Real Estate Investor Magazine South Africa June 2013 | Page 28

MANAGING

BY JOHN ROBERTS

From property management

Y

OU know property managers exist, but
the precise realms of their responsibilities
remains a mystery. The irony is their work
is fundamental to your property investment.
In essence, property managers are third party
players handling the daily operations of a real estate
investment and their skills range across single
family homes to large apartment complexes. It has
emerged as among the most popular real estate
specialities with some agents shifting away from
selling to only managing properties.
In an environment where buy-to-let property
has become a key element in wealth creation,
the role of property managers has grown
exponentially in value.
Their first responsibility is the rent, from
setting the original level to collecting payments
and adjusting those levels in the future. Their
experience provides insight into the appropriate
rental to attract tenants to your property.
They can also become the rent collector,
ensuring an optimal cash flow by setting the
date by which rent is due and enforcing late
penalties. When time comes for renewal, they
are sufficiently aware of comparable rentals to
adjust up or down in line with market demand.
Property managers are responsible for tenants,
from finding and screening those appropriate,
to dealing with complaints or initiating
evictions. They know where to advertise and
can recognise the cosmetic changes that would
boost a property’s selling point.
Screening tenants requires credit checks
to avoid future problems and then handling
the leases - setting the length, ensuring the
necessary provisions are in place to protect the
owner and determining the deposits required.
Given municipalities are now refusing to accept
utility bills in tenants’ names, that deposit

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June 2013 SA Real Estate Investor

also includes an amount against defaulting on
electricity and water bills.
If the agreement between owner and manager
covers monthly responsibilities, property managers
are responsible for dealing with maintenance
requests, noise complaints and have the contacts to
handle emergency situations. When tenants leave,
they may be responsible for inspecting the unit,
checking for damages and determining how much
deposit is returned.
In large complexes, property managers are
responsible for the regular maintenance, emergency
repairs and preventative maintenance including
checking for leaks, landscaping and rubbish
removal to keep the property in peak condition on
the owners’ behalf.
Good property managers know the laws
pertaining to their jobs - Sectional Title Act, Law
of Property and Real Estate law - such that they
can apply correct procedures and comply with
property safety standards. They are responsible
for managing the budget for building and
maintenance and retain the necessary records
including income and expenses, inspections,
signed leases, maintenance requests, complaints,
repairs, rent collection and insurance costs.
That leads on to the next issue - as a property
investor, have you asked the right questions
of your propert y manager to ensure the
most appropriate care will be taken of your
investment? What questions should you ask
before embarking on that relationship?

The principle question is the level of
fees charged
Property management companies will charge fees
based on their responsibilities. If owners only require
the company to find and screen the prospective
tenant, the percentage of annual rental charged will
be higher as a once-off payment than if they are also
responsible for the monthly collection and operating.

Typically the fees are 4-10% of gross monthly
income, but owners should ensure the fee is
based on rent collected and not on rent due.
This protects them against paying the property
manager on vacancy.
However, as with everything in life, paying
peanuts attracts monkeys. Do not be dazzled
by low management fees, but be prepared to
do your homework and establish a relationship
with a property management company with a
sound track record.
Ensure you know what responsibilities they
will undertake on your behalf - will they
only collect the rentals and wash their hands
of management until the followin ???????e?)????????????????????????????????)?????????????????????????????????)???????????????????????????????)-???????????????????????????????)?????????????????????????????????????)???????????????????????????????????????)????????????????????????????)]?????????????????????????????????)??????????????????????????????????????????)?????????????????????????]??????????????)??????????????????????????????????????)??????????????????????????????????????)?????????????????????????)e???????????????????????????????????)??????????????????????????????????????????????????????????????????????????)?????????????????????????????????????)?????????????????????????????????????(??????????????????????????Q?????????????)???????????????????????????????????)?????????????????()IM=UI
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