In This Article You’ll Learn About:
- Should I hire a rental real estate agent?
- Can I rent out a property without a rental agent?
- Is it better to rent privately?
- How to find a rental agent to rent my house?
- How do I choose a rental agent?
- 8 questions to ask before signing with a rental property manager
- Some frequently asked questions from first-time landlords
- Conclusion
So you have an investment property, you’ve got it ready to rent, the market is starting to recover, and the only question left to ask is, how to choose a real estate agent to rent your home?
It has never been easier to find information when it comes to real estate, house prices, rental expectations, fees and charges. And yet, it has never been harder to separate the plethora of agents out from the crowd.
Having said all of the above, there are a few ways to separate the wheat from the chaff, and we will be going through these methods in more detail.
So let’s get started, and before we get into the how in choosing, let’s talk about the why. And especially whether you should at all.
There are a few questions that you should ask before any others when beginning the process, which are: should I hire a real estate agent to rent my property? Why should we hire you as our property manager? Is hiring a property manager worth it? So let’s try to answer these questions first.
Should I hire a rental real estate agent?
Regarding the first question above, the answer is to say it depends. If you are 100% certain that the tenant you intend on renting the place to will not be trouble, then by all means.
However, there can be a lot of legislation to understand, chasing rent payments can be quite stressful, and dealing with maintenance and contractors is not easy to manage and balance sometimes. A tenant’s circumstances can change quickly and if you need to evict them then it is a technical, sensitive and stressful process involving tribunals.
A property manager can act as a project manager, debt collector, and top negotiator as well as a stress remover for you! On top of all of this, property management fees are usually tax-deductible – check with your financial advisor.
Why should we hire you as our rental property manager?
Many property managers have differing experience, knowledge, skill sets, and of course, rates. Selecting based solely on one of these factors is a mistake – you should instead look to hiring the property manager who best fits your needs and ticks all the boxes.
Is hiring a rental property manager worth it?
Depending on your currency, whether the finances are the bottom line, or your time or mental health, then the answer to all of these is yes! A property manager saves you money in the long run, saves you time and saves you stress!
Can I rent out a property without a rental agent?
Yes, you can. But the better question is: should you? As alluded to earlier, there are a lot of things to worry about when it comes to this.
Understanding legislation
You might think that legislation only applies to properties rented through an agency, but this is simply not true. All landlords have obligations to uphold during a tenancy, regarding maintenance or notice periods etc.
Property managers are the most well versed in what these are, and they understand them better than you will, meaning they know what responsibilities are yours, and which ones are the tenants.
Arrears management
Chasing tenants for their rent if late or unpaid can also be quite an uncomfortable thing to do, especially if you’re either inexperienced in doing so, or haven’t had to do anything like this before! Property managers do this every day and so it’s easier for them to make sure your rent gets paid. They also know when notice to remedy, or eviction notices can be served if need be.
Tenant screening process
When it comes to background checks of tenants, finding out about their work history, rental history and generally screening, property managers are experts at this and also have access to databases which they can use to cross-reference.
Often, landlords who want to self-manage can find a tenant quickly and organise the lease, only to find later on that the tenant wasn’t completely honest.
So yes, you can rent out the property yourself, but I wouldn’t recommend it!
Is it better to rent privately?
To follow on from the above, renting privately is simply to have a private agreement directly between landlord and tenant, without a property manager in between. It can be better in some ways – as a landlord you will get to keep all the rent, and not have to pay a fee. If you know the tenant directly, for instance, if they are a friend or family member, it might work out well to have a less formal arrangement.
Not getting the best amount of rental returns
However, it’s not a setup that I would encourage, for a few simple reasons. When you are renting privately, you may not be able to maximise the possible rental return. This could be because you couldn’t negotiate with the tenant well enough, or as it is a friend or family member they may try to take advantage of you or reject your attempts to give rental increases later on.
Maintenance and repairs
When there is a maintenance request, which is inevitable sooner or later, sometimes there are disputes as to who is to pay for this or gain access for yourself or your contractors to assess and complete. Completing the maintenance can be difficult too if you haven’t done a lot of this before – or if your investment property is in another state or city.
So the answer is, whilst sometimes it can be better to rent privately, usually, in my experience, it’s not.
How to find a rental agent to rent my house?
So now you have a better idea of whether you should use an agent or not, and you have made the decision to use one. But just how to work out which agent to use? Where do you look for them? How many should you interview for the role? What factors should you consider when picking the one for you?
