DIY rental property management guide
If you are a savvy property investor, you might consider managing your property yourself. But before you do, here is a helpful guide as to what’s really involved.
While paying a property manager might seem like the easiest and least stressful way to look after your investment property, the truth is this is not always the case. Dealing with inexperienced or unprofessional property managers can be just as stressful as dealing with difficult tenants. And in a high turnover industry you can almost guarantee you’ll go through a few property managers, sometimes more regularly than tenants.
The real question is, do you want to manage your tenants, or manage your property manager?
Pros of managing your own investment property
The main advantage of managing your own investment property is the control you ultimately have over the process. From screening tenants to day-to-day communication, you will have the responsibility and control over the renting process.
You can also save a lot of money and avoid many potential problems by managing your own rental property. Many of the decisions your property manager has to make during a tenancy have to be approved by the landlord anyway, so it can often feel like you’re doing the work you’re paying your property manager to do.
And while giving your property manager permission to make important or costly decisions without you might seem like a good idea at the time, you might find yourself questioning the trust you put in them when you see they approved a repair that cost double the amount you could have arranged yourself.
Cons of DIY property management
On the flipside, not having a property manager means dealing with your tenants and repair people directly, which can take up more of your time.
If you choose your tenants wisely, make all the right checks, complete all the correct paperwork and familiarise yourself with tenancy laws in your state (which all good landlords should do even if they do have a property manager), there is every chance you will manage your property without too many hassles.
Late rent, damage to property and evictions can occur whether you have a property manager or not, but if you follow the correct procedures you’ll be able to get these issues sorted out without too much drama.
We’ve all heard tales of nightmare tenants and ongoing legal battles, but having a property manager doesn’t necessarily avoid these. In some cases, neglectful property managers can contribute to these problems if they’ve failed to communicate effectively with landlords and tenants and address problems as soon as they arise.
Time is really the major downfall of property management. If you have a full-time job, managing your property on the side can quickly become an added stressor, particularly if you manage more than one property.
What does a property manager cost?
Property managers aren’t cheap, but a good property manager will be worth the price. There are three fees commonly charged by property managers:
Management fees
The fee associated with the day-to-day management of the property, like collecting rent, communicating with tenants and body corporate, doing inspections, organisation maintenance etc.
Letting fees
The fees charged for finding a new tenant. This fee covers advertising, processing rental applications, negotiating leasing terms etc.
Other fees
Other costs can vary from agency to agency, but covers things like lease renewal fees, tribunal representation fees if problems arise with the tenants, statement fees and more.
The management fee is usually between 5% to 12% of your weekly rental income. This means a house with a larger rental income will come with a larger management fee, and is charged on an ongoing basis.
What's right for your situation?
There are hazards and benefits involved with ditching your real estate agent and managing your investment property yourself, but ultimately it comes down to your personal preferences.
If you don’t mind handing decisions about your investment property over to a third party, don’t want to deal with tenants directly, are willing to potentially pay more for repairs or things you might have done differently yourself, and generally have a hands-off approach to your investment property, a property manager is probably best for you.
Just make sure you find an experienced property manager who has ideally been recommended.
On the other hand, if you want to look after your investment property yourself, deal directly with tenants, save money on repairs, and are confident in familiarising yourself with the rules, procedures and laws around tenancy in your state, managing your own property is probably best for you.
No-one will look after your investment property better than you. If you’ve bought an investment property, chances are you’re in it for the long haul. While your tenants and property manager might not notice early warning signs for things that need repair, by doing your own regular inspections you can pick up on problems such as troublesome tree roots or rips in the pool liner and have them addressed before they get out of control and end up costing a fortune.
A bad experience with either a tenant or a property manager can leave a bad taste in your mouth, so a safe approach can be to start with a property manager, familiarise yourself with the procedures involved, and take it from there.
If you’re not happy with your property manager, you can always let them go. And if you’re finding managing your own property isn’t for you, you can always hire a property manager to pick up where you left off.
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