Best practice in property management

Good morning property chatters,

I've been lurking on this forum for a while and it looks like there are some great property managers in here!

I would love to hear from some of you about best practice property management practices in a few areas:
- managing tenant relationship
- trust accounting
- reducing vacancy times
- anything else you think is relevant to operating in best practice.

Then assuming you are operating under best practice procedures, what information/data do you track to assess whether your strategies are working?

Thank you all

 

Could write books on each of those topics, what do you actually want to know?

 

Why do you want to know? Are you a pm? Uni student doing research? If your a newbie investor, whats trust accounting best practice going to do for you?

 

I'm sure you could! I would love to hear from you on a high level summary (say top 6 and their associated metrics) so I know the right questions to ask when looking for a property manager.

I'm originally an Adelaide girl and all my family are there, such a great city!

 

Those are property management systems and quite detailed and probably can’t be answered by investors on an investor forum.

 

Possible controversial personal opinion:

I don't think the average landlord can assess how good a property manager is by just asking questions or talking to them. "You don't know what you don't know", and the Dunning-Kruger effect and all that.

I think most LLs would be better served by just getting recommendations from other trusted landlords, property managers or professionals and just have to have an element of hope and trust.

 

Interesting - so some sort of blind faith?

You say 'most LLs' - who are the exception to that rule?

 

Thanks - its primarily out of personal interest as I'm being doing a lot of research into residential property management. I work for Westfield (which I believe prior to splitting their Aus & int. assets were the biggest property management company in the world) so it is interesting to see where commercial & residential best practices differ.

 

I suppose you can call it "blind faith", but really I'm just saying its the same sort of trust one needs to have in any sort of trained professional with specialist skills.

E.g. I didn't go online to try and find questions to ask my sleep respiratory specialist to use to assess how "good" he was.

The only properly competent measure would be from other professional peers.

There wouldn't be many exceptions to the rule. Only ones I know would be a LL that was also a PM or knew essentially more than a PM would.

Slightly off topic story - I used to be a tenancy solicitor and actually hired one of my PMs because I met her at court acting for the other side, and realised she was significantly more competent than the usual PMs I dealt with.

 

Ah that would be an interesting job - you would see all sorts! What made you realise she was significantly more competent?

Sorry for the delayed reply. I have 2 tiny kids who have taken all my energy & attention the last few days

 

Well personally I knew the tenancy laws inside and out, and also dealt with lots of agents and their practices and procedures. Pretty easy from there to figure out who is good and who isn't. But like I said, it requires specialist knowledge.

Unfortunately there isn't any one magical indicator, if that's what you were hoping for.

 

Thanks for your thoughts - would you say vacancy percentage in comparison to the average vacancy rate for that area/suburb would be a good indicator? This is what is used in commercial management (alongside return/profit metrics).

 

Not really, no. I'm surprised its used in commercial management actually.

I'd have issues with how reliable average vacancy rate statistics would be and therefore using them for anything apart from comparing against itself. Let alone trying to get a vacancy % for a specific agency. I would have thought any one factor out of many outside of an agency's control would put things out of whack.

 

There's what you can learn in text books and what you are as a person.
Ethics is not a subject that can be taught... even though it does exist as a subject which is laughable in my opinion.

A good property manager is one that is ethical.
They may work for the owner (well they are suppose to), but they also need to know when not to cross the line and be prepared to tell the owner to get lost.

 

Yes that's a very good point, ethics are hard to quantify aren't they!

 

That is interesting as I had thought that if your company was using best practices and mitigating risk where ever possible that this would ultimately show up in your vacancy rates.

If its not vacancy rates, what metrics would a property manager consider can be used to track their success/performance?

 

I can't see why? Vacancy rates are based on supply of properties, demand by tenants. Sure these are mainly determined by area, employment, economic factors?

Imagine in a perfect market, 100% of properties are occupied. LL works out PM is hopeless, and moves their property to another PM. PM still has 100% of their properties occupied ...

PM would have to be pretty bad for a tenant to vacate, and for the word to spread to such an extent that tenants actively avoid any property managed by that PM.

 

As a landlord, I think a good property manager is one that:
-communicates (what's happening, why, when)
-responds to, and resolves issues from LL or tenant sides
-plans ahead - don't leave it after the lease renewal date to think about rental increases
-checks how things are going and how they have been done.
Generally - being proactive rather than reactive.

IN terms of trust accounting I would expect that recognised RE trust account software is being utilised. Not MS Excel as experienced by some other members on here ...

 

I couldn't agree more with proactivity being highly important... I would like to understand more about how to 'measure' this. If I was vetting a property management company to manage my property, what metrics could they use to demonstrate that they are proactive in their management?