Owning an investment property can be a great way to generate rental income and build your wealth over time. However, being a landlord also comes with responsibilities and legal obligations. Property management refers to the oversight of residential, commercial, and industrial rental properties on behalf of property investors and owners. Hiring a professional property manager can save you time and stress, allowing you to reap the rewards of investment property ownership without the day-to-day headaches.
This ultimate guide covers everything you need to know about property management in Australia as an investor, owner, tenant, or someone interested in starting their own property management business.
What are the Benefits of Using a Property Manager?
Managing an investment property on your own may seem easy, but there are many advantages to hiring a professional property manager instead:
- Tenant screening and selection - Thoroughly vet and select reliable tenants based on credit, background, employment, and reference checks. Good tenants mean steady rental income.
- Lease creation and enforcement - Create comprehensive rental agreements that comply with all Residential Tenancies Acts and manage breach of lease issues.
- Rent collection - Take care of collecting and depositing rent payments on time. Many property managers use advanced software to automate this process.
- Maintenance coordination - Arrange any necessary repairs and maintenance through approved contractors and tradespeople.
- Compliance management - Ensure properties meet all safety and operational compliance requirements. This includes smoke alarm servicing, bond lodgement, and final inspections.
- 24/7 emergency support - Experienced property managers have processes in place to handle any emergencies immediately, even outside business hours.
- Financial reporting - Provide detailed monthly, quarterly, or annual income and expense reports, allowing you to easily monitor the performance of your investment.
- Industry expertise - Apply their extensive knowledge of landlord-tenant legislation, rental market conditions, and trusted contractor networks to properly manage your property.
Hiring a great property manager is essential for reducing headaches and making the most of your rental income. However, not all property management services are made equal.
How to Choose a Good Property Manager?
Choosing the right property management company or agent to hand your precious investment over to is no easy feat. Here are the most important factors savvy real estate investors consider:
- Local expertise - Make sure they have an established presence and a deep understanding of the specific suburbs and areas where you own properties. This impacts their ability to set accurate rents, attract quality tenants, and coordinate maintenance issues efficiently.
- Communication skills - Look for responsive, personable professionals who provide prompt and clear communications with both owners and tenants. Ensure you understand exactly how and when you’ll get updates on your property.
- Track record of success - Ask about their occupancy rates, rent collection metrics, and client retention levels. The more satisfied property investor clients they have on their books, the better.
- Full service offering - Property managers handle everything from marketing vacancies and screening tenants to liaising with trade contractors and ensuring compliance. Confirm precisely what’s included (and excluded) so there are no surprises.
- Industry qualifications - At a minimum, your property manager should hold formal certification such as a Certificate of Registration or Licence issued by state regulatory bodies like NSW Fair Trading, Consumer Affairs Victoria, or the REIQ in Queensland.
- Professional affiliations - Membership in industry bodies like the Real Estate Institute of Australia (REIA) demonstrates a commitment to professional standards and development.
- Competitive fees - Property management fees typically range from 6-12% of collected rental income. Be wary of unrealistically low fees, but don’t assume higher rates mean better service either.
Taking the time to vet potential property managers will give you confidence that your investor obligations and tenants’ needs will be properly balanced.
What are the Key Responsibilities of a Property Manager?
