Are you thinking of hiring a residential property manager? It’s important to understand what a property manager does, both for contractual reasons and to make sure your expectations are met. In this article I'll cover the role of a residential property manager.
Some rental agencies may split the role between a leasing agent, property manager, and a senior manager. The overall responsibilities are still the same in this case, just with different people completing each part.
The main role of a property manager is to work for you under agency and act as your advocate. While this isn't a strictly legal definition, working for you as an agent means the property manager has authority to work on your behalf and represent you. As a practical example, this means that any notices which an agent sends out to the tenant have the same effect as though it came from you. Work orders, maintenance requests, and tenancy documentation are completed in your name as the owner. On the flip side, agency law also means that property managers can sometimes be held jointly liable by Tenancy Tribunal along with the landlord (see the discussion in Tenancy Tribunal Order 4601989, None vs AT Home Realty).
This is the main difference between a property manager and app-based management systems or other professionals. An app-based management system is only a platform and does not become an agent for owners.
Full service property managers will cover the following roles:
Some property managers like us who have an investment or renovation background could help in more areas:
Here's the steps a property manager will take through the course of a normal tenancy.
Property managers will market and advertise your rental property. They’ll create listings, arrange photography, and advertise on a variety of platforms such as TradeMe and Facebook. A good property manager will bring prospects through the property with at least two viewings per week and the best agents will use video to marketing their listings. They should also provide you with feedback and progress updates on the tenanting process.
Once a good quality applicant has been found, the property manager will screen tenants from the first point of contact at the viewing, ask questions, and complete a full suite of credit and reference checks to form a complete picture of the potential tenant. These checks should be saved in writing along with the application form. Most property managers will seek your approval as the landlord to place the tenant before proceeding.
A property manager is responsible for collecting rent and other tenancy invoices. They also collect the tenant’s bond at the start of the tenancy, and lodge this with Tenancy Services. On top of this they handle property expenses, maintenance costs, and provide you with financial records during the end-of-month payout and with a financial year end statement in April. Rent reviews are another regular task. A property manager should review the rent before the annual rent increase and consult you about the proposed amount.
Most property managers will make payouts to your account twice a month. Some managers can make once a week payments, however this does mean you'll need to top up the trust account for any larger maintenance jobs manually.
Regular property inspections are a requirement of most insurance policies, and all property management companies will consider this as a core role. Insurance policies generally ask for three-monthly routine inspections. Property managers will also complete an entry and exit inspection.
As a general standard, routine inspections should have enough photos to show the state of the house meets the reasonable standard set in the RTA, along with more detailed shots of potential areas of maintenance such as drainage or gutters. Photos showing the smoke alarms remain in place are also best practice to prove that the property is compliant with smoke alarm legislation.
Property managers will arrange maintenance and repairs as required. This ranges from maintenance planning with you, organising the work, and being available for any emergency situations. A property manager will choose the best contractor from their network for the type of work, while considering the tenant’s situation and affordability.
Most property managers operate with a spending limit which is set by your contract with them. If the estimated cost of the maintenance work exceeds the limit, they will need to consult with you to seek your approval unless the job is an emergency or legally required.
Property management in New Zealand has changed significantly in the past decade with a raft of new legislation. A property manager should have a strong legal knowledge of the Residential Tenancies Act and the Privacy Act. Other laws which affect tenancies are the Human Rights Act, the Fair Trading Act, and the Healthy Homes Standards. A property manager will make sure that the property remains compliant through the life of the tenancy, and all laws are complied with.
This flows through all facets of their business. For instance, a good property manager should be checking the interior of the home during inspections to make sure that that Healthy Homes compliance has not changed.
Timely and effective communication is essential between the property manager and both the landlord and the tenants. A good manager should respond quickly and provide regular inspection feedback, tenancy feedback, updates on maintenance, and financial statements. You should also receive access to a landlord portal which lets you download important documents any time.
Disputes between tenants and landlords will happen from time to time. If this happens, the property manager acts as the your representative and should seek to resolve the dispute either through private negotiation or through formal channels such as mediation or Tenancy Tribunal.
One of the most common disputes are rent arrears. A good property manager should act in a very timely manner on these with the rent arrears process starting immediately once the rent has not been paid. 14 day notices should be issued within a couple of days, followed with the appropriate Tribunal channel (Fast Track, mediations, or court hearing) depending on the context. An abandonment inspection at the 14 day mark is also a requirement of many insurance policies.
A residential property manager is able to take on all almost all situations in the day to day running of your rental property. They'll handle everything from the start of the tenancy to the final bond refund. Once you engage a property manager, you should be able to enjoy a much more passive income from rental investments. A good property manager will stay in contact with you as much as you request so you'll be kept in the loop as little or as frequently as you'd like.
