Real Estate Managers: Investor's Foes or Friends?

Published on 21st August 2007

Although the advantages of using Real Estate Managers outweigh the disadvantages of not using any, use of their services has not ‘peaked’ in Nairobi despite its vast rental housing. However, as alleged by Kevin Mwanza in his letter Real Estate Managers are Expensive, it is not true that most landlords cannot afford their services. Most people misconceive that Real Estate Managers charge exorbitantly and must be paid a flat figure for their services.In Kenya, their percentage commission ranges from 2.5 – 10 percent on the money they collect. If they collect nothing, then the fees or commission due to the agent is also zero since he is payable on commission basis.

 

Landlords who manage their own properties will in one way or the other incur costs similar to those incurred paying the agent. This is without counting the time that one will spend doing these duties. 

 

Some non professional managers in the market charge a flat rate thereby creating the impression that this is the practice.  Landlords should avoid using such managers as they don’t do their work professionally.They cause property managers to be viewed as dishonest. The minimum qualification for one to practice as an Estate Agent as per the current legislation is “good morals” which is difficult to define. The Estate Agents Registration Board has neither been legally enabled to discipline errant members nor does it have the capacity to supervise the works of its members. This has made the industry lack discipline and the “managers” act on their own whims.

 

Members of the public ought to deal with managers who are not only members of the Estate Agents Board but also the Institution of Surveyors of Kenya which that regulates Valuers and Estate Managers. This will make avert falling prey to conmen thereby leading to mistrust.

 

It is not true to perceive that the Professional Managers only manage ‘High Value Estates’. While high value estates have more income for the Property Managers, it does not warrant avoiding the middle and low income estates when seeking property management work.  From experience, the middle and low income houses provide a more stable business for any property manager.Most highrise building property management contracts are awarded on yearly basis through tenders, making the Property Manager not to be sure of how long he will manage such buildings. For th stability of a property management firm, low end estates cannot be ignored as they provide continuity to the company.

 

Virginia, a senior executive in a leading commercial bank bought a house in Komarock estate in her early days. As she moved up the ladder, she moved from this estate and needed a tenant to live in her house.  Through her friends, she was introduced to a colleague who was in need of  a house to rent.  They readily agreed on Kshs.10,000 and the lady promptly moved in.  The arrangement entailed that on top of the rent, she would also pay the accruing water and electricity bills.

 

On moving in, the new tenant paid Virginia Kshs.30,000 which included three months rent. She felt that this would be a suitable tenant for her premises. On the fourth month however, the tenant told Virginia that her business was not doing well and she would call her when she got the money to pay the rent. She then started avoiding her calls.

 

Being a busy person, Virginia was not able to follow up the tenant whose  water bill continued to accrue arrears.  Virginia would on some occasions drive all the way to the house only to find the tenant was not in and had switched off her phone. This frustrated her so much because she was not getting due returns to her investment. That is when she approached Metrocosmo for help.

 

On taking over the management, we were able to enter into an agreement with the tenant on strict rent payment deadlines with regular follow ups.  The tenant on the other hand, complained that the landlord never handled any repairs which we were able to handle on behalf of the landlord. On assessment, we realized that the tenant was under paying the house rent and promptly increased it. Virginia is not only happy with our services but has as a result referred two of her friends who own houses to us for management.

 

Remember, just like other professionals, Property Managers are required to follow a code of ethics governing their profession. 


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