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Hello and welcome back to the Property Investors Handbook podcast. Today's episode focuses on a crucial aspect of property management and it's something we've talked about and it's been an ongoing theme of a lot of our episodes and that is risk management. So, With us again, Colleen Sutherland from Sutherland's Property Management Group, here to discuss just how landlords can identify and mitigate risks in rental property management and how she has done it for 20 years or more in her agency.
So stay tuned as we navigate the complexities of keeping your investments secure. Colleen,
welcome to the
Colleen, welcome to the podcast.
Thanks, Adam.
Okay. Give me a saying. We've heard it in quite a few episodes. It's your mantra And it's something you've basically lived your agency through isn't it for the whole time
Education is the most cost effective form of risk mitigation
and it is isn't it? And it's what you've been doing this whole time, but let's maybe talk about what sort of risks are we talking about here because everything's got risks owning and, renting out a property is no different.
There's plenty of them there, isn't there?
There is. So the landlord holds the biggest risk. So that's his money that's in the investment property. So he is holding that risk. So what, you need to have is a property manager who understands those risks and mitigate them for him to make the maximum amount of money.
Sure. Now you say education is the best way to do this. So how do you educate? And it's education on both sides, isn't it? For the landlord and the tenant and you in between.
Correct. So education for the landlord is it. So what happens is when we list the property for rent, say it's a new property, we will give him, guidelines to, to take to prepare the property for rent.
And then what to do once it's rented. And those guidelines form part of the education. So we will let him know that he needs, a pool safety certificate, current, smoke alarms, a smoke alarm certificate, water compliancy, claim water. So, there's a big process of that, and if you don't have those things, which are fairly simple to get, right at the start of the tenancy, and you're halfway through and you're trying to charge the tenant water, but the property's not water compliant, then you've had a bit of a loss there because I can't charge the tenant.
Okay. So those steps play a vital part in the preparation because the other saying that I have is you begin with the end in mind. So, and that's where all these guidelines come into play. Sure.
And I think you've also mentioned a lot throughout the course of this series that having your, you know, Procedures and policies and checklists is a sort of forms a part of this risk mitigation, isn't it?
Absolutely. To know what the risks are and to be on top of them from the start. And your education through that is your communication around what they are. And that's again, a real value of having you as a, as a property manager. So, but for someone else out there, you've got to have some sort of framework to, to know that you're.
You are mitigating these risks, don't you?
So I'll refer back to the guidelines that we provide the landlord at the commencement of the tenancy or prior to the commencement of the tenancy. And they form part of the risk management. during the tenancy I can quote bits of legislation that this is why you have to have a smoke alarm compliance.
This is why you have to have a water compliance. This is why, and I can quote the pieces of legislation if you need me to. Yep. But that just sort of bogs you down with too much detail. Just know that when I'm telling you, that this is what you need to do, it's because of this legislation behind the scenes,
will be forced on you during the tenancy if you haven't done it.
Yep, absolutely. Look, I'm just going to butt in here and tell you the one piece of legislation that me as a tenant finds so annoying, and that is the amount of times they have to come in to check the smoke alarms.
I know, it's crazy, isn't it?
I get the call it seems every three months. I know it's probably not quite that, but it feels like it. Every time I get this text, and yeah, we've got to come check the smoke alarms again. I get it, but.
I do get it, but I think that it's a little bit, over the top. But what we have to do is make, clean, test and inspect the smoke alarms at the start of every tenancy.
However, if your tenancy is a 12 month lease, then we'll only come in, or the smoke alarm people will only come in once a year.
Yep, sure, sure. So, What strategies do you recommend for managing tenant related risks?
So at the commencement of the tenancy, ordinarily they would view a video, of their obligations and their rights over the tenancy.
Sure. And it just gives them a brief outline of what to expect. So that's their first piece. Part of education, and then it will go on from there. So when we send out a notice to inspect the house, we will tell you what we're looking for, why we're looking for it, and if you've got any maintenance issues, you can present them then or you can follow the procedure and, report them.
That, again, that's another form of education. And then after a while, they don't need us to education, educate them. They will, accept that what we're doing is in accordance to guidelines set out by the Residential Tendencies Act.
Sure. Now I'm going to ask you a question, but I'm going to answer it for you.
Okay.
What is, what is the best form of overall risk management and risk mitigation for a property owner. And the answer is to have a property manager.
Yeah. Very good. Yes. Having a property manager who works for you, not necessarily that's her job. and they tend to be a little bit blase but if you've got a really good property manager they will have these guidelines in place to minimise any risk that you
take.
They cover everything and that's what it's all about because in this world there's so much of you don't know what you don't know and that's why you need professionals you know in, in any, anything that you, you do and you know as I talk to you Colleen in every episode we've, done and we've done a lot now.
I walk out of the studio every episode thinking, how would anyone not only have a property managed, but have a good one and pay for a good one. There's just too much that can go wrong. And you don't know what you don't know. Why would you ever try to do it by yourself?
Like I said at the start, the landlord holds all the risk.
So the landlord needs to find somebody who is capable. to manage that risk. Yep. And not everyone can do it. I do get that. But if you've been able to interview your property manager and then she can you how to minimise risk, and maximise an income, then that's the person that you choose.
But you have to be savvy because some people just have scripts and then their actions don't add up.
Match up. Match. They don't mirror. Ask for referrals. Ask for recommendations. You know, people, we're in a world of like that now that, people are looking at Google reviews. They're wanting personal recommendations.
So I think, you know, on that, Make sure you ask around, and find yourself a good one because the good ones do have good reputations. And the not so good ones don't.
When you talk about the Google reviews, and I know that they're important because I gather them as well, but we do tend to get keyboard warriors who have an experience that doesn't align with what their expectations are.
So if we've been able to,
It's up to you whether you understand it and then agree with it. Yep. And if you don't agree with it, they get on the Google reviews and smash you. Yep. And that's because of, I don't like the word ignorance. I don't know how other, what other word to use, but it's because they haven't been able to understand the education and the communication and stuff that we're trying to pass on to them.
Yep. And so they just terrorise you, so just be careful sometimes.
Yeah, you do. And I think that's when you look at them for anything. And I hope, as a society now, we realise that you do get disgruntled people that just want to jump on and cause a bit of trouble. For Whatever reason that is but , I hope people can see see through that.
You know with with a lot of that I mean generally you you can tell if there's 20 good ones and yes Yeah, and you see that a lot don't you you see, you know, 55 or four stars and then Two ones. Um.
However, I do go and read those two ones and then I go, no, that's just a disgruntled person. Yep.
Absolutely. All right. Well, look, thanks again for coming in and sharing your expertise on managing risks in property rentals. Now, what was that, what was, what's your catch cry again?
Education is the most cost effective form of risk mitigation.
Okay, I would say having a property manager is, and getting a good one like Colleen.
So look, go along and have a look at, the Sutherland's Property Management Group website. It is spmg. com. I always want to get those letters in the right order. I know, and
a lot of people don't.
Yeah, spmg. com. au, everything there, all of our other episodes, you can get information on just about anything property management.
Colleen and her team are premium. property managers and as we've talked about, you get what you pay for in this industry. And if you want the best, you do need to, to pay for that, but it is well and truly worth it for all the reasons for everything we talk about. So, keep tuning in, stay ahead in the property investment game, stay informed, and we look forward to you joining us on the next episode.
Thanks again, Colleen.
Thanks, Adam.