Most property owners in Australia hold the belief that local property management is king. You might have asked a colleague what to look for in a property management company, and been told that locality and expertise are prime features, especially when finding good tenants is concerned.
The equation seems simple. A local property manager is more focused on a smaller area, will have more expertise and knowledge about your advertising in your neighbourhood, and will have more time to manage your property since they’re a smaller agency with fewer clients, right?
36% of owners who come to us indicate their trust in a property manager’s abilities is their biggest fear during leasing.
As it turns out, local property managers aren’t always the right fit for you and your rental property. There are pros and cons to local leasing managers and national property managers, and you should consider these before deciding on the right fit for you based on your needs.
We’ll help you make that decision by comparing national and local property managers and explaining when you should go with one or the other.
Using a local property manager
Many believe that picking a local property manager should be your primary criterion. You might have been told that above all else, you need an agent who knows the local area.
But, is this really true?
To make your life easier, we have laid out both the pros and cons of local property management to determine whether or not local truly is king.
Pros and cons of using a local property manager
They know the ins and outs of the local area and market, which is perfect for catering your property to the target demographic.
They also may get insider information or contacts. For example, if an owner is considering selling, it may result in a golden nugget investment for you.
They're small, and there are some disadvantages of being a small fish in a big pond.
Since they work on a much smaller scale, they won't have a lot of money to invest in their processes, and won't have as many resources at their disposal as a national property manager.
They can do rental inspections super easy. They'll also be able to quickly respond to call-outs if they're in the local area.
Better yet, they'll be able to observe any potential misconduct to the property if they regularly pass by your rental property.
They tend to charge more. Local leasing managers typically charge between 7-10% of your monthly rent in property management fees.
They also tend to use a traditional model of property management, so there are typically extra surcharges for things like admin fees, credit checks and so on. It tends to add up.
They know local vendors. Local property managers usually have a working relationship with reputable contractors and tradespeople in the area.
They might be inexperienced. Since they work on a smaller scale, they manage fewer properties.
This means that if your specific property manager has not dealt with problem tenants before, or are unsure when and how to evict a tenant, they can quickly fall behind, make errors, and lose credibility with your tenants.
They manage fewer properties. This means they often have more time to prioritise your property and your tenants in a more personalised way. Granted, this comes at a higher cost.
You may still have to do some managing. Unfortunately, if they don't offer a full service, it doesn't necessarily get rid of your responsibilities as a landlord.
In many cases, you'll still have to 'manage the manager'. Property owners tend to be dissatisfied with the level of communication and speed at which maintenance issues are resolved when local property managers are concerned.
Using a national property manager
Now that you know some of the benefits and drawbacks of using a local property manager, let's do the same for the counter-option, national property managers.
National agencies have garnered a reputation for being bureaucratic, slow to respond and lacking flexibility over the years. Plus, you want someone with local expertise managing your rental property.
The matter of fact is that national property management is a completely valid option for many. These days, plenty of national agencies have found clever solutions that help them service you faster and to ensure you still don't lose out on local expertise.
Pros and cons of using a national property manager
National property managers typically charge you less since they work on a much larger scale, bringing their overheads down.
You might not feel like your property is a high priority for them. Some large agencies have one property manager for every 150 investment properties!
No matter how good you are at your job, it's not possible for an agent to keep up with that many properties while still giving you personalised service and attention.
They have extensive resources and expertise. Since they operate at a large scale they have more to spend and larger tenancy databases. For example, at :Different we build our own technology including our tenant and owner app in-house!
They also often have platforms dedicated to identifying trends, as well as data at their disposal to grab market insights.
You might not be able to meet your property manager in person. If you're on the other side of the country it'll be hard to get a real look at the person who's going to be managing your rental property.
They will help you stay up to date on laws and compliance, even if you have multiple properties in multiple states.
Lack of flexibility. National property managers often have little room for flexibility. Many large, traditional agencies have policies and procedures that are set in stone, which can make it difficult for you to get any specialised care or exclusions.
National property managers tend to come up with clever solutions to make up for a lack of local expertise.
For example, here at :Different we have local experts on the grounds in all cities we operate in who are educated and experienced in their area. That way, you won't lose out on local knowledge whether your property is based in rural NSW or urban QLD.
So, should you use a local or national property manager?
While having local knowledge and expertise is crucial, you need to know that no amount of local expertise is going to outweigh having plain bad processes.
Therefore, first and foremost, you should always check to see if it's actually a good property management company.
Use our guide for finding a good property manager when you go on the hunt. You'll get the best questions to ask in an interview, and what to look for.
Apart from that, we'll now explain the situations in which you should pick either option.
- Use local property management if you feel you'll benefit from the local expertise and more personal approach. Just remember that you need to understand what is included in the property management fees. If you're paying a lot of money for not a lot of service, it's not going to be worth it. There are national property managers who have clever solutions to getting you local expertise, so there are options.
- Use a national property manager if you own multiple investment properties. Hiring one property manager for each location simply isn't going to end well for you. Tech-driven property managers are especially good at making owning multiple rental properties feel more like you own just one.
- Use a national property manager if you're trying to save on costs. Since local agents tend to charge quite a bit more, getting a national property manager with a more reasonable price is a good option.
At the end of the day, your top priority should always be that you're picking a good property manager, not focusing too much on whether it's a local or a national one.
If you put in the work and do your research on the agency and its processes, you'll greatly increase your chances of scoring an agent who will take proper care of your investment property.
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