DIY property management, what are the perks and pitfalls?
Landlords should understand the pros and cons of managing their own rental properties. Are you better off doing it yourself or is outsourcing to an expert agent the right fit for you? To help you make that decision, here is a snapshot of the chief advantages and disadvantages of parting ways with a property manager and dealing direct with your tenants; DIY property management.
Perks:
• The potential to save thousands of dollars annually. Depending on the size of your portfolio, this has the scope to put big cash flow in your pocket and enables you to achieve a better return on investment. Real estate agents usually charge between 8% and 15% of gross rent each week to manage your property and may charge you for other fees on top.
• You are closer to your property and can react quickly to issues. Investing in property is a wealth creation strategy so staying close to your growth asset so you can take care of it and maximise your return is a good approach. Little problems will come to your attention immediately, and not have the chance to become big problems because of slow or poor agent communication.
• You will manage maintenance, quoting and payment of bills. Again, cutting out a middle person places you closer to your property and means you are more aware of any issues before they get out of hand. You can also use your own tradespeople or, if qualified, do more work yourself.
• You pick your tenants. You will get to consider and select the tenants based on their references and applications, giving you more control over who lives in your property right from the start.
Pitfalls:
• Doing it yourself demands more time. Are you committed to being available 24-7? Most investment property owners find they are better able to deal with things quickly due to their direct link to the tenants, but it is important to accept you will be on-call for tenancy emergencies. You must also make time for record-keeping.
• You must understand tenancy laws in your relevant state or territory. You must give appropriate notice periods for all tenancy dealings. This is essential. Breaches carry penalties. Relevant industry and government sites in each state and territory provide information and can provide ongoing support to help you clarify your obligations and resolve issues.
• You must use correct tenancy application and management forms. Again, relevant industry and government sites can assist and there are useful apps that can provide all of these forms plus guidance on how and when to use them.
• You might get too close to tenants and become their friends. While it is important to build good relationships with your tenants, it is important to always maintain a professional relationship.
