Granny Flat - Self Manage or not?

J

Jboz

Hi,

I am in the process of building a brand new granny flat in my backyard and wondering what your thoughts are if I should self manage or use a property manager from a real estate agent?


Since I will be living in the front, I would probably be getting all the enquiries anyway and being a new granny flat, I don't expect there may be many issues?


But after reading some threads in here, I understand that Landlord insurance is hard to come by if we self manage and also since I don't know any of the legislation in my state (NSW) I am not sure which path to take.

Wondering what your thoughts are.

Thanks,
 
I'll be in the same situation at the end of the year when we move into one of ours that has a GF at the back.

I intend to leave it with the agent, to try and keep it at arms length as much as possible same as any other IP.

In fact I don't even want the GF tenant to know I'm the owner.
 
Coconutwheels said:
In fact I don't even want the GF tenant to know I'm the owner.
Click to expand...

Get over it!

The tenant is now in charge of one of your assets so make sure they know what are the expectations and don't feel intimidated by them.

Be reasonable, but keep them on the backfoot and make sure they understand where they stand in their dealings with you. Be fair but firm!

(nb: their dealings with their local administration tribunal may be a different matter!)
 
I've formed this opinion from previously self managing another IP and running a share house in a previous ppor.

The question really is, do you believe in self managing your IPs, the distance the dwelling is from your house is irrelevant IMHO.
 
Coconutwheels said:
I've formed this opinion from previously self managing another IP and running a share house in a previous ppor.

The question really is, do you believe in self managing your IPs, the distance the dwelling is from your house is irrelevant IMHO.
Click to expand...


Fair enough, I guess it depends on your personal experiences and skills to an extent. I personally prefer to have face to face contact for all my business/contractual relationships where possible.

I self manage half my properties, and have a "lite" PM management agreement for the rest where I do my own inspections and property condition reports.

Distance is fairly relevant because it makes many aspects of management a lot easier. My PM managed properties are the ones a bit further out from home.
 
People can be turned off as it is by having the landlord living next door. Self managing will make this worse.

You also don't want tenants knocking on the door at midnight asking for a light globe.

Having a PM can mitigate those things.
 
geoffw said:
People can be turned off as it is by having the landlord living next door. Self managing will make this worse.

You also don't want tenants knocking on the door at midnight asking for a light globe.

Having a PM can mitigate those things.
Click to expand...

Our ex-PPOR had two 3 bed homes on the one block. We lived in the front & rented out the back.

From day 1, we used a PM for the rear home & decided that we wouldn't let the tenants know we were the landlords.

Well, that didn't work because the neighbours always told the tenants. In fact, it seemed that the whole street knew we owned the back house, and any time it was vacant we would get people knocking on our door wanting to rent it out.

Although it was common knowledge that we were the owners, we rarely got tenants knocking on our door asking for maintenance. They were expected to follow the correct channels & they did. Even though, nine times out of ten, Hubby would fix whatever needed fixing.

Why use a PM, you say?

Well, it wasn't the best neighbourhood & we used to tell the tenants that we had signed our rights over to the Agent, who was responsible for tenant selection, amount of rent charged, and management of the property.

As we had to live there too, it gave us peace of mind that we wouldn't have problems with disgruntled prospective tenants that did not pass the screening, or current tenants trying to give us a sob story about rent increases, or even late payment of rent. The answer was always the same. "You'll have to talk to the Agent about that."

Worked a treat!
 
Jboz said:
But after reading some threads in here, I understand that Landlord insurance is hard to come by if we self manage and also since I don't know any of the legislation in my state (NSW) I am not sure which path to take.
Click to expand...

I've always self managed, and would do the same with GF (if we had one).

The insurance comment is not valid. I've never had trouble finding an insurer who will not insure our self-managed houses. In fact, I've only ever had one insurer who wouldn't, which was Terry Scheer and that has changed now.

It comes down to whether you know what you are doing, are prepared to read up so that you do know the rules... or not.
 
To do a selfie or not?

Hiya

I have the exact situation...to get the initial tenant screening and all the bonds lodged etc i engaged a professional property manager...

After 3 or 4 mths, i started to self manage...the property manager transferred all the lease agreements, bond lodgement papers to me...save me the hassle.

I figured if i am comfortable to live with that person in my backyard, i shd be able to communicate and self manage no?:D

So far, it has worked out okay...as i say, wait a bit longer for a good tenant first....and go from there...
 
Forgot to say in my post, that I agree that engaging a PM to find the tenant, do the checks and leave you out of that part of it could be a good idea when the IP is in your back yard. It removes you from the "why didn't you pick me?" scenario and allows checks to be done that private landlords don't have such easy access to.
 
Self managing can, from time to time, take time as well as money. That time is not always at a time which fits in with your own schedule.

When I self managed I found it very hard to fit things onto a schedule which was already quite busy.
 
Thanks All,

Great wealth of knowledge and experiences there.

I think I'm leaning towards getting a PM to provide some sort of separation since I am new to this.

Just wondering if I would be able to also contribute to the screening process when selecting tenants if I use a PM as this was my main concern since I have a young family?

Thanks
 
If you are new to it all, definitely use a PM- at minimum to know what they do (and don't) do.

If you have difficulties you'll learn even more.
 
I'm a bit bias because I am a Property Manager but the benefits of using a Property Manager are numerous.

I have managed a few Granny Flats in my time, with most being that the owner or lessor lived in the main house.

We found that all negotiations came through the right channels and we had all of the right record keeping to keep it clean and accurate. If it ever does go wrong, it gives you peace of mind that it has been managed as per legislation and there should be no issues.

The beauty also being that if the rent is late, the Property Manager is calling to chase it. Not you. The beauty of it being managed by a third party is being able to plead ignorance should they ever bail you up at the mailbox, you can say, "I'm not sure where your rent is paid to, you will have to chat to the Property Manager."

It removes any personal feelings and keeps it distant. Tenants can have their grudge or beef with the agent and not you, when you live right near them.

That said, I have had owner's in the past who didn't understand the boundaries and would say one thing to the tenant, but not relay that on to me (the Agent). So if you are going to engage a Property Manager, choose your level of involvement and keep to it. If you start signing up to do the routine inspections, or meeting contractors there for maintenance, it can get very messy and confusing.

All of that being said, best of luck!

Our plan is to build a granny flat for our daughter (who is only 2 now) but I never want her to move out of home! The rental return on them can be fairly good in the meantime.
 
Granny Flats

Hiya Kathryn

Interesting! I assume you are a PM in Brisbane....i thought that renting a granny flat up your way is not allowed unless it is to a relative?

Please explain:p
 
Hi Jboz,

My thoughts are even if you use an agent, the tenants will find out that you are the owner one way or another - it would just be a matter of time. So even if you use an agent my thought would be that the tenant really only finds out IF they ask or when they sign the lease. Honesty is the best policy haha in most cases.

If you rent it out yourself you need to have strict guidelines of what they need to do if there are repairs, urgent repairs etc. Also strict guidelines on your restrictions to enter the property etc. So build a fence up, make it as separate as possible and only do you routine inspections when your suppose to.

If you don't go around knocking on their door all the time, they should do the same thing to you.

You could lower the rent of the granny flat under market value (may 5 -10%) to really attract a good long term quality tenant to help minimise any on going issues you could run into.
 
virgo said:
Hiya Kathryn

Interesting! I assume you are a PM in Brisbane....i thought that renting a granny flat up your way is not allowed unless it is to a relative?

Please explain:p
Click to expand...

People still do it. I see them listed on re.com.au from time to time - listed with agents.
 
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