If you’re running the numbers and can’t decide whether to save cash and self-manage, or play it safe with an agent, read on for the pros of each to help you decide.
Self-managing your property
If you are self-managing you’re responsible for everything, including marketing, choosing the tenants, and all ongoing tasks. This could be a welcome challenge and something you’ll enjoy, or it could be headache.
Know your legal obligations
Getting to grips with the legal obligations of a landlord in your state/territory is essential to good property management. Knowing how long you have to carry out repairs, when tenants are in the wrong, and what can be done in times of dispute is essential to being entered into the landlord hall of fame and keeping headaches to a minimum.
Some of the legalities are relatively straight forward. Bond lodgment is a simple process, leases can be sought from your local authority, and rent collection is often a simple direct debit. It’s when disputes arise that you need to be ready with the law on your side.
So what are the pros and cons of self-managing your own property?
Choose your own tenants
Who can you trust more than yourself to choose who lives in your property?
Self-management will undoubtedly save you money. Agent fees can often range between 7% and 10% of the rental value.
Higher landlords insurance
If your property isn’t managed by a reputable agent you are likely to have to pay higher landlords insurance. This is because you are perceived as a higher risk, and there’s not much you can do about this if you don’t have experience on your side.
Employing an agency or property manager allows you to sit back and only track the numbers. Everything is taken care of allowing you to focus your efforts on other things, such as your family, job, or other interests.
Management fees are tax deductible
Management fees are a cost of owning an investment property and are therefore tax deductible. This can somewhat mitigate the outlay of the property management at tax time.
It saves you time
Time is a big factor in choosing whether to self-manage or employ an agent. If you work full time, you may not physically have the hours to spend on property management. Similarly, if you live far from your investment property, you can waste hours travelling back and forth between residences if maintenance is needed or disputes arise.
The initial period of finding tenants and setting everything up can be stressful, but once your tenant is in you hope to sit back and relax. However, this is not always the case; property inspections, missed payments or neighbor complaints can soon sour the harmonious relationship you hoped for: Professional property management takes these responsibilities out of your hands.
They know the law and the industry
Property management professionals deal with rentals all day long. They know the ins and outs of the law and have seen every trick a tenant may try to pull. This means they are perfectly positioned to resolve conflicts on your behalf quickly and effectively.
Remain emotionally detached
It’s true that an agent with little invested interest in your property doesn’t care like you do, but this can be a good thing. They remain emotionally detached from every situation and know exactly how to handle difficult situations.
They know tradespeople
When disaster strikes agents have a database of reputable trades people ready for action. They also will have heard the same problems over and over, meaning they may be able to diagnose issues quicker. This means that your tenants could receive a faster service using fewer tradespeople, which could save you money.
Established property agents have all the marketing platforms at their fingertips and know what the rental market expects. They take the photos, textually describe the property in its best light, and conduct property viewings to a higher level than you may be able to achieve yourself. This could mean that you achieve a higher rental figure, offsetting the agent’s costs.
Management fees range from 7 – 10% of the rental value.
Whichever avenue you decide to go down, know what you are capable of and what the specific offerings are from your local management agents to help you make the best decision.