Replacing yourself as property manager. Maintaining an investment property can be quite expensive. In order to make it as profitable as possible it’s ideal to review areas where you can save or improve your cash flow. One of the areas many investors look to consider saving is replacing yourself as property manager.
As property advisers/buyers advocates, we understand why a landlord would consider it. The average cost of a property manager in Melbourne is approx. 6%+ gst. If you earn a yearly rental of 20,000, this would equate to $1,200 per year in management fees. A substantial saving of $100 per month if you can do it.
However cost saving doesn’t always result in a better long-term investment return. Property management is no easy task. If managed poorly, it can create large financial woes compared to employing a professional.
If you are considering replacing yourself as property manager, here are some common difficulties faced with managing your own property:
Dealing with responsibilities
The responsibility of managing your property is quite intense. You have laws to abide, obligations to meet and an ethical approach to your tenants. As your portfolio expands the responsibilities increase too.
Maintaining a relationship with tenants
Maintaining a close relationship goes a long way to keeping a happy tenant. A happy tenant is more likely to look after your property and pay rent on time. See our article on ‘tips to keep a happy tenant‘ that takes a closer look at this perspective.
It can be difficult to have transparency with a tenant when you are also the landlord or owner. Not having an arms-length relationship can make things more challenging, particularly when dealing with conflicts and/or disputes.
Understanding the legislation
There are many rules and regulations that need to abide too. There are laws governing disputes, property damages/repairs and deposit bonds to highlight a few. Knowing how to manage procedures with the Victorian Civil and Administrative Tribunal or understanding the Residential Tenancy Act 1997 is another difficult task.
Administration requirements can also be quite complex with lease agreements and bond lodgement forms. Failure to meet these requirements correctly can result into some unfortunate circumstances, particularly financial.
Time management
To meet the responsibilities of a property manger you need to be readily available to serve your tenants needs promptly. In some cases you may receive contact at all hours in the morning to attend to an emergency such as a burst water pipe or storm damage. In these circumstances you need to rectify the issue immediately to reduce further damages and ensure the tenants is safe
In the event you are unwell or away on a family holiday you still need to be available to attend these types of issues. There may be a break-in, structural damage or a personal injury with the tenant. There are many scenarios that can take place and a property manager needs to meet a duty of care promptly.
Other time consuming duties include marketing a new tenant, reviewing tenant applications, documenting tenancy agreements, managing deposit bonds and completing property inspections to name a few.
Computer systems
When managing our own property you’ll need to carefully document all forms of events and contacts you encounter. You’ll need to manage the rental income, administer the expenses and coordinate contact with the insurance companies and/or owners corporations where applicable. Maintaining financial records are best documented using software and computers. To adequately communicate with third parties you may need to update your technology regularly. These may incur additional costs that haven’t been considered.
Marketing for a tenant
One of the hardest and most time consuming tasks is to source and interview tenants. Property managers often have active databases and access to online portals such as Realestate.com to help find a suitable tenant.
Knowing what questions to ask and how to approach these sensitive conversations can be difficult if you don’t encounter these dealings regularly. Taking professional photos and conducting property inspections are other areas to be aware of.
Establishing marketing plans and advertisement campaigns are not easy. Being able to do this cost effectively and time efficiently is also critical.
Pricing your rent
Pricing your rent to the market requires real estate knowledge of the rental market and appropriate research. Establishing a competitive price while representing a good investment return for yourself can take time and wisdom.
Is it worth replacing yourself as property manager?
If you are knowledgeable in managing your own investment property, have sufficient time to service the role of a property manager and feel your knowledge and time spent on the job is more cost effective then this is a viable option for you.
At Crest Property Investments, we work closely with buyers everyday. Replacing yourself as property manager is no easy task and not ideally the best decision. We recommend employing a property manager. They are experienced, well resourced and more knowledgeable than most property investors when it comes to property management. We respect the fact some investors have been able to adopt the service autonomously but feel the costs and services a more suited to outsource the role as apposed to doing it yourself.
We have some great relationships with some professional property managers. We can introduce you to the right people who can help you get the most out of your investment property. If you want to learn more about property management click the following articles that have some great information:
- What property managers look for in a tenant
- Great tips when selecting a property manager
- The importance of a rental appraisal
If you’d like to discuss your investment property needs, please don’t hesitate to contact us at your earliest convenience. Happy investing!
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
May 2020
