Choosing the correct rental agency is just as important as choosing the correct location, property type and rental rate for your investment property. However the importance of an excellent rental agency seems to be often forgotten and many landlords find themselves frustrated and regretting their discussions entirely. This need not to be the case, you simply have to do your homework in ensuring you choose the best rental agency that you can find and afford.
Main duties of a rental agency
It is important to remember the main reason why a rental agency is used:
- To maintain your property
- To maintain the value of your property
- To find appropriate tenants
- To collect rent and take general care of the wellbeing of your tenants
These are the bare basics of any rental agency, if you find yourself with a current rental agency that is inept in any of these 4 main duties, it would be recommended that you consider finding a new rental agency, worthy of your business.
Credentials of a rental agency
Landlords often forget to ask for the credentials of a rental agency and it's staff. All agencies and agents must be registered with the Estate Agency Affairs Board and have a valid Fidelity Fund Certificate. This is extremely important to any landlord, simply because it actually gives a level of protection to you as a landlord. If you made the mistake of choosing a less worthy rental agency you as landlord will not be protected from this agency in the case of damages and fraud and you cannot file a claim from the Fidelity Fund at the Estate Agency Affairs Board for your loss.
Different mandates of rental agencies
There are 2 types of mandates, an introduction option or the management option.
An introduction option is often what DIY landlords go for: this will include the usage of an agent for finding, showing and signing a lease with a tenant. It is seen as a once-off service and will generally cost a landlord a month’s rent in commission. This will leave the landlord as the person responsible for the collection of rent and management of the property and the tenant.
The second option is that of full management. Such companies will not only find, show and sign with a tenant, but will manage the property, the tenant and the collection including the handling of payment of rates, levies and other property related bills.
It is important that the landlord and agent has an agreement on what is expected from each other.
The deposit can be held by the rental agency or the landlord, but it is important that the deposit is held in a well managed interest bearing account. There is the assurance that if the rental agency holds the deposit, it will be kept in a proper interest bearing trust account as per the requirements of the Rental Housing Act and the Estate Agency affairs board and will be available when called upon. Many DIY landlords make the mistake of using the deposit for repairs or arrears rent while the tenant is still in occupation causing future problems of repayment to or from the tenant. If you are a DIY landlord, we strongly recommend that you open a new savings or trust account to avoid such a misstep and only use the funds for the purpose of repairs or arrears rent (as per the Rental Housing Act) after the tenants have moved out.
Credit checks are essential for any landlord. Being thorough pays off- always call at least two previous landlords and run a check that is endorsed by the credit bureau to insure that the placed tenants can afford to stay in the property and that they don't have a bad payment record, drowning in debt or a nuisance history with previous landlords, it always gives that extra piece of mind!
We recommend that even if a landlord doesn’t want full management services, that they at least use an agency for their credit check facilities. Most agencies have a set-fee to run credit checks on prospective tenants. Rental Agencies have an advantage that no DIY landlord has- access to credit check information that is not available to the general public.
Who said what…
Communication is key as in everything in life, landlords and rental agencies should know what is expected from each other. Once that agreement is established your tenants need to know where to fall in. Should they communicate to the rental agency, or should they talk to you as landlord?
This may seem like such a small matter, but honestly being a tenant and not getting your concern across to the correct person can be very frustrating, this often leads to unnecessary arguments.
If you choose a full management mandate, your rental agency is suppose to take care of your tenant, but we know the difference between “suppose to” and reality. It is for this reason that I would still recommend that you even as a full managed landlord put a call out to your tenants, just to make sure your rental agency is worth their commission, no matter how small it may be.
Statements of what goes where…
It is important that your rental agency has a good understanding of the management of your property and tenants. A landlord has the right to ask where his/her money has been spent and why, and honestly it’s your responsibility to check up from time to time even if you have a property management company.
Rental Agencies are a dime a dozen, but not all agencies are created equal. Make sure that the agency you choose not only fits your pocket, but your needs as well. Sales go up and down, but service is forever!