Issue:

The Insurance policy only allows coverage of 2 weeks rent if the Lease was a Periodic Agreement, also known as a Continuing agreement.

An extremely outdated policy term that this insurer has had in place for many years but is being changed 1 month after our claim has been made.

Our argument here is that the majority of tenancies are periodic agreements after the initial fixed term has expired and more importantly, landlords and tenants do not have to renew a fixed term agreement. It’s like saying to a tenant at the end of the lease, you need to move if you don’t lock in for another year.

Result:

Pending as it goes through the Dispute Resolution process but it isn’t looking good!

 

It’s important to note that none of these insurers are specialist landlords’ insurers and more likely the companies you would use to insure your car with. Landlords should always stick to insurers that understand Residential Tenancy laws, the legalities and the limitations!

While I won’t name & shame and I can’t specifically recommend insurers It’s important that you, as a Landlord read the long-winded and PDS and ask questions.

THE PDS & Why you need to read it!

The PDS explains what actions can void your policy, how to make a claim and most important outlines what is covered and what isn’t covered. I’ve read a couple lately and while they are long-winded they make for an interesting read. If you’re going to buy a policy from any insurer, find their PDS and read it first.

I would really look at all insurers and just because you have Building Insurance or other policies with an insurer, does not mean that they will be the best fit for your landlord’s Insurance.

A policy that sounds good and is a fair price is what we look for but what they’re like when you go to claim is most important and there is plenty of info and reviews online about that.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/