Goldilocks approach
I always suggest the goldilocks approach (like the story of goldilocks and the three bears) – in this case, it would be: the most expensive one, the cheapest one, and the one in the middle.
That way you can compare the differences and understand that the difference between some agents can be similar to the difference between driving a Ferrari and driving a Fiat. Let’s go through some of the search methods here.
Find a local real estate office
It seems quite old-fashioned to say it – but the local real estate office is a good place to start your search. Usually, this implies a sort of sticking ability- the agency with an office has probably been there for a number of years or plans to be there for a number of years to come.
An office that you can walk into is also one that can be made more accountable. In the past, I’ve experienced some agencies who don’t have such an office – either working from home, only listing a P.O. Box, or having an office that is not a shop front.
These can often be the types of agencies that are hard to get hold of or totally disappear for days or even weeks at a time when the going gets tough.
Have a look at realestate.com.au or domain.com.au for listings
It doesn’t mean everything – but the agency with the highest number of listings in your area is a good agent to talk to. Chances are, they know the area well, have a large database, and are very active. They are likely to both have good access to prospective tenants and contractors.
If you’re doing the goldilocks approach to finding a property manager, then at least one of the 3 you look at should be the agent with the highest share of properties available on either realestate.com.au or domain.com.au as these are the main marketplaces in the Australian market.
Ask your friends or family members
They say that there are only six degrees of separation from one person to any other person. Well, when it comes to real estate agents, everyone is only a maximum of two degrees removed from one. Everybody knows at least someone close to them that works in real estate or has a relationship with an agent.
The best stamps of approval are the personal recommendations that come from your trusted friends or family members. You should listen to them as their experiences are valuable and they can give you insight that might be hard to discern from online reviews or adverts alone.
Google search
The old-fashioned answer: Google it! Sometimes Google can be a fantastic tool, with tonnes of info right at your fingertips, so don’t discount using it to help find an agent. Google can help you find out quickly the location of the agents, their fees (if online), their current listings, their team list, and of course, their google reviews.
Check Google reviews
If you are totally brand new to an area and really don’t know where to start, google reviews are a great source of info to aid you in your decision. Having said that, it is important to take a pinch of salt when reading any individual reviews – whether good or bad ones.
What you are looking for is the overall score out of 5, common staff member’s names or commonly mentioned issues within the reviews, the date of the reviews, and finally the company’s responses to the negative reviews (if any at all).
What score should you look for?
The overall score is important as every company will have bad reviews – even if their score is 4.6 out of 5.0 overall – so don’t focus on whether they have a few bad reviews or not, but on what the overall score is.
Is there a pattern in a particular agent’s name?
If you do see some common names or issues within the reviews too this can be a negative sign – someone who has a bad attitude could still be in the company, or they might just not be very good in a particular area.
When did the reviews get posted?
The dates are important as if there were a number of bad reviews from 2 years ago, but since then the reviews have been better, then it could be a sign that the company has been working on their culture and service or come under new management.
How does the agency reply?
And finally, the responses from the business especially to bad reviews are hugely important to read. A red flag is when the company, instead of taking on board the feedback, instead tries to turn the finger of blame back around and onto the reviewer.
We all know that there are customers from hell out there, but a savvy business will know that they aren’t responding privately but for the whole world to see.
Through advertising
This could be either through print media, such as flyers, bus stop signs, or billboards or through digital means, such as Linkedin, Facebook and other social media. Whilst it’s not necessarily a sure sign of an agent to choose, it certainly is a good way to find one and I would recommend interviewing at least one that has an advert that you come across.
How do I choose a rental agent?
Now you have chosen your agents to interview, but you still have the very tricky task of screening them. This is the most important part; you need to go in armed with important questions and be aware of what constitutes a good agency.
What makes a good rental real estate agent?
There are many different personality types, styles, and methods to being a good real estate agent. Enthusiasm, knowledge, experience, culture, and service-oriented values are generally the key factors.
Experience
For a property manager, you really need one that has at least a minimum of two years worth of experience behind them, because there are a lot of things that can frazzle or stress a less experienced property manager.
After two years, they would have experienced a wide range of situations and types of people, and possibly a couple of different states of the rental market to not get flustered anymore.
Thick-skinned
A good property manager should be customer service driven, show a lot of understanding, and be a good listener first and foremost – but they also need to have thick skin.
Tenants can be quite difficult to deal with at times, and sometimes you can have the best property manager ever on paper, but if they are not resilient enough they might not last long. The mark of an effective property manager is one that doesn’t take things too personally.
