How to Select a Good Managing Agent to Manage Your Real Estate Investment

How to Select a Good Managing Agent to Manage Your Real Estate Investment

Even though all agents provide similar services, there are a few checkpoints you can use to ensure that you are engaging in a business relationship with a good and responsible agent.

We will also summarize when it may be a good decision to hire a managing agent and when not.

Things to Check When Selecting a Managing Agent?

– You can start checking a managing agent by making your first meeting with them at their offices. Their office will have a lot to say about their business. If they insist on making the meeting somewhere else, you should draw your own conclusions.

– Check their knowledge in property law. One good way to do this is to read or check their lease agreements. Though this may not be enough, the rest of the questions below will also indicate their knowledge in law. You should have their agreements vetted by your attorney. If you have your own lease agreement and it has been vetted by by your attorney, ensure that they use it at all times.

– Check their knowledge of the Letting and Rental Housing Act. That is where most legalities can go wrong and you won’t even know what hit you.

– Check their screening process. Ask to see their “Tenant Application Form”, it will say a lot about their screening process.

– Ask them to explain how they qualify a good tenant?

– Ask them if they use the Tenant Profile Network (TPN). If they have no clue of who or what TPN (tenant profile network) is, then it is strongly suggested that you move on.

– Ask them if they will provide you with a copy of the ITC and other checks that they do (initially and periodically). If they don’t, that should switch a red light on. It’s not uncommon to encounter agents that say they do checks, charge the tenant for them, but never do the checks.

– Ask them what their procedure is for collecting rent and whether it is written anywhere in their business processes.

– Ask them if they have a service agreement or whether they sign one if you provide it? If not, well, then you should carefully consider whether you want to deal with a service provider that doesn’t want to put anything on paper.

– Ask how they notify tenants of rentals due. Better agents will send invoices via email and reminders via SMS.

– Ask how they manage late payments and what action they take when a payment is late.

– Ask if they provide you with written reports on the inspections they do, when tenants start and end the lease agreements.

– Ask to see an example of a monthly report.

– Ask how do they organize repairs, what is the process? Do they have a team they contract, on ongoing basis, for cost effectiveness?

– Ask how they deal with disputes. They should also give you some examples with disputes they resolved successfully and ones they did not manage to resolve. If they say they solve all disputes, the red light must switch on again, as we all know nothing in this world is 100{919468b76a1b111b1791bdf3e51426d8562c963af300c016649515c15309dd6c} absolute.

– Last but not least, ask for references. Some people are uncomfortable in doing this, but ultimately, you are responsible for your service providers and if anything goes wrong, you are to blame at the end. Comfortable or not, you want to make sure the agent has happy, long-standing customers which you consider joining.

What happens if the agent doesn’t want to answer all your questions or doesn’t want to give you references?

Well, then you must draw your own conclusions. Decide for yourself if you are willing to work with agents that either don’t really want your business or worse they have something to hide. Which most probably is bad service.

What is the selection process worth to you?

If you think that the list above is exhaustive ask yourself: How much is your investment worth to you?

If your property is worth R250,000 then ask yourself is R250,000 worth asking a list of questions to preserve the investment. What’s the price for lack of due diligence? The Buck Stops With You.

At the end, you must remember that no matter who you hire to manage your property for you, you are responsible at the end.

Sometimes it is worth hiring a good managing agent. However, if you can’t find a reliable agent, then it may be worth managing the property privately, until such time as you find someone that you can trust. You want to know that you are getting what you pay for.

Someone said to me once that we humans like to replace a big problem with a smaller problem we can live with, and we call that a “solution”. I accept that idea. However, we also have to make sure that we are not replacing a small problem, which is the hassle of managing our properties, with a “bigger problem” that in the long term we won’t be able to live with.

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