At some point, every landlord has asked themselves, “Should I manage my own rental property?”. Enticed by the opportunity to save hundreds – or even thousands – of dollars in management fees, they consider going it alone and assuming all responsibility for advertising and administration. Given it’s estimated that somewhere between a quarter and a third of Australian landlords are self-managing, it’s clearly a real consideration.
If you’re thinking about whether you should manage your own rental property, you probably have many questions – like, is it hard to manage a rental property? And, what exactly does a property manager do? We will try to answer some of these for you in this article.
What are the benefits of managing your property yourself?
Understanding what motivates some landlords to manage their property themselves will help you work out if self-managing is for you. So, if you’re wondering if you should manage your own rental property, start by considering why others do it.
Put simply, the main reason some landlords choose to manage their own rental property is to save money.
For most investors, property management fees can be one of the biggest expenses, behind mortgage payments, rates, and land tax. Generally charged as a percentage of rent received, these fees vary from state to state, averaging between 5% and 10%. While these fees are tax deductible, they do represent a good proportion of the total expenses and will reduce your return on the investment by maybe 0.1% to 0.2%.
Some landlords also prefer the higher level of control self-managing gives them. As the one finding tenants, administering payments, organising repairs, and conducting inspections; they have a better understanding of who is living in their property and how well they’re looking after it.
Why do most landlords choose to use a professional property manager?
Given the potential to save large amounts of money, it’s reasonable to question why anyone would outsource the management of their investment property. But, before you decide that you should manage your own rental property, it’s important to understand what you get for your property management fees.
The most obvious advantage of working with a professional property manager is the time – and stress – it saves you. When you self-manage, you need to be available 24/7 to receive, and respond to, any tenant issues. However, when you outsource the management of your property, your property manager is the one that deals with your tenant’s requests at all hours.
A good property manager will also provide a range of skills and expertise you may not possess yourself. From planning your marketing, to screening and selecting good tenants, resolving disputes, and knowing when it’s time for a rent increase; a property manager should be more like a business partner than a service provider and can help you maximise the security and performance of your investment. It’s also their job to stay updated on changes in tenancy law and to make sure you’re meeting all your legal obligations.
What’s more, most leasing specialists have systems and processes in place to make sure payments are on time, regular inspections are conducted, and important documents are kept. This minimises the risk of things going wrong – at least on the administration side – and provides a much better experience for both you and your tenant. In fact, some tenants say that they prefer to deal with a professional property manager as they are seen as more experienced, impartial, and responsive.
All that being said, we believe the biggest benefit of outsourcing is actually that you are less impacted by issues when they arise. When you self-manage, you may need to have a range of very difficult discussions – like if rent is late, there is damage to the property, or your tenant leaves without giving notice. However, when you use a property manager, they are responsible for handling these issues and having these conversations.
So… should you manage your own rental property?
If you’re still not sure if you should manage your own property, we recommend you ask yourself one question – how much is your time worth?
Managing your own rental property takes commitment. You need to be contactable at all times – even in the middle of the night, on weekends, and while on holiday – and ready to respond to issues as soon as they arise. If you are unable to do this, or simply don’t want to, engaging a property manager would be worthwhile.
If you would like to use a property manager, but are concerned about the cost, speak to your preferred agency and see if they are open to negotiating on their fees – some agencies offer more than one package with different costs.
Want more information?
If you’re wondering whether you should manage your own rental property, or would like more information on what this entails, give Local Agency Co. a call. We have over 18 years of experience in the property management industry and understand why some landlords would prefer to look after themselves. We offer 2 property management packages – cost saver and peace of mind. We’re always happy to have a chat and offer advice, so contact us on 1300 258 888 or via firstname.lastname@example.org to discuss what you’re thinking and how we might be able to help.
We’re your local property management experts that help property investors SAVE MONEY + TIME & REDUCE STRESS by finding great tenants.