Honesty is the best policy
The property manager you should want is one that will be honest with you no matter how difficult it may be. If you are about to hit the market, they will need to be brutally honest about the price point, otherwise, you could stand to lose a lot of potential income every week if you still haven’t found a tenant.
You shouldn’t trust the property manager who suggests a higher price than any of the others, or that you even thought of in your head. They also need to be honest with you about the state of repairs or upkeep needed, or the likelihood of losing out financially if you go through a tribunal, even if you get a ruling in your favour.
Knowledgeable
A top-level property manager is also able to give you advice on topics that others may have little to no knowledge of. For example, getting a tax depreciation schedule organised for your investment property is an absolute must, especially if it’s a brand new build.
Many property managers don’t know enough about these topics or have the connections to put you in touch with the relevant professionals in each field.
8 questions to ask before signing with a rental property manager
1. What is your staff turnover rate?
This is a question that only veteran property investors know to ask – and it is a truly vital question. If an agency has a high staff turnover rate, it is a surefire sign that there’s some kind of trouble in paradise.
It is also a sign that the property manager you are building rapport and understanding with now might not even be around in the mid to longer-term. This is quite important as it can change the whole dynamic of your relationship and upset the apple cart in terms of a tenancy or even cost you money in the long run.
2. What are your fees, and do you have any hidden extras?
Everybody knows to ask an agency how much their fees are. However, what many people don’t realise is that they should also ask whether there are any hidden fees or extras. There are a lot of agencies that are not forthcoming with all of their fees.
They will sell you on a competitive management fee rate but omit their extra fees such as admin fees, lease renewal fees, lease preparation fees, end-of-financial year statement fees, and the uncommon disbursement fee.
3. How long is the notice period if I want to leave?
Usually, you can leave the agreement anytime, as long as you provide the requisite notice in written form. There are some legalities behind this in certain states, but in NSW there’s no maximum wait period.
The standard period is 30, 60 or 90 days. Most agents will be negotiable with this depending on your reasons to leave, or if you offer to pay the remaining difference of their management fees.
The reason why this is a good question to ask is that generally speaking, the longer the notice period stipulated by the agency, the more likely they are going to be difficult about things.
An agency that believes in their service will give you the shortest possible notice period because not only is it rare that an owner would leave them, but if they do, it means the agent wouldn’t want to chain an owner down if there’s a bad relationship as it can lead to bad press.
4. How often can I be paid my rent?
Traditionally, real estate agencies pay their landlords at the end of the month due to the legal requirements of trust accounting. Monthly is legally the maximum amount of time that an agency can hold on to your rent for. Many agencies have introduced other payment options, like a mid-month, twice-a-month, or even weekly payment plan.
This can be important for you for a number of reasons – for example, when your mortgage payments are set up, or just generally to get your money more frequently. This is a good question to ask as depending on their answer, it can show an agency that is about servicing their clients’ needs.
5. How many routine inspections per year do you do?
The legislation in your state might differ in what frequency is the maximum allowed per year, however, you’re not asking them this question. What you are asking them is how many they will do.
In NSW, the maximum number of routines that can be done in a 12-month period is 4. Most agents try to save on this cost by performing 1-2 per year. However, a good real estate agency in NSW should perform 4 routines in the first year of the tenancy, and 2 per year after that, unless the tenant needs a little more checking.
6. Do you negotiate lease renewals with tenants in advance, and do you have many tenants sign renewals?
This is another question that is really two in one. It’s very important that your agent proactively negotiates lease renewals BEFORE the lease expires, and works with the tenant to get them to sign.
Agents don’t always actively negotiate lease renewals, and often allow them to lapse and leave tenants on a periodic lease. This increases risk on you as the landlord, as the tenant only needs to give 21 days’ notice to vacate, compared to when in a fixed term when they have break lease fees.
You want to make sure your prospective agents don’t lose tenants on a regular basis as well – tenants do move out from time to time, however, if there is a revolving door, much like with staff turnover, it can be a bad sign for the agency. Find out if they have a lease renewal fee as well – this can often cost you a week’s rent or half a week’s rent.
7. Do you charge a fee for the tribunal?
Hopefully, this never becomes an issue. However, it’s good to know what money, if any, an agent may charge you. Standard is anywhere between $90-$160 per hour.
The rate, however, is not the important part of this answer – what you want to hear is the reassurance from the agent about prevention being the best cure to a tribunal.
