Are PM's worth it?

[geoffw]

Only issue I have is: how do you advertise your property? As far as I understand I can’t advertise on realestate.com and a lot of tenants find rentals by walking the real estate shop strips in the suburbs. Do you self-manage guys just find your tenants through ads in the paper?

This self managed guy had the tenants already in place (3 cottages, 3 sets of tenants) a few years ago when Ms Nasty PM was sacked, and they haven't moved yet.

Though I understand that some PMs will give you an option to find your tenant (for a fee)- though they would obviously prefer an ongoing relationship.

 

[duncan_m]

Only issue I have is: how do you advertise your property? As far as I understand I can’t advertise on realestate.com and a lot of tenants find rentals by walking the real estate shop strips in the suburbs. Do you self-manage guys just find your tenants through ads in the paper?

I cant speak for Brisbane.. in Adelaide the Wednesday and Saturday newspaper (The Advertiser) is the hotspot for advertising rentals.. I never fail to have a good selection of Tenants turn up for an open inspection when I advertise on a Saturday.

I pay for a longer ad and put as much information in as I can as it prevents my phone ringing the day beforehand (I advertise on Saturday and open on Sunday). I take note of the phone calls I DO get and try to avoid the same kind of calls the next time around.. tenants want to know about heating, cooling, BIR's, availability, address, number of rooms, bathrooms, rental amount, open time, and pets.. (btw, the wording "pets negotiable" always seems to result in more calls than it solves, I've changed this to "cat/small dog OK").. I compress the open time down into a 15min slot late on Sun afternoon (4-4.15 normally). I encourage people to fill in the application on the spot and stress the importance of getting them back ASAP.. I offer fax, email and my home address if they want to drop the application off later that day or the next momrning. I've usually made a decision by Monday lunchtime.. I make the tenant do as much of the running around after that as possible.. they have to come and see me to complete the lease, pick up the keys etc.. I've already completed the inspection sheets for the incoming tenant by turning up a little early for the open inspection..

I also try and add some fluffy details about the house like "lovely, airy and light" dunno if it helps but it makes a change from the typical kind of line ad you see like "Woodcroft, 3BR, $190PW PH 8321 1231".. thats doing it the hard way, the number of calls must be huge..

 

[aef]

Insurance vs "running like a business"

My previous experience has been confirmed by this thread.

Before I sold I had my three properties managed by a PM, I considered it as insurance.

I pay the fee and know it is there to take care of things if (when) they go wrong.

My belief is that hiring a PM is not a "set and forget" situation. We still need to monitor what is happening without necessarily getting our hands dirty in the day to day action.

This is how I run my properties, I work full time and have a small family and consequently do not have the time or inclination to self manage so I delegate this task to a pre-qualified PM.

On the other hand, self managers such as Duncan have developed such excellent systems and have the knowledge of the relevant rental laws that it reduces their risks.

My personal preference is to delegate to a PM but I can see the merit in self management.

A

 

[kaf]

Thanks Duncan & Les - v helpful!

kaf

 

[kierank]

To me, it is simple economics.

Assuming rent $300pw for 52 weeks per year and pay PM 8% - that equals $1,248 in PM fees. I value my time at $200ph - so this equates to a little over 6 hours. For rent of $250pw and PM 7%, the PM fees equate to 4 hours of my time.

I understand that, on average, PMs manage around 200 properties each. Assuming that they work 44 weeks/per year (allowing 4 weeks annual leave, 2 weeks sick leave and 2 weeks public holidays) and 40 hour/week, they are expecting to spend 9 hours per IP.

So by using a PM (and I do on all of my properties, even the one 10 mins away), I am saving myself time and money. Either I expect to spend 9 hours per year managing each IP or I pay someone equivalent to 4 to 6 hours of my time to do it.

I use the same principle in my business (I pay someone to sell our products, I pay someone to deliver our services, I pay someone to do our bookwork, etc) and at home (I pay someone to do the gardening, I pay someone to do the housework, etc). I do this because they can do it better and cheaper than if I did it myself. That does not mean that I don't supervise and manage them. Of course I do or I pay someone to do it.

Same with PMs - they can do it better and cheaper than if I did it myself but I still have supervise and manage them - if fact, I pay one of my staff to do that (because they can do it better and cheaper ).

I understand that all wealthy people employ this principle - I am not wealthy but am trying to get there.

Does this mean that I don't get a bad PM? Hell no!! When I do, I do the same thing when I get a bad/poor member on my team - you fire them!!!

 

[Rixter]

To me, it is simple economics.

Assuming rent $300pw for 52 weeks per year and pay PM 8% - that equals $1,248 in PM fees. I value my time at $200ph - so this equates to a little over 6 hours. For rent of $250pw and PM 7%, the PM fees equate to 4 hours of my time.

