Time to Change Property Managers?

What’s Going On?

“Are the tenants going to renew their lease?”  I asked my property manager.

It just popped into my mind to call her.  I was a bit nervous.  I remembered last year when the lease lapsed she had a hard time finding a tenant.  The unit sat vacant for over four weeks and I didn’t feel she was putting in sufficient effort to bring about a quick result.  After it sat vacant for two weeks, I got on the phone and started looking independently for tenants.  I just about had someone over the line when she called to say she had a tenant.  Back to my phone call …

I waited – holding the phone – and listened for her reply.  It wasn’t exciting, nor encouraging.
“Oh yeah, I need to call them and ask.  Not sure.  I’ll get back with you.”  She stammered.
But, that’s why I called.  My property manager had shown glimpses of incompetence over time and it was costing me money.

She notified me a few days later with the news, “The tenants are not going to renew.”
We were already behind the eight ball!  The advertising campaign should have started a week ago, or earlier. We should of had a plan in place on the best approach to get the home re-rented.  But, there was none.

Start the Race

I didn’t waste any time.  The race was on.  I started looking for a tenant myself.  My plan was simple, find a suitable tenant – soon!

Is There Something Wrong with the Property?

Why so much drama?  Is there something wrong with your property?  Is it a wreck?  Is it in a gang infested neighborhood?

No, on all counts.  It’s in one of the best areas of Darwin.  From the balcony you can see Fanny Bay and the beautiful tropical ocean.  It’s virtually new – built in 2006; a multi-unit complex with all the trimmings – lap pool, regular pool, tennis court, BBQ area, walking track and secure underground parking.  The unit is first class – top range appliances, walk-in closet, ensuite, 3 large bedrooms, large living area, modern kitchen, high speed internet built in.

And, lots more!

And, Darwin has one of the highest demands for rentals.  So, really there should be no reason why the property isn’t continuously rented.  It was especially frustrating last year when I’d read the Australian Property Investor (API) magazine about how the rental market in Darwin had reached a crisis point!  Highest rents in Australia; a severe shortage of rental properties.  And my unit sat vacant for over four weeks!  Does this make sense?

I wasn’t going to let it happen again this year.  I was confident I could get a good result relatively quickly.

Two Fold Plan

My plan was two-fold.  First, I’d let the current property manager look for a new tenant.  If she landed a good tenant quickly, fine – she could rent it for another year.  Next, I would start looking for either a tenant or a new property manager.  If I found a tenant, I’d even consider managing the property myself.  Otherwise, I’d look for a new property manager with a “can do” attitude.  One who can get the property rented quickly;  one who would inspire confidence;  one who would look after the property and deliver on the “brochure” promises.

It was pretty obvious from early on, I wasn’t going to have much competition from my property manager.

Here’s why.

Price too high!

She was advertising the property for $700 a week.  That’s what we had it rented for previously.

At $700 a week the property was going to sit there un-rented.  The market had softened.  There were lots of units – brand new units – comparable units – on the market and renting for less.  I discovered this myself by doing a quick search on the internet.  I played the role of a person looking for a unit in Darwin.  It became clear, the $700 figure for my unit was too high.  We needed to lower the rent to get it rented quickly.

After a week on the market, I was hoping my property manager would call and say we need to lower the rent.  But, the call never came.  It didn’t surprise me.   My property manager was taking the same easy going approach that wasn’t effective last year.  Except last year the market was on fire and it took over 4 weeks for her to get it happily rented.  Now the market was a lot softer, how long would it take her this year?

Also, I called her the day the unit became vacant and she told me the property was advertised on the internet.  This was mid-week.  On  Friday of that week, I checked the internet to see the advert.  I couldn’t find it advertised anywhere online.  I was very concerned.  We’re going to go through a whole weekend without any advertisement?  Without even giving the property a chance to be rented?  I called my property manager.

“I checked the internet and cannot find the property anywhere.  Are you sure you have it advertised? “  I questioned with considerable consternation.

“I told them to put it on realestate.com.  It should be there?”  She replied with a certain amount of surprise.

Later that day she notified me I was right – the unit wasn’t showing on the internet.  There was some kind of glitch with the system and it never transferred over to the internet.  Or some ridiculous explanation of that sort.
Bottom line, how are you going to rent it if no one knows it’s available?

Pounding the pavement

By this time I had already been pounding the pavement looking for a tenant.  My search started by calling the complex receptionist.  She’d been very helpful last year when I was searching for a tenant.

“Can you recommend any property managers?”  I asked.

