Just over a month after the sudden closure of Jericho Property Management another property management firm, Trump Assets Management, has closed its doors.
Efforts to contact the owner and sole director of Trump Assets Management and sister company City Gardens Management, Yan Xiang Li, have been unsuccessful, and like the Jericho case, property owners claim they have been left out of pocket.
For Harcourts Accommodation Centre owner and Fellow of the Real Estate Institute, Patricia Bowden, events such as the Jericho and Trump collapse can be traced back to the Real Estate Agents Act, which allowed anyone to set themselves up as a property manager.
"I could see this sort of thing was going to happen in the future, if they deregulated property managers," she said.
Previously, real estate regulations "brought property managers under control so these types of things don't happen, and if they do there are serious repercussions."
For Bowden there are a number of things a property owner should check before trusting management of their property to a third party, one of the most important being that the property manager keeps rent payments in a separate, audited account.
"It's absolutely, 100% important, and it has to be an audited account. You don't want trust funds going into the business account."
The point is echoed by Martin Evans, president of the Independent Property Managers Association (IPMA) and former New Zealand Property Investors Federation president.
"It's up to the customers to do their homework and make sure they're dealing with someone reputable," he said.
Evans listed a number of questions a property owner should ask, including how long they have been in business, how many properties they manage, do they invest in property themselves, do they send out detailed statements to owners and do they have public liability insurance.
Another check both Evans and Bowden recommend is asking for references from other clients.
Evans also recommends property management clients ask for contact details of tenants so that in the event of late payments or a break in communication, the owner can immediately contact the tenants and ask them to redirect their rent payments.