So, you’ve bought an investment property and are looking at your options for managing it. Should you hire a property manager or go it alone?
On one side of the coin, property managers do cost money, which will eat into your returns. But on the flip side, they should be experts at what they do, which can save you more money in the long run. And their fees are also tax deductible.
What are your goals?
If you want to build a significant property portfolio with a diverse range of locations, you won’t be able to do it alone.
Imagine having to advertise for tenants and hold open inspections in central Queensland for one week and then heading over to Perth to conduct a routine inspection the next week.
Add 5 or 6 more properties in different states, cities and regional areas and you’d have to be a time traveller to cover the distance. Not to mention you’d also need to be an expert in local tenancy rules (which differ from state to state) at each location where you own a property.
And the tax office doesn’t even let you claim the cost of travelling to investment properties anymore.
So unless you are only going to buy one investment property… and it’s nearby… and you know a fair bit about managing property, then it makes sense to hire a manager.
Property is complicated.
Managing a rental property can be demanding and time-consuming. It also requires a diverse skill set. Think of it like just about every other profession or trade, untrained amateurs who like to DIY rarely do as good a job.
Property managers will have know-how and experience in a range of areas that you may not even know about yet. Here are just a few.
Law and regulations
Australian property laws and regulations are complex, just like any law, and are subject to frequent changes. And as mentioned earlier, these change state by state. But they can also change building by building if you are investing in a strata complex.
Property managers can make sure landlords remain compliant with all relevant legislation, from tenancy agreements to routine inspections and processes when rents are in arrears, or the landlord and tenant might disagree on something.
Advertising, tenant screening and selection
If you were going to find a tenant for your property, where would you start?
First, property managers are skilled in marketing rental properties effectively. They use various digital, social, and print channels to get your asset in front of as many quality tenants as possible.
They will also keep databases of suitable tenants and know exactly what to look for and who to avoid when it comes time to lease your asset.
Once there are applicants, managers will screen and select suitable tenants.
They have the experience and resources to conduct comprehensive background checks, verify references from previous rentals and assess a tenant’s job and general finance situation to make sure they can pay rent. Getting the right tenants in place quickly means minimising costly vacancy periods for landlords.
Relationships and conflict resolutions
Property managers are experts at managing relationships with a wide range of tenant types. To do so, they need to employ a balance of communication, understanding and assertiveness.
They handle tenant inquiries, address concerns, facilitate conflict resolution and seek to maintain a positive and productive relationship between landlord and tenant.
They also ensure rent is collected on time and manage the next steps if there are payment issues.
Maintenance and inspections
Managers oversee routine maintenance as well as emergency callouts for repairs when needed.
They also conduct routine property inspections to help catch problems now that may turn out to be costly down the track. Being on top of maintenance will ensure the asset retains its value and commands the best rent the market can offer.