Beginners Help

[WebBoard]

From: Dael Simpkins


Hi,

I am a very new investor (bought a property 3 months ago). I found this site and have lurked around for a while, but now I have a question for those more experienced in the game.

When I bought the house, it came with a tenant and the property was managed by the agent who sold it to me. This tenant has worked out really well, no problems of any sort etc. The lease expires in another month and my question is this:

The current tenant wishes to stay on. I currently pay approx. $17 per week management fee to the agent. Given that there are no problems with the tenant, I feel that the agent is getting easy money and am considering having a go at managing the property myself (I live around the corner). I am wondering if this is a smart move or not, ie; is it worth $17. Could someone who has experienced both managed/self managed give me some advice here.

Thanks,

Dael

 

[Rixter]

Reply: 1
From: Rixter ®


Dael,

$17/w does sound fairly expensive for management fee, that is unless you are getting a exceptional weekly return? whats the agents % commision..the industry standard these days is around 8.5%.
You also said the tenants lease is about to expire, therefore your property will revert to a period tenancy.

But this doesnt necessarily mean the exclusive right for the agent to manage your property will also expire, that is unless you have signed the agents authority to manage also expires with the term of the tenants lease. If I was you I would recheck you agreement with the agent before deciding what course of action you will take.

I personally prefer to use the services of a good manager to look after the day to day running of my Ip's. I mainly do this for 2 reasons - 1/ Its their area of expertise and are up to date with all the tenancy laws and proceedures that may or may not need to be taken if anything is to happen, plus attend to organising any repairs or maintenance. The last thing I want is a phonecall in the middle of the night from a tenant telling me the roof is leaking. 2/ It allows me to concentrate & work on building my Ip Portflio by freeing up my time. The last thing I want is to become a slave to my Ip portfolio by managing it..the whole idea for me to build it in the first place was to get out of the RAt race by becoming finanially independent and freeing up my time to spend it how I liked.

To me employing an agent to look after the day to day running of my properties, while I build the portfolio is a well spent tax deduction provided you get good service from your manager for $$ spent.

Thers no real right or wrong way to do it. It all comes down to what gives you personal peace of mind.

Happy Investing,
Rixter

 

[WebBoard]

Reply: 1.1
From: Mark Pardi


Property management in Sydney usually attracts a fee for service of between 4% to 7%. Lots of agents will manage property for 5% in most areas.

Property Management is just like a lot of other services....yes you can do it yourself

you can DIY just about anything in life !

but it can be grief !!!

and is it really worth it ??

my personal opinion is NO !

my professional opinion is also NO !

let a property management company handle it, and spend your time learning more about making more investments......$17 is cheap grief removal


Mark

 

[Jacque]

Reply: 1.2
From: J Parker


Dael,

Rixter has answered this really well (in MHO anyway!) and he's right when he says there's no wrong or right way. It also depends on what type of person you are and how much time you have on your hands. If, for example, you are the type who goes into a panic when your tenant complains about something (leaking tap, bad neighbours etc) then don't manage it yourself. Far better to be emotionally removed, as you will only cause yourself stress.

Being so close to the property may cause you to become too "friendly" with your tenants, seeing them on a regular basis and then not being able to raise the rent/point faults out at inspections etc. If you do self-manage, make sure you are thoroughly professional about it all and get the money deposited straight into your account or direct debited from their pay. Send letters to announce upcoming inspections instead of phoning and maintain a courteous but professional relationship.

You can purchase lease packs from newsagencies when you need to draw up a new lease- they are quite easy to follow and also include the bond lodgement and transfer forms. If you do decide to self-manage, enjoy the experience and the extra money in your pocket! Good luck!
Cheers, Jacque

 

[geoffw]

Reply: 2
From: Geoff Whitfield


Dael,

Don't forget that property management also includes finding the tenant when this one finishes. That might take a bit more work- especially if a property manager has good networking & experience in picking good tenants.

I toyed with the idea of managing myself- but I realised that I would be a soft touch when the tenant cam to me with excuses for not paying on time. And also for not raising the rent.

You may find an agreement in place with an existing tenant which might be hard to break.

I'm not a property manager, and I'm not saying this just because I support them. I've asked similar questions myself on this forum, and the conclusion I reached myself was that I would rather pay the 7% (deductible) and get someone else to put pressure if necessary.

 

[WebBoard]

Reply: 2.1
From: Dael Simpkins


Thanks for the advice guys. It's certainly making me lean towards keeping the manager in place. I'll see how it goes.

Dael