Getting to know AUS!

[kathryn d]

Don't get me wrong, I self mange, but I would never suggest to someone that is what will make my investing a success or a failure like you seem to,.

But a PM charges a %age of rent and set fees and no more, so same %age per property regardless of # of properties.

I think some investors have made it to financial freedom using PM's, so I am not as convinced as you that it is better to limit yourself to your own area just so that you can manage it yourself in order to succeed somehow while being blind to other possiblly better opportunities out thetre which could eclipse an expense of property manger's $3k pa bill

Jaycee,
I have no problem suggesting staying in an area where you can self manage.From the problems I read on SS about PM's who don't know the ACT, obviously are an advocate for the tenant, and who also encourage the LL to do something, for the benefit of the PM ( ex.increase rent $10 wk, and the tenant moves, all reletting fees apply then )
Having a PM can be the most detrimental part of property investing.

When you self manage, you don't need to pay $50+ for someone to change a lightbulb, fire alarm battery etc. Even if you hired a "weekend husband" it would be cheaper to fix all minor things.
If it stopped at % of the rent, that would be one thing, but it doesn't. Many times if the PM represents you at Tribunal, they charge for that too. and the list goes on and on.

When you have this much trouble when you can be beside your property, imagine the risk you can be putting yourself, when you are in a different state.

Yes some will make it to financial freedom using a PM...imagine how much futher they could have been doing it themselves

Using your numbers..37 properties @ $3k=$111,000
Yes, I would rather have that money.

 

[jaycee]

Having a PM can be the most detrimental part of property investing.


Fair enough, will keep that in mind.

 

[AlmostBob]

We are lucky
I am a tinkerer,
ADF in all its arms teaches the ability to learn, and there is nothing that you cant do ( you just have to find the right forms )
Country kid from when family was unpaid labour, journeyman in a lot of trades
knowlegeable enough to know what I cant do, physically and legally
more of the relevent Act and regulation than PMs, and Director of Residential Tenancies.
Had our leases checked out by a lawyer who is a judge on the relevant court to ensure extra clauses are properly written and enforceable
Am the developer of record for all the large works
watched Warren Buffet pick up a quarter(25c) off the street
Many posters on SS run negatively geared, for capital growth to offset operational losses, we are fortunate to have 50% capital growth and CF+ for five years, minimise what may be unneccessary expenses,
I consider PMs unneccessary just by the number of threads here on SS about fword-ups by the pm,
If you can operate out of your pocket till you get your feet, its a lot easier to get to your feet

We dont use PMs, at 3k each/year plus outgoings like $90 to change a $1 battery (ss thread elsewhere) the 100K is better served to hire 4 part time employees to do our bidding, incidentally the four employess to do our bidding only cost 15K, trades and services engaged by me are much cheaper than trades and services engaged by pms, our plumbers are plumbers for one of the local pms and they pad the bill 100% because the pm takes 90days to pay, in this small town, the plumber also sees the amount the pm charges to the property owner for those bills, the PM ads 20% service charges for engaging the plumber,
Our carpenter works for us during his summer downtime, works on oil rigs in the winter(seems strange but the oil rigs are on the IceRoad, no freeze no access), and we dont do renos in winter

We have had good results from buyers agents, and would use one outside the comfort zone, if we get big enough to buy outside the comfort zone, and of course would use a property manager outside that area, would not accept the **** that seems to be the normal business for property managers in Oz and here
doing the sums, what we do and what we get from it, our time is worth $450/hour.


edit: the filter did not, I actually wrote a string of asterisks

 

[WinstonWolfe]

Whilst it's admirable if you have the time to conduct the on-ground research yourself it's not always possible, hence the reason some buyers elect to use us if purchasing interstate or out of their familiarity zone.

Yes, Jacque, I've used a BA myself, but know enough to discern good from bad. My point is a new investor is better to have a baseline of knowledge, so they can better discern a BA and not unreasonably blame the BA if the property does not perform to their expectations.

If I was a BA myself, I'd be reticent to act for someone with a naive mindset and quite ignorant about PI. From my talks with BAs, a high % of potential clients new to PI are quite unreasonable about the property they expect for a price. And they'll say things like I only want a property that will return me 5.5%+ gross yield and 5%+ growth pa; or I want a property I can reno and make 50k pre tax profit. As most BAs are not financial advisors and cannot predict the future, they are compromised by such expectations.

If you can't dedicate the time or resources then a BA can be the ideal choice.

As for PM choices, part of our service for investors involves interviewing local PM's and sending the transcripts of these to our buyers- there are no referral fees involved from any PM we have contact with so we avoid conflict of interest here. Naturally we recommend particular PM's who appear to pass our 12 question interview script with flying colours but we can't be held accountable for problems years down the track, as I'm sure you can appreciate.

Which an investor needs to remember when they say they don't have enough time (or interest or patience or personal discipline) to do more research themselves. It is like saying, I want to invest but don't want to have to do anything, or even think about it. Once again, if I was a BA I wouldn't want a client with that mindset.

I have a great dedication to my clients, both present and past and have maintained ongoing contact with several to date- not just on PM issues, but current market movement updates, tradie contacts, reno tips, selling agent advice etc. It may sound cliche but when you're doing something you truly love, it's easy to help out your clients, even when it's been months or years since the last contact.

I am sure you are personally conscientious Jacque, but to my knowledge BAs are not a profession with a professional code of conduct and disciplinary board, nor compulsory formal education, nor do they warrant their service. And if they are lone operators, and business is brisk, they may not provide the service they did when less busy.....hence why a new investor is better to have that baseline of insight to discern, to accompany word of mouth whether on Somersoft or elsewhere.

Every profession, trade, or craft has its shonks or operators who find themselves under increasing time or financial pressure to provide less service for more money. It's just human nature. As with most purchases of goods and services, Caveat Emptor.