Managing your own property investments can seem like a good idea if you are thinking purely about the 'cost of management, but have you considered the cost of self-management? It may appear to be a bit of a no-brainer if you have only considered the fee for a property manager, however, self-managing property investments can prove to be a lot more costly than you think.
Marketing and finding tenants
How hard can it be right? It is all over the news; people are crying out for decent rental accommodation, and there is a shortage. They’ll be banging down your door! The truth is a little different.
While there are absolutely plenty of people out there needing a home to rent, you still have to find them and as a private landlord, you will be targeted by those who have a history often easily discovered by a professional. The best tenants however are sceptical of private arrangements and they’re unlikely to come across your advertising on the usual platforms used for private rentals, such as social media. That means you’ll have to do your own marketing on the major portals which will cost you.
On the other hand, professional managing agents cover all major online portals. If they are proactive, they’ll also have a database full of current and potential renters for your property. Compare this reach and you will understand how limited private advertising is to achieve the best results both in terms of quality and time. It is about the strength of scope, and it’s easy to see why you’ll be at an instant disadvantage.
Securing the right tenants
If you do go it alone and find yourself a tenant via your marketing efforts, how do you know what they’re like? What tools do you have at your disposal to properly check the history? Do you know the signs, based on experience, of what they will be like to deal with as a tenant? Will they cause you no end of grief? You’re effectively rolling the dice with what is likely to be a rather large investment.
One of the main issues landlords face currently when marketing their own property is the increased volume of tenants who scour the types of advertising streams available to self-managers. Their history is often sketchy (if they have any at all), so their options are limited. This leads them to your door and, if you’re not prepared, it can be overwhelming and like trying to find a needle in a haystack. Professional property managers have systems in place to pre-qualify and work through the enquiry in order to narrow the applicants and bring you the best of the bunch.
It can also be tempting to pitch the rent on the high side as a private investor which you might think will bring better quality. Actually, the opposite is true. You will limit the activity and delay the applications which can lead to the acceptance of an applicant to simply avoid leaving it empty, so you naturally come together with the wrong fit for your property.
Employing a professional property manager will reduce the risk of this happening as they’ll have all of the recourses to protect you from repeat offenders.
Ensuring that your tenant’s needs are met takes a lot of work and diligence. Experienced property managers have a distinct advantage here, as they’ll have a team ready and able to answer all of your tenants' queries, questions, and problems.
Consider what happens when self-managers go on holiday and the tenant needs to get in touch with them about water pouring in through the ceiling. They may be able to contact them via email or phone, but that’s far from ideal if you’re on the other side of the world!
Having a reputable property manager handle your day-to-day tenancy affairs not only makes your life easier, but it also gives you a degree of separation.
The list of important things to do before placing a tenant in a rental property is massive if it is done professionally and it requires many hours of work and attention to detail. Landlords and tenants underestimate the importance of things such as property condition reports and inventory. It is the one thing we see private landlords repeatedly get wrong because they are too trusting. Worse still, some don't have one at all because it’s another drain on their time.
Detailed condition reports and photos before entry are vital if you want to avoid disputes and get your property back how you delivered it. Proving that damage has been done by your tenant without this document is impossible, and it might leave you with a hefty bill that could have been easily avoided.
No doubt you have invested a substantial sum to buy or build your investment, this will automatically qualify you to become personally attached to it. For those who have inherited property, it can be even more emotional. It is really hard to be objective and remain professional when dealing with a tenant who may not be looking after it. This can lead to heated disputes and put you at risk.
A degree of separation may be the one thing that saves you thousands Having a trusted advisor, someone with years of experience in dealing with conflict situations is worth every dollar if you are up against an educated tenant who knows their rights and all of the loopholes in the legislation.
Understanding the law
Being a landlord can be your worst nightmare if you are not up to speed with the relevant Act and regulations. Even if you are, legislations change, so you need to be prepared to keep up to date with law and how to apply it in every situation.
Landlords rarely have an intimate understanding of the legal side, and the consequences can be very serious.
A reputable property manager will mitigate your loss and stress when things go wrong because it is what they do every day, they are constantly monitoring the legal requirements. They will be aware of any changes to laws before they even come into play and they will keep you updated so that you are always on the right side of the law.
Instead of being reactive, a property manager will be proactive. If they are good at what they do (like us) they will be able to advise you before any contracts are signed, be with you throughout the process, and be there for you if your tenants do the wrong thing.
A good property manager should cost you nothing
Self-management takes time, lots of time, and it can be incredibly stressful if you do not have the knowledge of the law and also if you have any kind of emotional attachment.
If you are investing in property, you are in it to make money. While plenty of investors love the idea of being in control of their own property, the underlying motivation is usually profit. With this in mind, wouldn’t it make sense to put yourself in the best position possible to make as much profit as you can?
With a property management team on your side, you have access to people who look at every opportunity to maximise the investment and manage the risks, they are there to deliver you greater returns.
Michelle Williams, Managing Director, Property Investor Advocate