Professional Property Management: A Luxury Or Necessity?
It's the age-old question: 'Why pay someone else when you can do it yourself?' Is professional property management a luxury or a necessity?
It’s the age-old question, ""Why pay someone else when you can do it yourself?""
Some services are luxuries while others are necessities. Sure, you can clean your own property but you probably wouldn’t cut your own hair. What about property management?
Why some people choose to manage their own property
There are many instances when managing your own property works seamlessly. The tenant pays rent on time, looks after the property like it was their own. In return, the landlord attends to all maintenance in a timely manner and respects the boundaries of the lease agreement.
Landlords who choose to self-manage their property tend to have an existing relationship with the tenant. They know them, or know of them, and are confident that they will make good tenants.
The other deciding factor is the cost of management fees. In order to maximise the rental return, this may seem like an easy service to cut, but it could cost you more in the long run.
The value of a good property manager
When all the parties work together harmoniously it is a match made in real estate heaven. However, there can be many different personalities and circumstances that can start off great but not stay that way.
A couple of years ago I was approached by a landlord asking for me to take over the management of her property. I discovered that she had rented the property to a close friend of hers and was confident it would be a smooth transaction. The reality, however, included three months without any rental income, a VCAT hearing and upon subsequent eviction, we uncovered a household full of furniture and personal belongings, an overgrown garden and a dirty house. The cost to get the property back to rental-ready and the loss of income greatly outweighed the cost of agent’s fees.
A good property manager is worth their weight in gold, so if you don’t have one consider what is important to you before appointing an agent. Draw on the experiences of a current landlord and ask who they would recommend and why. Things such as communication, regular inspections and rent reviews, quality tradespeople and sound knowledge of the Residential Tenancies Act are just a few key points to consider. Don’t overlook speaking with tenants to see how they are treated by their property manager too.
Managing property requires a special skillset
The opposing argument is normally, “I will claim it on landlord’s insurance if my tenant doesn’t work out.” Did you know that most insurance companies will only insure part of the rent and if the tenants are on a periodic tenancy it reduces the claim even further if you’re eligible at all? Pet damage, abandonment of a property, tenant damage, rent arrears, sub-letting, neighbour complaints, maintenance, tribunal hearings, and breach notices are just some of the things that property managers deal with daily. Before jumping into managing your property directly, consider whether you are equipped with the knowledge and resources to handle this.
Another consideration is urgent tenant requests. The tenant who wants to report a dripping kitchen tap to you at 10.00pm on a Saturday night, claiming that it is urgent... is it? What is considered an urgent repair under the Residential Tenancies Act and how quickly do you need to attend to repairs, urgent or otherwise? A property manager is skilled in problem-solving and conflict resolution and without the emotional attachment to the property or the situation, can calmly work with both parties to come to a mutually acceptable outcome.
Professional property managers are also well across the latest change to the Residential Tenancies Act. This is the most comprehensive change to the Act in 20 years and all property investors who are managing their own properties will need to fully understand how this affects them, their tenant and their asset. The changes are varied and range from pets in properties, notice period changes or removal, rent increase periods and everything in between. Some changes will benefit the landlord and others, the tenant, but either way, they need to be adhered to. Pleading ignorance at the Tribunal will not work in your favour.
So…is property management a luxury or necessity?
If you live and breathe property management, can objectively appraise your property annually for review, understand the Residential Tenancies Act (now and in the future), maintain a good relationship with your tenant, complete prescribed forms from leases, bond lodgements, condition reports and relevant clauses and can put in the time and effort to monitoring the rent payments and tenancy then the answer is - yes. However, if you are happy to part with the cost equivalent of a coffee a day for the peace of mind of knowing your property is in safe hands, then appoint a property manager today.