Are You Better Off Managing Your Own Property Investment?
At a time when wage growth is low and banks are reviewing expenses line by line before providing credit, it can be tempting to look at out-of-pocket costs like property management and think that you might be able to handle it yourself.
Property management can be one of those “how hard can it be?” jobs that many first-time investors underestimate.
For those who feel they need to maintain tight control around their investment for fear of getting the wool pulled over their eyes, handing the management of their property over to a complete stranger can often be more than they can handle.
If you are thinking about taking the DIY approach though, here are a few key points that you need to ensure you’re up for...
Price at market value – If you want to get the best return on income, or worse yet, avoid extended vacancies, it’s essential that you understand what your property is worth on the open market.
The difference between having a flood of people inspect your property or hearing crickets can often be the difference of $10 or $20 in pricing. Price too low and you’re undercutting yourself. Price too high and your property will sit vacant for weeks while the market goes elsewhere.
Make sure you research other properties on the market, comparing those that are most similar and price accordingly.
Avoid making friendships – The number of investment properties on the market that are charging below market rent would be too numerous to mention. This is often due to the landlord not wanting to upset the tenant (and lose the rent) or having formed a friendship with them where they find it difficult to increase the price.
Remember, prices will go up on building goods, utilities and just about everything else in this world, so if you’re not keeping up with the market (or at least inflation), you’re probably going backwards.
If you’re going to engage with the tenant yourself, be polite and courteous but keep it professional and avoid engaging on personal matters.
Treat it like a business – At the end of the day, your investment is generating income so it’s best to treat the whole operation like you’re running a business.
That means maintaining clear and organised records, staying on top of insurances and regular payments, and being attentive and responsive to your client's needs (yes, your tenant is your client!).
That also means taking responsibility when a light bulb blows or the toilet backs up. If you don’t have the time or can’t arrange for a repairman to attend to it quickly, then you should think twice about accepting the role.
If this all seems like too much and you think you have better things to do with your life than act as administrator and employee to your investment asset, consider hiring a quality property manager.
I always like to engage a property management team whose sole job is property management - that is, they’re not attached to a sales team. I often find these teams are more committed to their roles and tackle property management as a profession rather than just a necessary evil of building their rental role.
Great property managers should be great with people, courteous, calm under pressure and have a great eye for detail. If you can find an operator with these traits then you’re usually on to a winner.