I don’t care who it is, but someone needs to be looking after your investment property.
One of the questions you’re going to have to answer as a property investor is whether to engage a property manager, or manage your rental properties yourself.
I’m agnostic on the question personally. It’s really just a question of what’s the best use of your time. For some people, they have enough free time that it makes sense for them to manage the property themselves.
For others, their day job pays them enough that it’s just not going to be worth their while.
But whether you manage the property yourself or not, the only option that’s not an option is not managing the property at all!
We’ve all heard the horror stories about when tenants go rogue.
I’ve heard of tenants tearing up the bedroom carpets and burning them in the backyard for some reason, leaving a noxious pile of smoking ash and plastic that had to be cleaned up by HAZMAT.
And I’ve heard of tenants who appeared to be really upstanding, committed members of the community. Business owners, kids in the local school etc. But behind the façade, they were actually running an illegal chop shop out of the six car garage.
One day the neighbours noticed and called the cops. The landlords ended up in court and it cost them a fortune to repair the ‘alterations’.
And then there was the tenant who just wouldn’t leave. She had a double decker bus parked on the property, and she had the landlord’s garage to the hilt with broken down furniture and “collectibles”. A total hoarder.
Total horror stories.
But actively managing your property and your relationship with your tenants if your first and best line of defence against this kind of thing happening to you.
If you are thinking about managing your properties yourself, its worth thinking about what a professional property manager actually does.
It might sound easy, but property managers actually do quite a bit of running around. And that’s why they charge what they do.
Most agencies will create a lease that includes a fee of up to fifteen percent, but this can change according to an individual’s lease agreement, and across agencies.
In some parts of Western Australia, for example, you might expect fees to be higher to reflect the large distances they travel across rural territories. So where you live can also make a difference.
Some real estates will charge an extra amount on top of the standard fee. You can commonly find a lease renewal fee included in your agreement; some agents will add other “fees” on top of this, such as letting or general admin fees, which can be as low as five bucks a month.
It pays to be wary and thorough. Do your homework and ask questions, especially if things aren’t sitting right.
When you’re starting out, don’t be afraid to negotiate, but you need to be realistic too – if you expect your agency to work for nothing, you will probably get nothing out of them. And end up with piles of smoking garbage in your backyard.
And if you do end up with a problem tenant, you want to know that they’ve got your back. Not only do they have to get good tenants in, they’re also responsible for the property’s condition and making sure it’s being maintained. And they’re also responsible for getting tenants out at the end of the lease.
If there have been any issues, this could mean mediating for an outcome or dealing with the relevant tribunal.
If you are engaging a manager, remember that services can also vary. Some agencies will only let the property, and leave the inspections and maintenance to the landlord.
Some agencies will only collect the rent; for these services you will pay much less, but you get less, of course.
Some offices have a team of people behind their manager, while the manger runs several portfolios. It’s worth knowing how many properties your manager has under their care, and who is actually doing the work.
A stressed out property manager probably won’t be doing the best job. You can probably expect an individual property manager to be responsible for 150 – 200 properties. Those with help could possibly handle up to 300 properties.
So it pays to ask questions going in. Ask who does the work, ask about workloads and ask about fees.
At the end of the day, you need someone with an active interest in your property. It’s never a case of set-and forget.
So have a good think about it. Could you do it on your own?
Just think about those guys and their chop shop.