Taking away the pain

Many investors choose to manage their own property but with more and more people buying apartments and houses to let, employing a property management company is increasingly popular. Property management is big business in the current boom market. The actual letting of the property is merely one aspect of the business, which extends to coping with the day-to-day problems faced by tenants, keeping track of tax deductible expenses, collecting rent, ensuring the lease is not broken, keeping a property and contents in good order.

Letting agents will find a tenant for a property and, in the process, will check out tenants' references and draw up lease agreements. However, the service ends there and they won't be on call when the sink gets blocked.

Many of the letting agencies don't actually manage the property, leaving that end of the business to a growing number of management companies. Management companies take on all the burdens of letting. They will not merely be on call when a serious problem arises but will normally follow through on the issue.

The advantage of a company that both lets and manages property is that clients get a long-term commitment for their money. Peter Wyse, of the Wyse agency, whose business includes letting and managing properties, says the two aspects are not unconnected. "If you are letting as well, you have a very responsible attitude as to who you are putting into a property since you don't want to manufacture problems for yourself. We check references and vet tenants very carefully, so there are trouble-free tenancies both for our clients and ourselves." Management companies should ensure that both the landlords and the tenants honour the rental agreement.

"A good management company will have a good relationship with the tenant. A happy tenant leads to a happy landlord. It's a basic principle in the business," he says.

The average cost of managing a property is in the region of 10 per cent of the rent, which is negotiable, depending on the size of the portfolio and the amount of work involved. This cost is an allowable expense against income tax. However, investors should remember that any expenses incurred by a management company in the course of managing the property - such as emergency repairs - will be added on to the cost. O'Dwyer Property Management is one of the biggest property management companies with more than 500 clients on the books. It not only manages individual units but also manages 70 apartment blocks. The company looks after service charges, credit control, day-to-day maintenance, pays wages, handles refuse collections, records and attends to disturbances and complaints, calls meetings of the management committee and general meetings.

Managing director Siobhan Kirwan, who manages an annual rent roll of £10 million, says landlords more than get value for the management fee partly because they know what is going on in the market. "We aim to increase the yields for our clients. We are aware of the going rate for an apartment and six to eight weeks before a lease is up we enter into negotiations with a tenant with a view to renewing the lease and if they don't want to renew, we set about finding a new tenant so as to avoid a gap. Any vacancies cost money to the landlord and we try to avoid this." The company is available for all emergencies. "We have contractors whom we employ at a trade price on behalf of our clients and we facilitate clients by printing out a complete tax statement."

An increasing number of people are investing in property, says Siobhan Kirwan, and as a consequence the management of properties has grown as a service industry in its own right. "Property owners don't have the time to deal with tenants these days. Even when you have a good tenant in a good property, there are often initial queries about how things in an apartment work and you might have to go out and explain again how to turn on the oven."

While many investors give a portfolio over to a management company, others are quite happy to manage their own property. Dubliner Yvonne Moran owns two apartments and although she now lives in the US, she manages both properties herself. "You take a risk," she says. "But I had the experience of dealing with tenants for many years, so I have kept on top of things. I have had to come home to re-let the apartments but at least I can vet the tenants myself and the money I save giving to a management company pays for my flight home."

She did not opt for a management company because she feels there can be a pressure to let at a lower rent and not necessarily get the going rate. "The letting agents usually want to clear a property off their books," she says. "They haven't the same need to get a higher rent when they are only on a percentage."

She has used a management company in the past. "I had one for four years but the tenant was late with rent one month and nothing was done. Then they were late the second month. They should have anticipated that and done something about it. She has also found that she is better taking on the inventory check herself. "I don't miss out on the small things," she says. However, she would only recommend the management of properties to people with the time and energy to put into it. "It can be very time consuming if things go wrong," she says. "If you're the type of person who is confident of being in control, it works. But make sure you have confidence in your management company if you are using one."

An increasing number of investors are buying property in the designated areas around the country, such as seaside resorts, with a management structure already in place. The company will look after the turnover of clients which will often be on a weekly basis in the high season.

Mary Powers, in Rosslare, runs Self-Catering Ireland, which manages high-quality schemes, mainly in the southeast. "We provide different levels of service. Depending on the location, the management fee would be about £350 to £500 per year."

There is a letting fee of between 15 and 20 per cent and a changeover fee of about £40 to £50. Among the sites which Mary Powers manages are Riverchapel and Forest Park, in Courtown, and Southfields in Rosslare.

Niamh O'Donovan and her partner Jackie Cohalan set up Acorn Property Management company in Cork in 1998. The company handles lettings, valuations and management. This ranges from advising individual clients on renting out apartments or houses, to managing communal areas in apartment blocks, and organising refuse collections and landscaping.

For investors deciding whether to employ a management company or to go it alone, it is basically a question of time, energy and the costs involved. Some investors might not want to deal with tenants, while others with small portfolios might feel they want to be on top of things.