Why is it so hard to find a good property manager?

There have been a few threads on bad property managers lately, and I'm interested to know why it's so difficult finding a good one (in particularly in nsw). I have received fantastic advice from PMs on this forum particularly @Xenia , @D.T. , @Andrew Hancock and have followed a lot of their postings on other people's threads. They give sound advice and seem to be on top of things. But the PMs I've dealt with are the complete opposite.

I have had several pms and I have yet to find one I think does a good job. I've been stuffed around by a few, some of the issues I have experienced are:

• late rent payment to my account even though the tennant has paid. Even had a month or two where they skipped the payment altogether until I brought it to their attention. Tennant has paid, agent hasn't paid me
• over charging for management fee i.e. Above and beyond what had been agreed and slow to reimburse the mistake. Not once but multiple times
• needs to be spoon fed, essentially when I was looking for tenants, once they get the application form, they don't even screen them but send it to me to ask me what I want to do.
• sloppy inspections or none at all
• not responsive and constantly need chasing up. Lack of updates like what was the outcome of open house.
• doesn't chase tenants up for late payment or under payment. I've had bills where I didn't get back the money until six plus months later despite constant chase up from me.
• doesn't ensure repairs are done properly. And when I ask for quoutes they get one and only one. When I ask for more details like what the quote includes, they have no idea and tells me to contact the repairers directly to work it out.
• no attention to detail, advertisement for rental has many incorrect details. Even after bringing to their attention, it's still not completely rectified
• statements wrong! Just wrong! Itemized incorrectly...e.g. repairs they will put payment for council rates.

I thought all the above tasks if done properly are bread and butter for pm, but they seem to struggle or are just not interested. It hasn't been one agent, but I've seen this across several that I have had and just becomes really stressful to deal with. I would love to invest in my properties in the future but this has left me with a bitter aftertaste.

Why are they so hard to find and why are the quality so bad?

At first I started with ones with low management fees, I thought maybe that was the problem. But then switched to ones with high management fee hoping to get better results but they are still the same.

 

Principal agents involved directly in property mangement have more interest on their clients that a property manager working 9-5 who hates their job.

3 month burnout rate for a pm is not uncommon in this industry.

 

Yep! Not a job I'd like to do, getting attitude/abused, stepping over crap during an inspection, including dirty nappies etc.

Try and find a small agency where the owners are more hands on

 

Two of my agents was a principal agent. They did most of the stuff in my list. In hindsight, I don't think they had property management background.... just owned the place. I didn't even deal with their staff, just directly with them, when things go wrong, they just blame the staff.... imagine if I was dealing with the staff!

Out of these two, one was a main stream real estate, and the other was a small family business one. So I have experienced one in both worlds and they were just as bad! Maybe it's my bad luck.

 

I have also had a bad run with PM's over the years when I had my IP's. i also rented with some of the same ones I had managing my properties. They seemed to be totally dedicated to the tenants and looking after their rights. it was so bad it was a big factor in selling my first IP which I regret now. They got in a low income family with issues. They put the guilt trip on me and I could never raise rent or move back to reno it. I also had a conscious so just sold it. The funny thing is the same agents totally treated me like crap when renting a property myself to live in. End of lease for my rented place I also got rid of them as my pm. Another one was twice as bad, made me spend a fortune on repairs and kept money the plumber got from me and then they also paid him with my rent. It was not till I checked accounts months later that I seen they screwed me and owned me $800, lucky the new manager there sorted it out but the PM wanted nothing of it and blamed me initially. just terrible service and I only mentioned one of dozens of issues. It is rare to find a good one in NSW. I went through at least 5 over 5 years, most were like the above.

 

I've forgotten to mention this.

When the lease agreement is almost up, they don't tell me about it, tell me my options or even seem to know that it's about to expire. It was only recently where I was fed up and started spoon feeding them I looked up the dept of fair trading website and noted the notice I had to give the Tenants.

