Has anyone here self-manage more than one IP to maximize income ?
- Thread starter JohnHenry
- Start date
For you maybe, but for me it's a snack if you have the knowledge and some smarts about you. Do the right thing, by the letter of the law, and you have no worries or problems.
Keep onto tenants who don't pay in advance...I mean email, text, phone every day they are overdue. Only takes a minute...and remind them they have signed an agreement that is legally binding and that their 'home' could be taken from them.
It's not all bad either, on the flipside, be compassionate, firm and fair and not a slumlord.
At the end of the day you need to say I did my absolute best and abided by all the laws and was totally fair.
All our tenants love us as against renting thru agents. They never question rent hikes (because they are always at market rent) and all inform us of any maint. issues as soon as they happen (our request) and we act on them immediately. They love that and we get to keep our IP's tidy.
We have a varied lot of tenants too, some may say that some are even 'undesirable', but we find them OK and never any complaints.
Treat them equal to yourself, no better or worse.
If things don't go according to plan then act immediately to get back on track. The root of most bad stories is usually leaving the grass fire go, only to turn in to a raging firestorm.
Many PM's are guilty of this, letting non-rent payments go unnoticed for weeks and not inspecting and keeping things up to scratch. It's not their money....
Some PM's are great of course.
Above all you have to want to do it yourself, not just to save money. Only then you will do a good job of it.
Gee you don't make $300 000 a year in rent?Gee do you make $300,000 a year in rent???
we've been at this 7 years, we'd planned on [sup]1[/sup]/2mill by now,
the seppo economy drowning in its own stupidity slowed things down a bit
ladylove is only looking at two properties this year
The entire family self manages, with PMs only being brought in to deal with problem tenants. Giving up 2 weeks rent everytime tenants change plus 7% on top plus horribly inefficient repairs that you end up having to do yourself when you finally get sick of the PM isn't particularly clever imo.
As for tax, what's the difference? It's just another expense you got rid of.
As for tax, what's the difference? It's just another expense you got rid of.
Gee you don't make $300 000 a year in rent?
we've been at this 7 years, we'd planned on [sup]1[/sup]/2mill by now,
the seppo economy drowning in its own stupidity slowed things down a bit
ladylove is only looking at two properties this year
Nope
- i wish ..currently around $140k But my portfolio are properties with high growth- bought in 2004 $720, on the market soon for $1.3M - rents $590pw
LOL, no mate that's too obviously cheating and also against the bible too.
What I'd like to hear and know is what to calculate, what to avoid or pay special attention to and what can be saved by doing this myself legally.
Its very very very very easy to calculate what you save.
The property manager's fees.
And that's it, unless you are going to be doing maintainence for the house too, but you could negotiate that with a PM too so not really fair to count that.
The property manager's fees.
And that's it, unless you are going to be doing maintainence for the house too, but you could negotiate that with a PM too so not really fair to count that.
I self manage 3 IP's located in different parts of NSW. By doing this yourself you are far more diligent on rent payments coming in, chasing arrears, repairs etc. You must remember to do everything by the book eg bond, lease and condition reports. Also when the property becomes vacant you will find you are much better equiped to sell the property to a prospective tenant than a 17 year old letting clerk who doesnt give a toss.
Only you know yourself if you are capable/suited to self-managing. There are plenty of inexperienced investors on this site who screw things up by simply not knowing the law. Learn the law and do your homework choosing good tenants to begin with and half the battle is won. I used to self manage and that worked well until I had three kids and constant travel for work and now I don't have time to deal with it so I outsource to PMs and an Accountant. When the kids are in school and I retire next year, I will self manage again and it will be like my own little business.
JohnHenry,
What you save is the management fee, which would depend on where your properties are but could be anything from 5% to 11% of your rental income, plus letting fees, etc.
For your tax return you have to consider your annual rental income, any repairs you have carried out on the properties, depreciation (hopefully you have a depreciation schedule), insurance, council fees, strata fees if applicable, expenses for managing the properties and so on.
I would suggest talking to a tax accountant to do at least the first year's return for you.
What you save is the management fee, which would depend on where your properties are but could be anything from 5% to 11% of your rental income, plus letting fees, etc.
For your tax return you have to consider your annual rental income, any repairs you have carried out on the properties, depreciation (hopefully you have a depreciation schedule), insurance, council fees, strata fees if applicable, expenses for managing the properties and so on.
I would suggest talking to a tax accountant to do at least the first year's return for you.
That's funny. When I read through the threads, I see all the horror stories of self managing.
I say PM. We treat property investing like a business. PM costs are just a business expense like any other business. Management fees are 7%. On a 35% tax bracket, it them really cost you ~4.5 - 5%. A small amount for having less hassle, compared to dealing with tenants directly.
We do have some horror stories.At any given time we have one troublesome tenant..not bad out of 39.
PMs are even worse, it seems. You can have a troublesome tenant, add an incompetant PM, and you are paying to be ripped off.
No thanks!!!
We treat our IPs as a business as well.
@kathryn d - Geez with 39 properties you could almost employ a property manager to manage them all exclusively (assuming they're all in the same sort of area and I do realise you don't have a PM at the moment). Say you were getting $500 per week per property in rent at 7.7% mgmt fee, that would be $1501 a week! Wow!
We have 2 married couples, who are superintendants of our properties, while we are away.
We pay them a set monthly fee. In exchange they advertise, show applicants,repair and maintain what they are capable of (and that is a lot) and if necessary bring in tradies.
After a tenant vacates they clean if necessary, repaint when absolutley necessary (they nform us when that is required).
The deposit rent into our bank account, chase up rental arrears.
They do not have any other rentals but ours.
They are in constant email contact with us. We advise them how we want issues handled.
None of our properties are in the $500 week category. They range from $150-375 wk.
At the moment we pay about $16k year for these services, but they save us at least that much again, if we had to use a local PM.
Be careful there Kathryn D and AlmostBob....the Banks will label you "too rent reliant"....
They already did..last month.
We had a really difficult time refinancing a mortgage.
We did get a lender, eventually..and sign the contracts July 4.
That's funny
Be careful there Kathryn D and AlmostBob....the Banks will label you "too rent reliant"....
Yes because we all know rent is one of those discretionary things that people don't pay in tough times. But not a plasma TV
Yesterday we were talking to our bank branch member,and she was surprised we had obtained a mortgage. We hadn't mentioned it to her previously, but she found out we had been in last week to sign the mortgage papers.
I informed her we are not able to get a mortgage from the branch, but always need to go thru a mortgage broker.
She was telling me about another client. This person wanted to use the equity from their PPOR to use towards a rental. He had $100K equity but they were only permitted to lend him 40%, and required an appraisal on his PPOR....and only consider 50% of the rent.
Very difficult to get financing for IPs.
I informed her we are not able to get a mortgage from the branch, but always need to go thru a mortgage broker.
She was telling me about another client. This person wanted to use the equity from their PPOR to use towards a rental. He had $100K equity but they were only permitted to lend him 40%, and required an appraisal on his PPOR....and only consider 50% of the rent.
Very difficult to get financing for IPs.
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