Thinkproperty Blog

Real Estate agents and negotiators usually won't. I am sending you a private message to explain further.

So you are saying that the misalignment of interest can be more than made up by the fact that the property manager would be far more knowledgeable than oneself.

Well first off you wouldn't hire a property manager taking care of your million ringgit investment the same way you take a property from an agent. With a property agent, some are very professional, but some are not at all, and since they don't have real control you and other clients wouldn't mind working with ones who happen to be unprofessional, and you wouldn't take their usual sales exaggerations as irregular and will just ignore them.

A property manager however is like an investment consultant and therefore you need to get one that can show track record, integrity, class, and professionalism. You choose one you feel comfortable with and that you can trust their judgement and level of knowledge, and walk away from any manager who you feel will not be up to par, because that will keep on reflecting on your property and your investment and amount to serious money. Additionally, you can also still double-check their recommendations with the market to be sure they are not referring over-priced units.

There shouldn't be conflict of interest with the right investment property manager because they actually earn a percentage of what they make for you. For many professional ones, that includes capital appreciation of the property (They work a percentage of the capital gains upon sale of the unit if they endorse, advise on, or choose it, into the contract). They are not like full-time agents whose main business is to sell off their listed properties including the stalled and bad ones, and therefore will not care about what comes tomorrow and will try to hard-sell you what they got. Managers are in it for the long-haul and know bad properties and bad management will simply get them bad money, a bad reputation, and not to mention fired. So they will be most motivated to help you choose the best units that can make the maximum yield and maximum capital appreciation. Even if they take a cut of the commissions from the agents they work with, the cut will not be different between good and bad properties, so it will not affect their advice, it might however lower your bill.

Obviously then the term "property manager" if advertised by real estate agents and negotiators should be understood to mean more like property administrators, and it would certainly not be prudent to take buying advice in such a situation.

Many professional property managers work at 10% of the return generated, exclusive of all expenses. Good ones ask for a higher percentage, which if they can show the track record to back their claims up, should not be ignored, you'll end up with more money. Property managers might not be on speed dial for local experienced property investors who manage their own business full time, but they can be the best friend of foreign investors, or those who are too busy in their main trades, or are under-educated in the property game.

Hi Ching,

Thanks for your comment. This period of time I am very busy with getting a few business endeavours off the ground, but over the next period I will be publishing more articles very soon.

Hi Alex,

That depends on what you regard as a property manager. If it's just a local real estate agent who promises to get the plumber in when the tenant calls, of course you never let them choose anything for you. However there are property investment managers that are dedicated professionals, they will know which units will yield the highest return in rental yield and value appreciation, know how to renovate and furnish it, what to add to it, how to tenant it, and take care of all its issues on behalf of relaxed investors, and they earn their money as a percentage of generated returns. Some managers are so professional they would run their business very similar to a hedge fund except individuals own the units individually, and they would turn away any clients whose property does not satisfy their specific criteria or is not endorsed by them. For the investors who care about returns, these managers can produce excellent results, for those who want control and flexibility or have other objectives than pure returns it is better to just get an administrative maintenance agent.

Hi and thanks for your comment. I completely agree with you in that lack of researching an area is definitely a big mistake. This article though is only one of many "Big Mistake" entries I am planning to do here, as I realize I can't put everything under that title in one article without making it endless. Expect that one to be discussed in detail soon.