Lucky I checked in time and made them have the tenants sign a new lease before lease was over otherwise for me that would mean I will have to give them 3 months notice as opposed to 1 month if I need them to vacate.... while the tennants only need to give me very short notice if they wanted to vacate. I was lucky to have done this in time because I know my tenants are leaving soon due to lifestyle changes however they are not sure when and it was around end of nov and dec period they were planning to go. This was of course bad for me because no one rents during that time. So a new lease was able to cover that period.

By the way I had to tell the agent how to fill in the lease properly! They got a bunch of the details wrong. Had the strata component ticked when mine was not a strata, rental amount was not clear, names were misspelt! I feel nauseous just thinking about the number of corrections that had to be made and what it would have meant for me if I hadn't checked and things went bad with the tenants.

I don't know whether this is incompetence or that keeping an eye on expiry of leases and renewals are not part of a PMs role. I honestly don't think I am expecting too much from a PM as from past experiences with others they have set the bar quite low, but the ones I have dealt with can't seem to even get the basics right, what chance do I have to expect more?

 

Again it comes down to the few giving the many a bad reputation.

That is why some people self manage, doing so works fine until something goes wrong though.

I self manage one, though it is a commercial and l have a great tenant.

 

An agent will never care as much about your property as you do, so track all the essential information like lease expiries, notice periods, strata general meeting dates, what the market rent is.

Whenever I get a new PM who seems a bit new, it's worth setting expectations on both sides, and chasing them up on it when they miss deadlines. Eventually, they'll get the idea that this guy won't stop following up unless they get good and do the tasks they planned to do, on time. I don't mind if they bludge on the rest of their 150-300 PM clients- just not me

The good agents can read your mind and take the initiative to let you know ahead of time. Tenant's lease expiring soon, better let Mike know there's room to increase rent by $10 on lease renewal, and to check in on the tenants by Tuesday on whether they want to renew for another year. That kind of stuff.

 

Good post @Zoolander
Unfortunately this can be so true with many service providers,
I.e accountants, their working on your file, get a call from another client, dig their file out from a pile on their desk and place it on top of yours, this happens a few times a day, yours gets further buried, weeks later left wondering why it's taking so long until you call, yours comes back to the top of the pile until the next client calls, on & on etc.

 

Most are bad. I experienced this myself 1st hand when I was living in Perth and had investment properties in Adelaide. Tried a few different PMs and kept being left disappointed. Eg one month there was no rent on a statement and I asked why and they said "because the tenant had moved to Victoria. Oh and would you like us to re advertise it?".

Fee revenue is required in order to get the internal systems that Andrew touched on and to employ decent staff to keep the ship sailing in the right direction.

If people negotiate these fees down, or if agencies continue to undercut each other, then this is a detriment to the above.

 

WoW! unbelievable
Just as well you were on to it, checked the statement, I'm sure many wouldn't, trust the PM has it in hand etc, only to realise a couple of months later when they default on an auto payment etc

 

It's a job for which the remuneration isn't overly high, and the environment can be very negative (landlords always stressed about being asked to spend money... tenants complaining about maintenance issues... PM having to chase tenants for rent etc). I can understand why it is hard to keep the staff retention rates and service levels up.

 

You pay peanuts, expect monkeys.

The average residential pm gets paid very little in comparison to the responsibility handed to them, have little in the way of qualifications or training and support.

If it is going to change then the business will need to invest in its staff which includes higher education standards and requirements for certification, better pay, working hours etc.

You don't see the turnover of pms in commercial, retail or industrial management.

 

It's quite simple. It's our fault as investors.

As with any industry, the calibre of employee you get is commensurate with what you're prepared to pay. What the employer is prepared to pay is generally related to the economic position of the business which is related to what people are prepared to pay for that product or service.

In PM, one of the first questions we always get is "What are your fees and can I have a discount?". People are less interested in the value that a PM provides in upholding their asset's value and more interested in saving $10 per week. Contrary to popular belief, the margins are not that big in PM, particularly when an agency is spending money on the right things and has less than 300 properties. Investors feel that paying anymore than 8% is too much and this translates into the industry paying quite low wages on the whole and as such, a lower calibre of employee is attracted.

