Property management plays a major role in your property investment risk management. It is a very important part of the overall management of your property investment portfolio. There are several areas that need attention with property management, whether you contract a property management team or self-manage the property.
Although if you focus on the news you would think there are many more bad tenants than there are good tenants but that is not so. I have heard an argument for the fact that it is better to buy good properties because you will attract a better tenant. This does hold some water because higher rents are generally paid by people who have employment and these people tend to be better tenants.
Unsuitable tenants could be:
• Tenants that just can’t afford the rent, even though they look after the property but due to unforeseen circumstances such as illness or accident, cannot pay the rent that they initially signed up to pay.
•Or they could be tenants that pay the rent, but mistreat the property along the way.
•Then the other scenario is where you have the ultimate bad tenant that doesn’t pay or look after the property.
Another group of tenants who is attractive to the landlord is the retiree. If they can afford your rent then these people can be the ideal tenant for several reasons:
• They want to stay long term
•They like to live in nice, but small homes so as a landlord you can purchase smaller and cheaper homes
•They look after the place because they have time on their hands
•Often they are receiving a ‘living allowance’ or rental assistance from the government, in other words a stable income
A greedy landlord can shoot themself in the foot because they have constantly changing tenants and perhaps even tenants who have taken the property because they could not find anything else at the time, but resent paying a higher rental which may play out in the property not being cared for. in the end the vacancy weeks, property management costs of putting in new tenants and the property maintenance costs will all impact on the profit of the investment.
Charging a fair rent is something that should be considered at all times. I mean: a fair rent for the landlord and also for the tenant. If good tenants can be kept at the property then they can save the landlord a lot of money in the long run in vacancies, repairs and ongoing costs.
If you do have the ‘perfect’ tenant then it pays to look after them. You may not put the rent up or you may pick up the garden maintenance when the next rent increase is due or do something to show your appreciation.
It really is not much different than being in a business where you need to look after good clients.
Repairs and maintenance
Regular property checks need to be done and be reported back to the landlord. If this is not done what could have been property maintenance then turns into a replacement situation which is much more expensive such as things like bad electrical wiring, broken power sockets, leaking water pipes, mould in the walls, termites, leaking taps, rotting timber decks, etc. All these types of maintenance issues can turn into very expensive repairs or replacements if they are not noticed and reported in the very early stages with property inspections.