Once you’ve hired your property management team, what exactly will they handle on your rental property? While specific duties can vary based on your management agreement, typical responsibilities include:
Advertising Vacancies and Screening Tenants
Experienced property managers have proven systems to get your vacant property advertised across key platforms, attract appropriate tenants, thoroughly screen applicants, and help you select the best fit. Duties include:
- Creating online listings on major portals like realestate.com.au and domain.com.au
- Listing vacancies with any relevant print publications
- Erecting “for lease” signage on the property
- Conducting open inspections for prospective renters
- Collecting and checking rental applications against tenant selection criteria
- Processing thorough background, credit, and reference checks
- Preparing tenant shortlists and providing recommendations
Lease Creation and Management
Property managers act as intermediaries between landlords and tenants. Key leasing tasks involve:
- Ensuring lease agreements adhere to all relevant legislation like bonds, condition reports, and disclosure requirements
- Negotiating appropriate lease terms and rents based on market analysis
- Explaining lease clauses, rental payments, policies, and processes to tenants
- Lodging security bond payments with state authorities
- Conducting detailed entry and exit condition reports
- Handling all lease extension, change, or termination paperwork
Rent Collection and Arrears Management
Collecting and distributing monthly rental income is central to the property manager role. Their rent collection system should:
- Provide tenants with proper payment methods and account details
- Send out rental arrears notices when overdue
- Follow up persistently on any outstanding rent
- Provide detailed reports to landlords on all income and arrears
- Pay landlord rental income monthly or as agreed
Maintenance and Repairs Management
Dealing with property repairs, contractor management, and regular inspections are also core property management duties:
- Coordinate timely repairs and quote approvals for all trades and maintenance jobs
- Arrange routine inspections and identify preventative maintenance needs
- Support tenants with emergency repairs 24/7
- Inspect properties thoroughly post tenant vacation
Safety and Legislative Compliance
Good property managers proactively manage compliance with legislation like:
- Residential Tenancies Acts in each state or territory
- Smoke alarm obligations for rental properties
- Pool safety standards where applicable
- Council regulations relating to waste, development, etc
They’ll also have systems for effectively:
- Renewing building safety certificates and condition reports
- Lodging landlord insurance and bond payment details
- Issuing breach notices to tenants if necessary
- Representing the landlord at tribunal hearings
Financial Reporting
The leading property management platforms provide digital tools and tailored reporting to give landlords full visibility of their property performance. Quality financial reports cover:
- Monthly or annual rental income statements
- Any maintenance and vacancy costs
- Contractor payment approvals
- Income tax deductions and depreciation tracking
Robust, transparent financial reporting allows you to make smart decisions on your investment.
Why Good Communication Matters
Managing communication between owners and tenants is often one of the top value-adds a property manager provides.
With happy tenants more likely to renew leases, property managers play a delicate balancing act - promptly addressing tenant requests while also optimizing financial outcomes for the owner.
That’s why you want a property manager who excels at:
- Promptly informing tenants of any property access or inspection visits
- Listening and communicating with tenants on maintenance needs
- Securing your approval for non-emergency maintenance above agreed cost limits
- Keeping you updated on tenant interactions and visit outcomes via phone/email
- Mediating any disputes or complaints professionally and objectively
By selecting a property manager with top-notch communication abilities, you’ll avoid many headaches and risks over the lifecycle of the tenancy.
Finding and Keeping Good Tenants
One of the most important jobs of any property manager is finding and retaining quality tenants. Here’s how:
Tenant Screening
Thorough tenant screening processes help assess applications to identify reliable long term tenants. Checks include:
- Photo ID confirmation for all adult occupants
- Assessing income against rental payments
- Inspection of current living conditions
- Credit checks for defaults or adverse records
- Confirming previous landlord rental history
- Contacting personal and employment references
- Conducting employment confirmation
Verifying tenant identities, income stability, and past rental history minimizes risks of future rent defaults or property damage.
Clear Expectations
Ensure tenants understand their rental responsibilities upfront by:
- Completing detailed property condition reports before move-in
- Explaining lease terms and obligations clearly via phone or in person
- Following up on all queries promptly
- Maintaining professional, courteous communication
Proactive Maintenance
Attend promptly to any maintenance issues or emergency repairs. A comfortable, well-maintained property encourages better tenant retention over the long run.
Fair Resolution Processes
If disputes arise, put documented complaint resolution procedures into action straight away. Give tenants confidence their concerns will be managed sensitively.
Lease Renewal Incentives
Offering lease renewal incentives like flexible terms or minor upgrades shows existing tenants you value their tenancy. This avoids lost income from vacancy periods between tenancies.
Preparing Rental and Lease Agreements
All property managers use residential tenancy agreements also called leases or rental contracts. These legally binding documents must align with state and territory legislation.