She gave me a half-dozen names.  Then she took time out to tell me my current property manager is not very well liked by most of her tenants.  “She just doesn’t treat them very well.”
This was confirming my doubts.   I’d already experienced some “poor” treatment at the hands of my property manager.  Like the time we came to Darwin and I organized a viewing of the apartment.  My daughter Chez and I walked from the Skycity Casino for our 5pm appointment at the unit.  We arrived just before 5pm and waited at the locked front security door.  And we waited.  And we waited.  Finally, my daughter called the agent.

“Oh, sorry, I couldn’t make it.  I left you three emails today.  Something came up.  I can give you the number of the tenants and you can call them.  They’ll come down and let you in.”

We called the tenants and they let us in.  Bizarre.
We travelled all the way from Alice Springs and she couldn’t make the appointment; an appointment we made well in advance; prior to traveling to Darwin.  Amazing.

Swing and a Miss

A few days later the receptionist told me there’s someone interested in renting our unt.  They live in the unit next to ours.  The owners are looking to sell but they want to stay in the complex.  I pursued this lead with vigour.  But, in the end the owners didn’t sell and the people ended up staying in their unit.  Oh well.  Swing and a miss.

Search for a New Property Manager

I then followed up on the property management leads.  I called at least 6 agencies.  During each call I was conducting an informal interview.  I refined my list of candidates down to two.  Then I asked these two candidates if they wanted to have a look at the unit to better determine a rental strategy.  I notified the receptionist of these two agents and she gladly let them in and showed them around the complex for me.  Once both agents went through, I called the receptionist and asked for a rundown on the two candidates.

“The first lady was the most professional.”  The receptionist assured me.  “She was very energetic and asked good questions and seemed to really enjoy what she’s doing.  I’d go with her.”  The receptionist explained.

I agreed; I had the same impression and came to the same conclusion.   Although the other agency had slightly lower fees and charges, I went with the receptionist’s recommendation.

Say Goodbye to Old Property Manager

I told my old property manager I had “alternate” plans for the property.  “Please return the keys to the unit reception office. “
I didn’t feel the need to provide a big explanation.   And, it turns out she didn’t want to hear one.

“No worries.  The keys will be at the front desk ready for pick-up.”  She responded.

That last sentence about sums up her attitude – apathy.   I was glad to be out of that arrangement.

Rental Plan

“We could start out at $675 for a week and see what happens then drop the rent or, if you want to get the property rented straight away, I’d recommend we drop the rent now to $650 per week.”  Said my new property manager.    Either way, we’ll start running open inspections this weekend and advertise  in the web and newspaper straight away.  Then we’ll give you an update every week on progress.”

I liked her style.  Form a plan then execute aggressively.

“I would rather have the property rented now for $650 than to have it rented four weeks from now at $675.”  I replied.

Later that week she called, “I’ve got the unit advertised on the web, have a look and tell me how you like the ad.”

I checked it out.  Good work.  Much better presentation that the previous advert with my old property manager.  Better photos, better write-up.  Much better “wow factor” for viewers.
The website advert allows you to check the number of views; how many people are looking at your ad.  The old website advert had hardly any views; this one was ringing off the scale.

Rented!

Within two weeks we had the property happily rented for the asking $650 a week.  I felt a certain sense of pride in this accomplishment.  I took action.  I rolled up my sleeves and got involved.  I wasn’t going to wait again this year – sitting on my hands – hoping my property manager would somehow change into a new exciting action oriented person.

And at the end of the month, I got a little reward.  A small deposit to my account for about $400.  Not bad considering the property had been unrented for about two weeks and all the start up management fees had been taken out.  The biggest was the property management letting fee – one week’s rent plus GST.  That’s $650 + $65 = $715!  But, I was happy to pay it.  Good service deserves to be rewarded.  I don’t mind paying for quality service.  I’m very happy I made the change to a new property management team.

Not Always Easy or Pleasant

Hiring a new property manager is delicate business.  You could jump from the frying pan into the fire; end up with someone worse than the one you’ve got!  The trick is to hire up; hire a better one each time you change.  Hopefully, you don’t have to change very often.  Hopefully, you hire right the first time.  I’ve had to change very seldom over the years.  But, on the odd occasion when I do, it’s not easy and not pleasant.  But, in the end, it’s a business decision.

Are you going to let a property manager destroy your cash flow just because you’re too afraid to make a change?

Property investment decisions are not always easy and/or pleasant.  But, that’s what keep things exciting and adds a little spice and adventure to our lives!