I understand that, on average, PMs manage around 200 properties each. Assuming that they work 44 weeks/per year (allowing 4 weeks annual leave, 2 weeks sick leave and 2 weeks public holidays) and 40 hour/week, they are expecting to spend 9 hours per IP.

So by using a PM (and I do on all of my properties, even the one 10 mins away), I am saving myself time and money. Either I expect to spend 9 hours per year managing each IP or I pay someone equivalent to 4 to 6 hours of my time to do it.

I use the same principle in my business (I pay someone to sell our products, I pay someone to deliver our services, I pay someone to do our bookwork, etc) and at home (I pay someone to do the gardening, I pay someone to do the housework, etc). I do this because they can do it better and cheaper than if I did it myself. That does not mean that I don't supervise and manage them. Of course I do or I pay someone to do it.

Same with PMs - they can do it better and cheaper than if I did it myself but I still have supervise and manage them - if fact, I pay one of my staff to do that (because they can do it better and cheaper ).

I understand that all wealthy people employ this principle - I am not wealthy but am trying to get there.

Does this mean that I don't get a bad PM? Hell no!! When I do, I do the same thing when I get a bad/poor member on my team - you fire them!!!

Well said!

 

[skater]

To me, it is simple economics.

Assuming rent $300pw for 52 weeks per year and pay PM 8% - that equals $1,248 in PM fees. I value my time at $200ph - so this equates to a little over 6 hours. For rent of $250pw and PM 7%, the PM fees equate to 4 hours of my time.

I understand that, on average, PMs manage around 200 properties each. Assuming that they work 44 weeks/per year (allowing 4 weeks annual leave, 2 weeks sick leave and 2 weeks public holidays) and 40 hour/week, they are expecting to spend 9 hours per IP.

So by using a PM (and I do on all of my properties, even the one 10 mins away), I am saving myself time and money. Either I expect to spend 9 hours per year managing each IP or I pay someone equivalent to 4 to 6 hours of my time to do it.

I use the same principle in my business (I pay someone to sell our products, I pay someone to deliver our services, I pay someone to do our bookwork, etc) and at home (I pay someone to do the gardening, I pay someone to do the housework, etc). I do this because they can do it better and cheaper than if I did it myself. That does not mean that I don't supervise and manage them. Of course I do or I pay someone to do it.

Same with PMs - they can do it better and cheaper than if I did it myself but I still have supervise and manage them - if fact, I pay one of my staff to do that (because they can do it better and cheaper ).

I understand that all wealthy people employ this principle - I am not wealthy but am trying to get there.

Does this mean that I don't get a bad PM? Hell no!! When I do, I do the same thing when I get a bad/poor member on my team - you fire them!!!

Excellant post. Kudos to you.

 

[simonjulie]

With over 7 years of self-management and more than 20 rentals I hardly consider myself an expert but I think this is an interesting post and worth contributing to.

Before you know whether or not you want to hire a PM or self-manage you need to ask yourself some questions. How much do you know about the Residential Tenancy Acts in the state(s) where you hold property? Are you a people person, prepared to communicate as regularly as necessary with tenants? Prepared to be both flexible and firm and know when to be which? Willing to build a rapport with your tenants so you can enjoy a good relationship with them and communicate with them at their level and on your terms? Develop and follow a system that makes decision making easier. Keep clear and concise records so that if you need to present yourself to an insurance company or a tribunal you can present a professional case.

If you choose to hire a PM are you prepared to accept them as being an expert and how will you know if they are if you don’t understand the game very well yourself. Are you prepared to accept the high staff turnover that is characteristic of property management agencies knowing that your tenant(s) may not get a lot of continuity and may be treated like a faceless stranger.

For anyone who has read my post entitled “evicting non-tenant” it may be worth noting that the first sign of trouble came when my tenant approached me to get out of her lease. She asked if “housemate” could go on the lease instead of her. This rang warning bells and I said that I would have to approve the housemate before I would enter into a lease with her. But on further questioning I decided that housemate would not be suitable. If I had had a PM in place how would they have handled this? They may have phoned me and told me that one tenant wanted to leave and another wanted to take her place. I could have simply said yes and could have ended up with a bigger problem. My view is that PMs generally want to get a quick result with the least amount of fuss. PMs aren’t all bad. I have a few really good ones interstate with whom I have regular contact. But my bottom line is I really like dealing with my tenants directly. No PM will ever care about my properties as much as I do and they can never offer the same fast efficient service I can offer my tenants directly. I personally manage 15 of my rentals and this does not take up a lot of my time. I follow a system that makes the job easy but when I have a problem I want to fix it quickly and not be at the mercy of someone possibly less competent than myself. I do enjoy PM because 90+% of the time my tenants are nice people and easy to deal with.

If you don’t like dealing with people, property management may not be for you. Even if you don’t deal directly with tenants you still have to have a relationship with your PM.

Good luck to you either way you choose and I hope this post helps shed some light.

Regards
Julie

It is our choices that show what we truly are, far more than our abilities.
JK Rowling