Important inclusions in every property lease are:
Property Details - Address, number of bedrooms, type of dwelling, fixtures and fittings, car spaces, inclusions etc. tortured
Lease term - Fixed or periodic duration, possible extension options
Bond amount - Typically 4 weeks rent – lodged with state authorities
Rent details - Payment frequency, approved methods, agent bank details
Tenant and landlord details - Full legal names of property owner/landlord and approved property occupants
Rights and obligations - Of landlords and tenants around property use, access, repairs, and assignment/sub-letting
Break lease clauses - Grounds for early termination by owners or renters
Signature fields - For tenants and property managers/landlords
Additional terms can cover pets, smoking, the number of occupants, the insured value of possessions brought onto the premises by tenants, and liability exclusions for tenant injury or property damage.
Ensure your property management agreement stipulates WHO is responsible for creating and signing leases. Most agencies handle lease preparation using advanced templates under the Real Estate Institute approved lease model.
Self-managing landlords must align rental contracts with the latest legislation and attach mandatory documents like condition reports or advice on smoke alarm obligations.
Managing Tenant Complaints and Concerns
Even quality tenants will occasionally require issues managing or complaints addressing throughout a tenancy.
Property managers act as the first response, assessing the legitimacy of complaints objectively and protecting landlord interests where necessary.
When tenants complain about:
Property condition or damage - Arrange prompt inspections, raise maintenance requests immediately, and follow up frequently. Take photos detailing issues.
Noise issues - Correspond respectfully with involved parties to resolve, suggesting dispute resolution services if persistent.
Problems with neighbors – Provide contact details for mediation authorities without admitting legal culpability on the landlord's behalf.
Maintenance delays – Apologize sincerely and investigate reasons, negotiate access timing, or provide temporary solutions like portable heaters. Compensate for excessive delays.
Lease or bond disputes – Clarify the official rental position in writing or request intervention by regulatory authorities like state tribunals.
The most successful property managers turn these negative tenant interactions into positive outcomes. They focus objectively on resolving issues through better communication and by nurturing tenant relationships.
Conducting Regular Inspections
Both during tenancies and after tenants vacate, property inspections are a way for managers to identify repair needs, check tenants are fulfilling lease conditions, and see signs of damage early.
In Australia, landlords or property agents conduct three types of inspections:
- Routine inspections - Around once per year to assess property condition, make tenants aware of responsibilities, and identify future work. No minimum notice period is legally mandated.
- Ad hoc inspections – With 24-48 hours notice on reasonable grounds – e.g. possible damage, change in owner details or to clarify repair requirements.
- Final inspections – Document property condition with tenants present after the lease ends before releasing any rental bonds. Identify damage needing work before remarks or sales.
Thorough visual inspection reports contain:
Photos – Demonstrating issues or that property remains properly maintained
Observations – On property cleanliness, damage from tenant misuse or fair wear-and-tear, ground maintenance
Areas checked – All rooms, installed appliances, water pressure, pooling water risks, etc
Tenant feedback – Record all ad hoc tenant maintenance requests
Further actions – Repairs requiring quotes, tenant communications needed, etc
If tenants deny access or inspections identify major unapproved modifications, property managers can issue breach notices or use details when pursuing tribunal orders allowing corrective work.
What Makes a Good Property Manager in Australia?
Not all real estate agents make good property managers. The most successful rental property managers excel across these key attributes:
Extensive property investment knowledge – Expertise in maximizing rental yields comes from understanding landlord taxation, investor finance, compliance regulations, and property markets.
Meticulous multi-tasking abilities – Top property managers skillfully oversee advertising, tenant communications, contractor liaison, inspections, documentation, reporting, and more daily.
Sharp negotiation tact – Persuading tenants or owners on rental applications, maintenance requests, lease terms, and disputes all involve tricky balancing acts property managers must master.
Tech savviness – From property advertising portals to digital condition reports and automated statements, property management today relies on using the latest real estate tools seamlessly.
Tough work ethic – Tenants have high expectations for urgent repairs and flexible access. Property managers must be available nights and weekends when needed.
Thick skin – Irate tenants, demanding landlords, and mistakes under pressure come with the territory. The best in real estate take both criticism and praise with perspective.
But most importantly - stellar property managers never lose sight of their core directive – efficiently managing rental properties to benefit both investors and tenant alike.
