With increasing numbers of Australians choosing to invest in property every year, there comes a point in time where you have to decide whether you want to manage the property yourself or use a professional property manager instead to manage it for you.
There are pros and cons to both and at the end of the day it comes down to you and personal preference and whether you have time to take this responsibility on, or even if you want to.
To help you decide what’s right for you we have come up with the pros and cons for both.
There are many investors out there who choose to take on the role of personal management themselves, but it is not for everyone. However, it is important to realise that there are a number of important factors to consider, and it’s not always an easy task. As well as being in charge of advertising the property and interviewing potential tenants, it is your responsibility for the ongoing supervision which includes rent collection, periodic inspections and much more.
Pros of Personal Management
- Cost Savings: You can save money by not having to pay property management fees.
- Management: You can manage the property better as you can keep a closer eye on it and maintain it to your standards.
- Occupancy: You will be more inclined to tenant the property as soon as possible, whereas a property manager may have other properties to manage and may not list your property as a top priority.
Cons of Personal Management
- Time: Personal management of a property can be quite time consuming, especially if you have more than one property to look after and you are employed full time or have other responsibilities such as looking after children.
- Location: You may not live close by, so when it comes to inspections etc you will have to organise to get yourself there which may be costly.
- Stressful: With continuous management tasks, it can become quite stressful particularly if you have to chase rental payments and deal with problematic tenants, inspect the property and fix maintenance issues.
- Laws: You may not have full understanding of the laws that apply to both landlords and tenants or the latest information on the current market that agents might have, e.g. tenants currently looking for property.
- Marketing: You may find it harder to search for tenants due to not having access to all the tools and websites that will help to market your property more efficiently.
- Interviews: Interviewing tenants may be tricky, especially when it comes to looking up their financial and rental histories.
Many investors choose to use a Property Manager to deal with the management of their property to avoid the hassle. You will find that a majority of real estate agents have their own property management department, whilst there are also some property management companies who only deal with property management.
If you are thinking of using a Property Manager it is important to find out what the percentage of vacancies it has and its turnover of tenants. This will give you an idea of whether the manager chooses quality tenants or not, but there are other factors that can affect this such as the nature of the suburb.
Pros of Property Managers
- Time: A property manager will save you time as they will take care of all the ongoing tasks involved in managing your investment, including collecting rent, organising inspections etc.
- Experience: Property managers will have a wealth of experience and knowledge at their fingertips, such as being able to recommend the likely rental return you can receive. They will also have access to a list of reputable trades people when maintenance issues occur.
- Finding Tenants: They will choose the tenant for you and can access a pool of tenants. They will also take control of interviews with tenants and are able to find out their financial and rental histories.
- Emotional Attachment: You can distance yourself from the property and remain emotionally unattached when difficult matters occur such as problematic tenants etc.
- Location: They tend to be close by and so can access your property easily.
Cons of Property Managers
- Costly Fees: Property managers can be expensive due to ongoing commission/fee, as well as hidden costs such as inspection fees, advertising costs and letting fees. It is important to find out how much this will cost you per month.
- Management: Property Managers tend to manage many properties at one time so can be overworked. This means that they may not manage your property as well as you would like.
- Experience: Companies may have juniors or inexperienced people not skilled enough to manage conflicts and problems that may arise and may not think out of the box during times of low occupancy to get your property tenanted.
If you decide to use a Property Manager to take on the responsibility of managing the property for you it is important to do your homework first to choose a manager who is efficient and up to the job and ideally you should meet with them. Once a manager is chosen, it is up to you to regularly keep up to date with them to ensure everything is in hand to ensure they are doing a good job for you.
When searching for a Property Manager there are many questions to ask. Our top 10 key questions are:
Key Questions to Ask a Property Manager
- How many properties do you currently manage?
- How many years of experience do you have in property management?
- What are your fees and are there any hidden costs?
- What is your process for interviewing potential tenants?
- Have you managed any problematic tenants and how did you handle this?
- Will you advise me of any maintenance and repairs required on the property?
- What action do you take when a tenant is behind in rent?
- Have you had any past complaints from owners?
- Do you have a director who oversees the property management department?
- Can I see some references/contact details of landlords who currently use your services?
Published on 20th of October 2014 by Marty Stanowich