To self-manage or engage a property manager? It’s a common question many new investors seek guidance on. But the answer is not one-size-fits-all!
While the allure of cost savings for self-managing can be great, the reality of time and stringent regulations can outweigh the benefits.
If you currently own or are looking to own an investment property and are thinking about how to manage it, this guide is for you!
Let’s explore the benefits and disadvantages of each option and lay out the steps for managing your investment property.
Advantages and disadvantages of hiring a property manager
Property management professionals are just that—professionals. They know the ins and outs of regulations and can take the burden off investors so you can reap the benefits without the stress.
Pros of hiring a property manager:
- Time efficiency: They manage all aspects of property management, from tenant screening to inspections, freeing up your time for other endeavours.
- Expertise: They know tenancy laws and best practices and can ensure your property management complies with all regulations.
- Reduced stress: Tenant issues, late payments, and maintenance organisation will be handled for you.
These advantages are powerful, but they do come at a cost. Here are three reasons why hiring a property manager may be a disadvantage:
- Cost: Management fees can be a significant expense, impacting overall profitability.
- Less control: Less direct involvement in the day-to-day management of your property.
- Variable quality: The quality of property management services can vary significantly.
Advantages and disadvantages of self-managing an investment property
Self-managing your investment property can be rewarding and cost-effective, but it is not without hard work.
Property management requires a clear understanding of various tasks and regulations and usually a significant chunk of your valuable time too.
Pros of self-managing:
- Cost savings: Avoid property management fees, which typically range from 7–10% of the monthly rent.
- Direct control: Some prefer a hands-on approach and direct interaction with tenants.
- Personalised care: Potentially provide better service and care for your property than a third-party manager.
However, some time and pressure considerations can often make it a less appealing option.
- Time: Tasks such as advertising, tenant screening, and maintenance require significant time commitments, which can interfere with your work/personal life.
- Legal knowledge: To self-manage, you must be familiar with local tenancy laws and regulations.
- Stress and effort: Managing disputes, late payments, and emergency repairs can be stressful.
What does self-management involve?
If you’ve weighed the pros and cons and decided to go ahead with self-managing your investment property, there are some key tasks and responsibilities you’ll need to handle.
1. Advertising for tenants
First, you need to find a tenant. To do this, you can use an online platform like realestate.com.au or domain.com.au to reach a wide audience. Your listing should be polished and informative to attract the right type of tenant. Include:
- High-quality photos
- Detailed descriptions
- Rent price
- Lease terms
2. Screening tenants
The screening process involves evaluating all applications that come your way. Check potential tenants’ rental history, creditworthiness, and references.
3. Arranging the lease agreement
This step includes a thorough understanding of the state or territory regulations for your investment property. Ensure the lease complies with these as well as guidelines set by the Residential Tenancies Act. Your contract must detail:
- Lease duration
- Rent amount
- Bond details
- Maintenance responsibilities
4. Keeping communication lines open
As a landlord managing your property, it’s essential to set up reliable communication methods, be it email or phone.
This will ensure your tenant can contact you in emergencies, and you can successfully arrange regular inspections per legal notice requirements to monitor the property’s condition.
5. Prompt handling of repairs and maintenance
It’s your responsibility to address any maintenance requests promptly. This includes distinguishing between tenant-caused damage and general wear and tear that you’re responsible for.
You must also ensure the property meets safety regulations, including working fire alarms and electrical checks.
6. Ensuring rent is paid
Monitor payments and follow up on late payments promptly with a tracking system. You will need an accurate understanding of the legal process for dealing with late rent and issuing breach notices to tenants.
7. Managing financial records for tax
An often overlooked but essential step in managing an investment property is keeping accurate records.
Particularly, track financial transactions, including rent received and maintenance expenses, and be aware of tax-deductible expenses related to your property.
So, should I self-manage?
If you have a clear understanding of the pros and cons as well as the rules, regulations, and requirements of the task, sure!
Self-managing an investment property can be fulfilling and offer greater control and potential cost savings. However, it does require significant time, effort, and knowledge.
On the other hand, hiring a property manager can alleviate these burdens but comes at a financial cost.
*The information provided in this blog is intended for educational purposes and does not take individual circumstances into consideration. For personalised advice and information, please contact us directly.