What Qualifications Do I Need to Be a Property Manager in Australia?
To legally provide property management services in Australia, formal registration or certification from your state/territory regulatory authority is essential.
Requirements vary slightly but generally involve:
Industry Entry Qualifications:
- Minimum Certificate IV, Diploma, or Advanced Diploma in Property Services (Agency Management) from nationally accredited course providers – offered online or via TAFEs and colleges. Leads to:
Formal Registration
- Gained by demonstrating suitable references, experience, and qualifications to your local consumer/fair trading department or real estate institute. Usually renewable annually for a licensing fee.
Note - ACT and Tasmania have no statutory registration system currently - just industry requirements around competency, education, and professional development set by REI, ACPM, or similar bodies at present.
Additionally:
CPD Points – Demonstrate you complete sufficient annual Continuing Professional Development training on legislation changes, workplace policies, etc
Background Checks – Pass a national criminal history/bankruptcy check before being granted registration
Insurance Requirements – Maintain appropriate Professional Indemnity cover plus Public Liability insurance on agency premises
Top professionals also join industry organizations like the Australian College of Property Practitioners or the REIA - investing in their careers via further education in specialist property management, negotiation, accounting, leadership skills, and more.
How Do I Start a Property Management Business in Australia?
If you’re interested in moving from property investment into the property management field, here are key steps for starting your own agency or management firm:
1. Gain essential qualifications and registrations
You’ll need formal training and credentials as already outlined before providing services – no exceptions. Study investment property services and management electives within certificate or diploma courses to establish your knowledge foundations.
2. Define your business model
Decide whether to operate an independent property management office, start a standalone agency or purchase an existing real estate franchise location. What services will you offer beyond residential services? Holiday rentals? Commercial management? Onsite caretaking? Tailor your model around niche expertise.
3. Handle legal and compliance requirements
Consult lawyers and accountants to determine appropriate business registrations for your location and structure - sole trader vs. partnership vs. company, GST registration, tax implications, etc.
4. Set up insured premises
Leasing an appropriate office, lining up professional indemnity and public liability insurance, securing business finance, and physically fitting out your workspace come next. Don’t skimp on security for managing tenant bonds either.
5. Acquire property management software
User-friendly tools like MPulse, RealSuite, Re-Leased, or Console are vital. Property management software centralizes all documentation, financials, maintenance workflows, inspection reports, and landlord/contractor contact details automatically.
6. Start marketing and selling services
With all foundations set, invest energy networking via local property investor meetups, club sponsorship, council events, etc to promote your services. Leverage existing business relationships and PTAs as a source of initial clients while cementing an excellent industry reputation.
7. Focus on providing 5-star service
Stand out by emphasizing communication, transparency, and cooperation with both owners AND tenants. Stay across legislation so your documentation and processes benchmark with industry best practices too.
Property management empires like Ray White Premier didn’t appear overnight – they were built business relationship by business relationship through referrals and top-notch customer service. Patience and persistence pay off.
Frequently Asked Questions
What percentage of rent should a property manager charge?
Most property managers charge a commission fee equivalent to 6-10% of collected rental income. Percentages can vary depending on the services included and local market rates. Written commissions are fixed in the property manager agreement.
How often should landlords inspect rental properties?
Australian states and territories have different legal requirements around rental inspections but best practice is every 3-6 months. Issues can be rectified quicker with more frequent inspections.
What insurance does a landlord need?
Landlords must take out building insurance covering property damage. The industry recommends adding landlord protection for loss of rent or malicious acts by tenants. Talk to an insurer about policy specifics for investment properties.
What tax deductions can I claim on a rental property?
Typical Australian tax deductions include property management fees, council rates, water rates, landlord insurance, maintenance and repairs, borrowing expenses, capital allowances deductions, plus other carrying costs directly related to producing rental income.
What should I include in a rental inspection report?
Typical rental inspection reports cover property cleanliness, condition of walls/floors/fixtures, plumbing and electrical systems, appliances, smoke alarms, security, mold or dampness, outside areas, pool/spa servicing, garden care, and any damage or repairs required.
