With so much information being freely available on the internet, the idea of managing your own investment property may be appealing. I’ve heard property owners say, “I’ll save money by managing my own property”, “It’ll be easy for me to find tenants”, “You do it so how hard can it be!”
So I thought I would cover some points about managing an investment property to give you an idea of the challenges involved. This will help you decide if you want to manage your own property or engage a professional property manager.
OK, managing your own investment property will save you the property management fees, which are typically a percentage of your rent or a flat fee, depending what a property manager offers. As an example, Coral Sea Property Management offers both a percentage fee and a FAB $50 service. This is a flat weekly $50 fee, designed to put more money into your bank account, with fewer fees and your rent paid to you weekly.
But what are the other costs involved in management your investment?
Did you consider how much time it might take to market your property, find and vet tenants, conduct routine inspections, follow up when maintenance is requested/required? Do you want to spend your spare time doing this, or paying a property manager and having the time back to enjoy yourself?
It’s true that having a good tenant may cost you some money. But did you consider that having a bad tenant will cost you a lot more – defaulting on rent payments, damaging your property, potentially conducting illegal activities – it can be a massive headache for you. This leads me to the next point I want to cover.
In my experience, many of the tenants that owner managers typically “find” from advertising and via informal sources may not actually have been able to rent through a property management company due to poor reputation.
At Coral Sea Property Management, we ensure A-grade tenants through our stringent tenant selection process. Not only do we have membership to Australia’s largest tenancy database, we fully check potential tenants’ IDs, income, and references for you. We have industry access to resources and databases that are not available to the general public.
I also believe it’s important to keep an “arm’s length” to your tenants. I know that having rental income paid in full and on time is critical especially if you have a mortgage on your investment property. Chasing late or non-payments can be easier when you’re not emotionally involved with your tenant. This leads me to the next point I want to cover.
Rules and regulations
There are many rules and regulations involved in managing a property. There are statutory regulations, specific forms for starting/ending a tenancy, policies for lodging bond payment, notices to be sent before an inspection, and specific processes to follow if you want to evict your tenant. To further complicate this, there may be different rules and regulations in different states/territories of Australia.
If you’re managing your own property, you must be aware of the applicable rental laws and understand your obligations. You must keep up to date with tenancy legislation changes, many being recently amended, and ensure you know how they apply to your property.
This is the knowledge that property managers have and maintain through regular training/seminars, networking with other real-estate professionals, and a lot of reading to keep up to date.
So while you might think that managing your own investment property is simply getting a tenant and sitting back to collect the rent, there’s a lot more that happens “under the surface” that may not be immediately obvious to you.
There are also valuable contacts that property managers have, and this leads me to the last point I want to cover.
I know that tenants call at any time of the day or night, on weekends and public holidays. Of course they want maintenance attended to immediately. Do you have the contacts with plumbers, electricians, handy tradespeople and so on to ensure any issues are looked at and fixed within a reasonable timeframe?
Property managers have long-standing, established relationships with their tradespeople. Given the volume of work property managers request, tradespeople will prioritise a property manager’s work. Without this network of tradespeople, a person who manages their own property may struggle to find the right resources and get work done in a timely manner.
Wrapping it up
At the end of the day, the cost of a good property manager is not a lot compared with the services and benefits you will receive. And the cost is tax-deductible!
Speaking of tax deductions, property managers make sure they keep relevant/appropriate records about your property, including the ledger of payments collected, and make this available in the format required by the ATO when you submit your tax return.
At Coral Sea Property Management, we’ve been in business for over 20 years and have systems, processes and local knowledge that consistently produced higher rental returns, better tenants and fewer days vacant. We’re accountable. We communicate. We manage your property like we own it.
Sure, you may want to continue managing your own investment property – it’s your choice, but at least you now have some more information to help you make that decision.
Please call me if you want to discuss this and how Coral Sea Property Management can help you.
Regan Leatch (Principal)
(07) 4724 1723