8. How do they handle maintenance?
A vital component of property management is managing the property itself. It’s important to know if they are quick and responsive to maintenance requests, if they have reputable contractors on their books and if they are flexible over who they use.
Maintenance can be quite costly if left unchecked. During this portion of your conversation, ask them if they receive referral fees, otherwise known as “kickbacks” from the contractors they use.
This is quite common in real estate and is a dying trend. It shows a conflict of interest and makes it harder to guarantee that they use the best contractor for the job. However, there are still agents that do this.
You’ve met the agents, and asked the questions, now how do you decide?
Property management is an ongoing service – so it is vitally important to find an agent who will have consistency, a track record, and the passion still alive for them. Remember, take your time, and make sure that the agent you pick ticks at least 80% of the boxes above, and above all else, make sure you have a personal connection and rapport with the agent.
Now with all that said, almost no agent, in fact, probably none, ticks every box. But there are some that tick most. Charlotte Peterswald in Sydney’s North Shore and Eastern Suburbs ticks most – knowledgeable, experienced, customer service is driven. Offering competitive rates, flexible service, reliable maintenance (through the use of management software) and effective leasing strategies.
There are a lot of agents who can tick some of the boxes, no agents who tick all the boxes, and a small few who tick a majority of the boxes above. If you want to find out more about their property management, check here.
Some frequently asked questions from first-time landlords
Can I choose who I want to rent my house?
Yes, absolutely. You always have control over who rents your home. Both in terms of the agency itself, and the individual within the agency. Usually, you sign on with a property manager.
There can often be a separate leasing agent in the company too. If you’re dissatisfied for whatever reason, you can always request to change property managers or have someone different working on your leasing campaign.
Unfortunately, you can’t hire and fire within an agency – but you are indeed always in control of your own destiny. If you don’t like the way the agent or agency is going, you can try to talk to the management of the agency, and failing that, you can change agency.
As mentioned before, usually the notice period is 30, 60 or 90 days when there is a tenant in place and immediate pending marketing fees when the property is vacant or about to go to market.
How much do real estate agents charge to find a rental tenant?
This varies from agency to agency, but usually, it is either a set fee or a fee based on a week’s rent.
Fees based on rental income
The most common setup is 2 weeks’ rent including all marketing, or 1 week’s rent plus marketing? You will want to advertise online, and have professional photos done and there may be a lease preparation fee involved too. All up, the cost could be anywhere from $600 to $1000.
Flat rate fees
Some agencies are now offering a flat rate, fixed fee, such as $500 or $800 for all. This approach is predicated on the marketing cost being the same for any property – and the strategy is given a uniform, non-tailored approach.
This can work for a great number of properties, however, there can often be a pressure point in this leasing strategy: as there is only a fixed fee on offer, the leasing agent will want to lease your property as soon as possible so their costs don’t rack up – this could mean they try to get you to drop your prices on day one, or they push sub-standard tenants on you. Instead of the pressure being on them to get you a high-quality tenant at the best possible rent, it will be aimed at you.
How much do agents charge to manage a rental property?
There are varying fees available. Some new agencies offer a flat rate fee, whereas the vast majority offer a percentage-based management fee. Usually, this comes to somewhere between 5% to 10%. For some agencies, this is the only fee they charge for management, but again, for the majority, there tend to be some extras.
Any extra fees?
Most agencies charge an admin fee, somewhere between $2 – $8 per month. Some will charge a fee for disbursement, another for sending the end-of-financial year statement out and lease renewals too.
You could consider the tribunal appearance fees as part of the costs too. Many landlords are choosing their property manager based purely on fees, however, it’s important to understand that whilst having an agent who offers competitive fees is a bonus, the long-term benefits of choosing a good quality manager over a cheap manager are clear.
A cheap manager will usually not do their job well and will run into more issues with tenants either via maintenance, arrears, or both.
What percentage do real estate agents take for rentals?
If your property is in Sydney, the range that most of the top agents’ charge is between 6%-7% when you factor in the extras.
Conclusion
To wrap up, we have looked at whether it’s worth hiring a property manager to look after your rental property, the factors that make up a good property manager, how to find the agents and what questions to ask them before you sign, and how much they are going to cost.
This should have helped you how to choose a real estate agent to rent your home, and what red flags to look out for from some not so good agents. We’ve also mentioned that Charlotte Peterswald Sydney are our choice of agents that tick the majority of the boxes and offer a good, personalised service along with competitive fees in the North Shore and Eastern Suburbs areas.
