Whether or not to appoint property managers is something most landlords ponder, especially those who have just purchased their first investment property.
The feeling that self-managing can save you money and allow you to keep an eye on your property is pretty common. However, there are some serious issues to consider before taking on the role of property manager.
Important considerations to weigh up when thinking of self-managing:
First of all from a commercial perspective, property managers have a job with many varying requirements and skills. These include attracting tenants, selecting and screening tenants, regular property inspections, rent collection, dispute resolution, arrangement of repairs/maintenance, and ongoing tenant communication.
Secondly, from a remuneration perspective, at 8% of the rent collected, you’re looking at $40 per week for a $500/week rental. Could you really do all of the above for $40 per week? If you value your time at $40/hour are you able to do all of the above in just one hour per week?
Thirdly, the real estate industry is currently in a period that’s heavily bound and governed by legislation. Are you willing to keep up to date on these requirements? Property managers and/or investors who are self-managing need to be aware of, understand, and implement this legislation. For example, conducting routine inspections thoroughly to ensure both the tenants and the landlord are meeting their obligations under the Act. These regular routine inspections are vital to identify any maintenance issues or emergency repairs that can be remedied before turning into something more serious. As the landlord it is your responsibility to keep the property safe and secure at all times. If you’ve got something that’s fallen into a state of disrepair you run the risk of becoming criminally negligent. Are you willing to give up the time and energy it takes to conduct these inspections and document your findings?
When appointing property managers look for their ability to –
Provide guidance and advice on legislative requirements
Communicate regularly with financial reports, maintenance updates and feedback from inspections
Proactively provide advice in regards to rental rates, lease terms, and maintenance
Save you time by completing all of the above
When working with your property manager they should provide –
Industry specific skills and knowledge such as knowing how to market your property effectively to get it exposed to the maximum number of tenants
Advice on setting the rent at an appropriate market level and explaining how they calculated this figure
Ongoing contracts to skilled and licensed tradespeople to carry out repairs on your property
At the end of the day most property investors should seriously consider appointing a property manager. The cost of professional property managers is a small price to pay when the true value of the time you could spend on it yourself is taken into account.