If you’ve ever considered investing in property but decided not to – there’s a reasonable chance that one of the things which put you off was the idea of having to deal with tenants. If so – you’re not alone. Most of us are familiar with at least one cautionary tale of a tenant who damaged property, terrorised a neighbourhood or absconded without paying rent (or all three) – and while the overwhelming majority of tenants are decent people simply making their way in life – there are enough ratbags renting homes to mean that anyone who has been investing in property for more than a few years will have their own story to tell.
My very first investment property – a block of flats in Napier – is a case in point. I bought it with high hopes of being a good and fair landlord who would help people by providing them with a warm, dry roof over their head at a reasonable price– but it wasn’t long before that naïve idea was dashed by the harsh realities of life. Three years on, in 1990, I was battered and broken and had had enough – making the decision to quit that property, and the others that I’d purchased after it. In fact, so bad was the associated trauma of it all that it was to be more than a decade before I decided to dip my toe into the property investment market, again.
It’s almost 35 years since I bought that first property – and with a bit of age and wisdom under my belt I can now clearly understand what I did wrong. Firstly – the property I bought catered to a particular section of the market, and while it’s certainly not true to suggest that all tenants of such properties are going to cause problems – it’s reasonable to expect that they will require more hands-on care than the average across the industry. And secondly (and far more importantly) – not every property investor is cut out to manage tenants – in fact the skills required to manage a property are very specific and not everybody has them. It’s the inability to understand this that trips up so many investors and has them fleeing the industry after just a few short years (as I did).
Fortunately, there’s a solution. Of the around 450,000 private rental properties in New Zealand, around a third of them are managed by professional Property Managers – and frankly, that number should be a lot higher. Property Managers are a particular breed of people who look after a portfolio of properties and who – if they’re good at what they do – can take almost all of the stress associated with rental ownership off your shoulders.
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Of course, not all Property managers are created equal. There are also some pretty bad ones who shouldn’t be in the industry and, in the absence of any sort of industry regulation, Property Investors often find it difficult to know which Property Managers they can trust.
So what should you look for? In my view – there are some essentials. Firstly, you should insist that your Property Manager is part of a recognised Industry organisation and that that organisation:
1. Offers some form of professional registration (to identify the professionals from the cowboys)
2. Has a mandatory Code of Practice and requires that its members adhere to agreed industry standards
3. Requires continuing education of its members (in the same way that other registered professions do)
4. And has an independent Disciplinary Body to deal with complaints and internal concerns
Fortunately, such an organisation exists, in the form of the Property Managers Institute of NZ (www.prominz.org.nz) – a body I have particular confidence in because I was instrumental in creating it as part of the merger between the Property Institute of NZ (of which I was previously CEO) and the old Independent Property Managers Association.
If you want to be confident that your Property Manager is a capable professional – insist that they be part of the Property Managers Institute as a condition of using them. It’ll be one of the better decisions that you make.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for Oneroof.co.nz. Email him at ashley@nzemail.com