In the US, I pay 20% management fee. I get a PM with a Masters degree in business on a 6 figure salary and the difference is astounding. I am prepared to pay it because I live far away and I need to genuinely entrust full management. I know I have a high calibre individual looking after my interests who has a deep and broad understanding of management, customer service and business.

All those agencies that will manage your property for 5.99% with 3 months free are almost guaranteed to be paying their PMs around $40,000 p.a., probably skimping on their entitlements like fuel, tolls and phone and cramming more and more properties per manager. The pay is low, the person has next to no qualifications (for various reasons) and they simply look to move on and make more money as soon as possible. In conjunction with simply being out of their depth on the actual requirements of the role which causes stress (or they just give up and the service collapses), it creates large turn over.

Until we are prepared to pay more for management and see it as probably the most important ongoing value add to our assets, the industry will remain on its knees. It is ripe for disrupt and someone will do it.

 

I empathise/agree with operational costs/wages etc, especially those who operate separate from a sales agency. Landlords squeezing on % etc, as @Scott No Mates said "You pay peanuts, expect monkeys"
I didn't negotiate, off the bat agreed with what was mentioned, however personally thought it was a bit slim.

However in WA our fees are much higher than over East, yet from many posts I've read on here most of the complaints re PM's seem to be WA based, so perhaps $'s isn't the issue?

Even if the fee wasn't negotiated lower, even if you gifted them more (i.e. their fee is 10% but hey I want to ensure great service, how about I give you 20%) I highly doubt the service would be any different unless you personally dropped into their office each week with a bottle in hand and asked "hows things going?"

 

WA fees are higher due partly to higher barrier to entry with higher license requirements. And seeing more issues there maybe partly due to confirmation bias with you being there. Either way, there's an opportunity there for someone

Being poorly resourced (from fees) in order to get good staff and good technology is only half the issue. All the resources in the world wouldn't help certain people with time management or relationship management.

I didn't mean to paint a bleak picture. There are actually some absolutely outstanding operators out there. Even those though, are hamstrung by owners (who won't respond to emails or listen to advice) and tribunals (which operate poorly).

 

lol yes I did consider that.

Yes I was going to add to the post that maybe one day @D.T. can sort that out for us in the near future, but its a lot of ground to service all of us, lots of Klm's, need a cloning machine for lots of D.T's running around. What area would you consider your base?

Wish I'd get responses and advise from mine, mainly during initial establishment of the relationship, which we are in currently and setting up first tenant, making sure all the T's are crossed, I's are dotted etc.
I'm not making constant contact, being a PITA etc, but to wait a couple of days for a response (phone or email) re things that need attention, like insurance, seems poor, and that's from a director who has a PA.

 

This is true to a point but you're assuming the same type of people would be working in the industry. As an extreme example, if you advertised a PM job paying $200,000 you wouldn't be attracting people with poor time, task and relationship management skills. They would be experienced high level professionals and require little to no training in those areas. Which raises the very relevant point that PM is an extremely transferable skill set (those items you mentioned).

As I keep saying, PM is time, task and relationship management (i.e. customer service) and as an agency we have validated this hypothesis already. The problem is that most people with the relevant skill set are already paid more in difference industries so they're unlikely to use those skill sets in PM.

More money and resources also allows more funds to be directed into training. Some of the PM training conferences and events are nothing more than a bunch of PMs sitting around all day complaining about the industry and rehashing the same incorrect focal points over and over. They're cheap and frequent and tick a training box. What is really needed are training days with consultants who charge a 5 figure sum and run your team through real business and customer management training. The money to pay for those sorts of days simply isn't there though.

 

Remuneration is only one aspect. Educational requirements need to be addressed by govt, a 3-4 unit course which can be completed online is totally inadequate considering that property management and trust accounting are not taught.

 

I had experienced similar problems, and almost sold my IP in NSW, until found a very good property manager, Investors Choice (Jenny), she is also an investor and manages a large share of properties in Balcolyn, NSW. I am not sure where your property is located however if it is in the Morrisset area she would be worth a call.