To self-manage or not to self-manage – that is the question for landlords. And the answer is… it depends.
It’s a question every property investor needs to ask themselves: Will I manage my own rental or put it in the hands of an agent? What are the pros and cons?
Let’s answer the second question first. When things go pear-shaped at a rental, landlords usually turn to their insurance to recoup losses. Sometimes, what lies at the heart of the issue is poor management of the rental. When the rental isn’t managed well, claims for things like unpaid rent and damage can be the result. Obviously, good management can’t prevent all mishaps at the rental, but it does play a part in minimising many of the risks associated with leasing investment properties.
So, the question may not be should an owner or agent manage the rental, but rather who has the skills and time to ensure that it is well-managed by whomever holds that responsibility.
While it might seem like managing a rental property is simple, the reality is that there is far more to it than just collecting the rent. It’s all those ‘extras’ that you need to consider when deciding if you want to manage your rental yourself (whether you own a single property or an entire portfolio) or to engage a professional.
What are those ‘extras’, you ask? Well, other than being available for enquiries/complaints 24/7, they include things like:
- Marketing the rental
- Sourcing and screening tenants
- Preparing a tenancy agreement
- Collecting and lodging bond payments
- Record-keeping
- Negotiating and collecting rent
- Taking care of tenant enquiries
- Carrying out regular inspections
- Managing the condition report process
- Arranging for maintenance and repairs
- Managing paperwork (taxation, insurance etc.)
- Paying council rates and taxes
- Reviewing legislation and lease paperwork
- Renewing rent and leases
- All the bits should things go wrong – like managing disputes, managing tenancy breaches, issuing termination notices, appearing before a tribunal or court, and making insurance claims.
Should you manage your rental yourself?
All of the extras mount up. So you need to ask yourself if you have the time, skills and inclination to take it on. And before you automatically reply in the affirmative, it’s a good idea to consider a key aspect of property management – and that’s the legal element.
Anyone managing a rental needs to be fully across the applicable rental laws and understand their obligations. As far as the law is concerned, ignorance is no defence. Many states and territories have recently amended and are implementing changes to tenancy legislation or are in the process of introducing legislative reform. This means those managing property leases need to be aware of the changes and how they apply in their situation. There is a lot to wrap your head around to be up-to-date with legislation and all the regulations that apply to rental properties – not just the Residential Tenancy Act but also other applicable legislation that may apply to building safety, strata laws, privacy and short-term accommodation.
Landlords who are happy to take on the responsibility and are confident that they have the time and know-how often find that being hands-on suits them, especially if they live close to their rental, have a good long-term tenant and can spare the time to do the things that go into the day-to-day management of the property. In fact, many owners enjoy and are very successful at managing their rentals and take it on as a ‘job’. They also like the fact that they are saving on property management fees.
Should you hire a property manager?
On the other hand, if the thought of dealing with a burst pipe in the middle of the night, chasing up a tenant who’s in arrears, or any of the multitude of time-consuming responsibilities doesn’t appeal, then engaging a property manager may be the answer. It’s estimated that three-quarters of all landlords opt to have a professional manage their rental. The good news is that, as with the landlord insurance policy premium, property management fees are often tax deductible.
The majority of landlords choose to use a property manager because they:
- Will take on the responsibilities of managing the tenants and property, as set out in the contract.
- Are required to be up-to-date with applicable legislation (it’s often a licensing requirement and agents should ensure they have the right professional indemnity insurance).
- Can advise you on your rights and responsibilities and those of the tenants.
- Are a neutral intermediary – a less personal relationship with tenants allows for a good dose of professional objectivity to address issues at the property and enforce the lease agreement (think issues like late rent, cleanliness, eviction, or matters that could void your landlord insurance like sub-letting or operating a business from the premises), and
- Have resources to help manage the processes such as access to tenancy databases and property management software.
Basically, property managers can save owners the time, stress and hassle of managing the property themselves.
The final pro?
Using a property manager is generally supported by landlord insurance providers (in fact, some landlord insurers will only cover properties under professional management). Why? Because having a professional involved can help minimise certain risks, like poor tenant selection, rental losses, tenant damage, and maintenance and repair issues.
As property managers often find themselves offering a 24/7 service, they can also get on top of incidents at the rental that can lead to claims escalation and be able to get someone onsite quickly to act to prevent further loss (another obligation in the insurance policy), for example putting a tarp on the roof to stop more water entering when the roof is damaged during a storm.
Managing a rental can be complex, especially in terms of legal obligations and requirements (which can have an impact on insurance cover), so a great property manager is worth their weight in gold.
Ultimately, now that you understand what is involved in managing a rental property, the choice is yours – to self-manage or engage a professional. What will you do?
