Blog - Would you trust $200k in the hands of a stranger?


 

Would you trust $200k in the hands of a stranger?

 

In recent times we have taken over management's from private landlords only because the “wheels have fallen off the wagon” so to speak.

 

In most cases when I’m speaking with private landlords about our services at LJ Hooker Property Management, the main reasons for not wanting a property manager are 1) They have had a “good” tenant in place with no real issues and 2) Fees. I’ll be writing about these 2 reasons throughout this blog.

 

Reason 1) They have a “good” tenant in place with no real issues.

 

It is always good when things are ticking over with a property. Rent is being paid on time, the tenant seems happy, and the landlord is happy. Unfortunately what we see when this happens is that regular inspections become a thing of the past. Mainly because the landlord is so happy with the tenant, that the owner feels the tenant deserves privacy. Comments like “they treat the house like their own home”. There is no doubt, when you find a tenant like that, it’s great! Good tenants are gold! But when regular inspections take a back seat, this could have serious repercussions for the landlord. This could affect their insurance policy without them even knowing. Most insurance companies expect at the very least written evidence of inspections being done at least once every three months. Another misconception that the private landlord thinks is a positive is “they never have any maintenance issues”. Sometimes this isn’t always a good thing. Perhaps they are having maintenance issues, but decide not to report it so as to not rock the boat? We encourage our tenants to let us know in the first instance of any maintenance issues. It is important that our landlords investment to be protected and maintained regularly. We see it with our own homes, whether our property has a loose door handle, or an accidental cricket ball through the lounge window, right through to a yearly chimney sweep and fireplace service. No maintenance at a property is not always a good thing.

 

But what happens when it all goes pear shaped. We have seen it happen many times. A few months ago taking on a property that sat around $1500 in arrears and a landlord with no real knowledge on how to get the arrears back or better still how to get the property back. (Yes, their own property!) We are talking a $200,000 investment property that is being completely controlled by a tenant, that was not credit or background checked, has previously been “good”, and was referred by a friend as being someone that would make a “good” tenant. But you have to ask the question, is a “good” person, that you know nothing about, you don’t know their history, or their personal circumstances worthy of tenanting your property? Would you withdraw $200,000 and give it to a complete stranger to take care of? Knowing the risk that they could lose it? And then when they do lose it, you have no knowledge of what you need to do to get it back?

 

This brings me to our next reason - Fees.

 

We see it everywhere, fees are charged sometimes as penalties, or sometimes we pay fees for a service. That’s what we do at LJ Hooker Property Management. We provide a service that keeps the landlord's best interest at heart when it comes to managing their investment property. Rather than leaving a $280,000 investment down to “good” hearsay we have an advanced tenant vetting system. Minimising the risk from the get go. Property Management companies are not bullet proof from all the issues that a private landlord too could face, however we have the tools and know-how to manage all the potentials that could go wrong. Again minimising risk to the investment property. We have processes and procedures in place to best service/manage the landlord, the tenant and of course the investment property.

 

So to summarise, why should the landlord pay a fee for a Property Manager? Firstly, Property Management is a specialized service. Think of it as a “hassle premium”, we take care of the things that the landlord may not want to take care of, the things the landlord may not have the time to take care of or the things the landlord may not have the knowledge to take care of. Think of the $200,000 and what a landlord should pay if anything to ensure that $200,000 is protected to the best it can be. And whether or not the cost to protect it outweighs the risk to lose it….is it worth waiting for it to all fall apart?

 

 

 

Get in touch with our Business Development Manager Kylie Kahukiwa today.

 

LJ Hooker Property Management Gisborne (Quay Property Management Ltd)

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