Should you DIY your property management?

May 15, 2017
Property management property for rent

Property management property for rentWhether you’ve just bought your first investment or have been an investor for years, it’s tempting to consider managing your property yourself instead of paying a property manager to do the job for you.

There are a few things these investors need first to determine if they are really up to the job of managing a property. After all, a poorly managed property will lead to a poorly performing investment and potential losses to the landlord.

Time, stress and workload of property management

The amount of time and work that goes into property management should not be underestimated – it is someone’s full time job after all. That’s not just getting a tenant in to the property in the first place but the ongoing management required. This can lead to considerable stress – especially if done in addition to a full time job – and limited downtime.

Personality and emotional attachment

A major benefit of hiring a property manager is that they have no emotional attachment to the property and thus won’t let their feelings influence their behaviour, advice or decisions concerning the property.

Furthermore, not all personality types are suited to property management, which often puts the agent or owner in awkward or difficult situations when it comes to chasing arrears, dealing with troublesome tenants or taking issues to tribunal.

Legal considerations

If you’re going to manage a property, you need to be aware of the complex legislation involved in tenanting property. This could be in regard to tenant and landlord rights and responsibilities, who is responsible for damage to the property, how quickly you must address requests and repairs, or what happens if a tenant wants to break the lease early.

Some tenants may take advantage of a self-managed landlord’s limited legal knowledge and seek compensation if things are not managed by the book.

Paperwork

When an agent manages your property, they will prepare all the necessary – and sometimes complicated – paperwork for you. This can be difficult to understand and complete on your own if you don’t have a background in property management or tenancy law. This includes paperwork such as the tenancy agreement or lease, an ingoing condition report and repair request forms, all of which an agent will have on hand.

DIY property managementRent collection

Property managers have access to sophisticated and professional payment systems using direct deposit that assist in making sure rent is collected on time, each time. This is much harder to organise as a self-managing landlord, so you must carefully consider how this will work for you and the tenant, in a convenient and legally compliant manner.

The work in leasing it out in the first place

The work involved in getting a tenant into a property in the first place is something landlords may not fully appreciate if they’ve had a property manager doing it for them in the past.

The landlord will first have to advertise for a suitable tenant. Access to major real estate portals is often limited to licensed agents, meaning self-managed landlords are usually left advertising to a much smaller market, leading to a smaller pool of prospective tenants.

Next, they must sort through applications and enquiries and screen potential candidates. Property managers usually have a database to cross-check all applicants, so self-managed landlords will have to figure out how to best screen candidates and check references.

Inspections

If you’re going to manage your own property you’ll want to make sure you inspect it regularly to ensure it is well kept and to check if any repairs are required.

However, just because you are the landlord doesn’t mean you can show up with your key any time you like. There are strict rules as to how many times a rental property can be inspected each year and the process that should be followed during inspection and this varies from state to state.

Rent appraisal

Setting the rent for your property is not simply about the amount of money you’d like to receive each week. In determining the rent in the first place you’ll need to be across general market values for similar properties in the area as well as market conditions, which can be difficult to accurately assess if you’re not exposed to it day in and day out.

In terms of appraising rent and changing the amount, this needs to be done in line with market conditions and the terms of the lease agreement. Knowing the correct rent to charge will require you to constantly be on top of what is happening in the market and in your area.

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