As the development of apartment buildings continues unabated in all our major cities, property investors have an important decision to make on whether to use the onsite manager or an external agent.
Investors will often be under the impression that it’s a condition of sale that they have to use onsite managers from the outset, but this is definitely not the case.
Normally apartment buildings with more than 30 apartments will have a resident manager. They’ll have purchased the rights to the onsite leasing and caretaking of the building. Quite often they’ll also purchase an apartment in the building and live onsite.
Traditionally, the profile of an onsite manager has been a husband-and-wife team. The wife will perhaps have a background in property management or customer service, and the husband could have a trade or experience in construction.
Often it’s a lifestyle choice. They live onsite, have great pride in the upkeep of the building and build relationships with the residents. The perfect onsite manager!
Over the past few years, however, this traditional model has been replaced with people seeking a secondary income in addition to their day job. Unfortunately this often comes with little or no experience in managing a building, the legislative requirements of property management and, if they’re working a second job and rarely onsite, communication can be poor.
The important thing to remember as an investor is you do have a choice initially. My advice is to check out the onsite manager’s experience and communication skills in the same fashion you would if you were choosing a property manager. These six pros and cons should assist you in asking the right questions when decision-time comes.
Onsite managers versus external property managers
1. They should have a strong knowledge of the building as they generally live onsite.
2. Should be able to show prospective tenants through at short notice.
3. Traditionally husband-and-wife team with pride in the building and experience in property management or customer service.
4. If they’re a unit owner, they’ll also have a financial and vested interest in the building.
5. Hands-on approach to maintenance items and access for tradespersons.
6. In a brand new building, they should be allowed access to show prospective tenants prior to settlement.
1. Inexperience in legislation can open landlords up to liability.
2. Some tenants may be uncomfortable walking past their agent as they come and go from their building – there’s a lack of privacy.
3. Marketing quite often generic with old photos used from development.
4. Slow to reduce rents and respond to a soft market, as they don’t want a knock-on effect for rents in other apartments in the building.
5. In a new development, they may be concentrating on leasing a large number of properties, as opposed to an external agent concentrating on one or two.
6. If they’re working a second job they may not be onsite to the extent required of an onsite manager.
If you’ve been lucky enough to have an experienced onsite manager who knows the business purchase your management rights they should be your first choice from the outset. However, if you’re unsure of their experience, skill-set or communication skills, you may be costing yourself a lot of money, in vacancy especially.
Note: Bees Nees’ New Business Manager Conor Blake wrote this article for the November Newsletter of Australian Property Investor Magazine.
We’d love to hear your thoughts in the comments below. Bees Nees City Realty is an inner-Brisbane specialist agency and we’d love to work for you on the management of your investment property. Please call us on 07 3214 6888 or email email@example.com