It’s a question every significant figure of history (Napoleon, Joan of Arc or Einstein to name a few) has asked themselves. Should I manage my investment property myself or should I employ a property manager? Okay, maybe not, but this is still a really important question for any investor with tenants.
‘DIY vs. property manager’ is a fairly easy question to weigh up, decide on and shouldn’t take you too long. Here are the most important things to base your decision on:
How much time do you have?
This is probably the main factor that will decide it for you. Do you have the time to effectively manage your property? If you are working full time and are new to the property market, then it may be unrealistic to think you’ll have the time.
Managing a property would include the marketing of your property to potential tenants, the management of all legal documentation related to your rental (lease agreements, bond lodgement forms, condition reports) and then finally the upkeep of the property (finding an emergency plumber on a Sunday for instance).
However, depending on your situation you may find you can dedicate what rounds up to be roughly two days’ work per month for the management of your leased property. If you do think you have the time and organisational skills then you stand to save money on the 8-15% share of rental income required by property managers.
If telling someone off for throwing their litter into the gutter gives you the cold sweats, then chasing up late rent may not be high on your bucket list of life’s little confrontations. Simply looking up the Tenants Union of Victoria’s latest survey of customer experience at VCAT is reason enough to want to avoid that place if you can. So having a property manager to act on these matters is a headache avoided.
Real estate companies often rely on their rental properties as a bankroll. This helps them maintain their resale value. So, it is incumbent on a property manager to be professional and effective in the collection of rent. Competition between agents is high in modern real estate markets. This leads them to sometimes lower their share of rental income to help build their client list. As an owner you are in a strong position to use this to your advantage.
If you do intend to manage this area of your leasing, and you are within your right to stipulate what aspects of the property you want managed by your property manager, then be sure to act fairly swiftly with written reminders to your tenants relating to late payments. Be aware of your state’s relevant legislation regarding arrears (that is, how long a tenant can be late in their payment before a breach notice can be sent).
Have you decided that you do have the time to manage the upkeep of the property? Are you prepared to follow the correct procedures in acquiring rent? Then there is one last thing to consider. Can you remain neutral and unemotional as a direct manager of your own property?
Property managers can act as a mediating party for every single aspect of your leasing arrangement. As long as that is what your contract with them stipulates. They can screen your tenants, carry out regular inspections and stay on top of market trends and rent increases. They also have the established processes to maintain records in a well-organised manner.
Sometimes knowing that your tenant is a friend of a friend of yours may not be the best. It can stop you acting professionally as a property manager or even hamper your desire to increase rent. This can be true even if that is what the market is telling you to do.
An easy decision
You have probably noticed any reference to managing your own property on the web comes with a “sure if you think you can manage this infinite list of considerations and love to pull out your own hair then DIY may be for you”. Opinion seems a bit skewed. Nevertheless, it should be a pretty easy decision. Base it on your stage of life, how organised you are and your level of commitment. There are benefits to both and depend entirely on these considerations.