How do you manage your investment property?
- Thread starter tomermh
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Response to RedWing's post
The quote feature doesn't seem to like requoting requoted quotes (!)
1. In Victoria, PMs charge about 2 weeks' rent as the letting/finding fee but I've negotiated 10 days or 1 week due to multiple properties or when I provide the photos and internet advertising text. All the PM has to do is open the door for 15 minutes and make a few calls to check applicants' references - hardly worth a huge fee.
2. I use also depreciation schedules prepared by QSs - these are very handy. But instead of paying an accountant to convert the schedules into my tax return, I pay a tiny fee to ******** to do it. Click the report button and it's done. Then all my accountant does is help with my other claims and lodge the return, charging me the standard fee for a tax return not the hugely marked up fee for having an IP.
3. 9.35%!!!! I've been to WA - the houses and flats are just the same as the ones in Victoria. Same bills, same occassionally broken stuff, same way to pay the rent. I don't understand how people could pay that much - that said, I paid $5 for a cup of coffee on holidays in Perth at Christmas so maybe everything's expensive over there.
The quote feature doesn't seem to like requoting requoted quotes (!)
1. In Victoria, PMs charge about 2 weeks' rent as the letting/finding fee but I've negotiated 10 days or 1 week due to multiple properties or when I provide the photos and internet advertising text. All the PM has to do is open the door for 15 minutes and make a few calls to check applicants' references - hardly worth a huge fee.
2. I use also depreciation schedules prepared by QSs - these are very handy. But instead of paying an accountant to convert the schedules into my tax return, I pay a tiny fee to ******** to do it. Click the report button and it's done. Then all my accountant does is help with my other claims and lodge the return, charging me the standard fee for a tax return not the hugely marked up fee for having an IP.
3. 9.35%!!!! I've been to WA - the houses and flats are just the same as the ones in Victoria. Same bills, same occassionally broken stuff, same way to pay the rent. I don't understand how people could pay that much - that said, I paid $5 for a cup of coffee on holidays in Perth at Christmas so maybe everything's expensive over there.
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Kate, ppl who dont know any different just accept it as being the norm. It all comes down to ones benchmark. Everyone does have the right to negotiate tho. If they feel they are being hard done by they can go elsewhere. But you are still negotiating in the same barrel of apples as opposed to a barrel of an over east variety.
Putting aside finding tenants, what surprises me is how so many investors out there are intimidated by self-managing once the tenants are in. When you ask them why they don't self-manage, it's the same two answers: "It's tax deductible" and "I don't have time".
Yes, it's tax deductible. But instead of paying a PM, invest the money back into the property (new stove, aircon etc). This is also tax deductible, over many years not one, it increases the capital growth in the property and makes tenants happy. Same amount of money spent but far, far greater return if you ditch the PM.
Self-managing is not time consuming, contrary to the PM spin. How long does it take for owners to pay their own water or Council rates bill? 5 minutes a year? That's exactly how long it will take to pay the IP bills. And a once-a-year inspection takes 10 minutes. ******** even sends me an email when bills and inspections are due! And when the odd thing breaks (like it will inevitably break in the owner's own home) how long does that take to arrange to fix? One or two phone calls? That's it. So how is all of that time consuming? I certainly can't justify paying a PM $1000 a year for no more than 2 hours work a year!
Yes, it's tax deductible. But instead of paying a PM, invest the money back into the property (new stove, aircon etc). This is also tax deductible, over many years not one, it increases the capital growth in the property and makes tenants happy. Same amount of money spent but far, far greater return if you ditch the PM.
Self-managing is not time consuming, contrary to the PM spin. How long does it take for owners to pay their own water or Council rates bill? 5 minutes a year? That's exactly how long it will take to pay the IP bills. And a once-a-year inspection takes 10 minutes. ******** even sends me an email when bills and inspections are due! And when the odd thing breaks (like it will inevitably break in the owner's own home) how long does that take to arrange to fix? One or two phone calls? That's it. So how is all of that time consuming? I certainly can't justify paying a PM $1000 a year for no more than 2 hours work a year!
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Kate, putting aside the actual time allotments (everyone's situation is different), those tasks are just one side of the whole management coin. You are also paying for what doesn't happen often but may. I am talking about professional expertise in relation to the legalities and requirements of persons in breach of the states tenancy act.
All this needs to be weighed up when making a decision whether to self manage or professional manage. Even more so when one has multiple property portfolio's - everything including costs, time and risks compound.
IMHO in the end it comes down to how much I value my time for the possible self manage monetary saving.
Money can be made and saved in as many ways as there are people but time is and will always be an ever diminishing commodity.
All this needs to be weighed up when making a decision whether to self manage or professional manage. Even more so when one has multiple property portfolio's - everything including costs, time and risks compound.
IMHO in the end it comes down to how much I value my time for the possible self manage monetary saving.
Money can be made and saved in as many ways as there are people but time is and will always be an ever diminishing commodity.
Kate,
The value of a PM, as Rixter succinctly puts it (kudos to you!) is not all about the time. I have 2 IPs in Qld, and I live in Geelong, Vic. My PMs are local (in fact, they are both onsite managers) and they can address issues before they blow up into bigger issues. They also have local knowledge of "good" tradespeople, amongst other things.
While I'm willing to be hands on for our local properties (eg, in renovations) once that part's complete, I want to just "forget" about the properties for the rest of the time. Money in once a month, the odd bill to pay, enter the figures into Excel, job's done! - I don't want any of the other hassles.
I'm also a believer in paying "experts". I have an accountant prepare my tax return, a solicitor prepare contracts, a PM manage my properties. And I can then concentrate on my "real job" and do what I do well and get paid for doing.
So if you can explain to me how Rentwise can do these things, you might get a convert. (But probably not!) BTW, the way you sing its praises, do you work for Rentwise?
Ro,
******** was mentioend once. you seem to be on pro PM, does that mean you work for REI of your state ?
perhaps I poured a gloass of wine early in the afternooon, but a littel balacne please !
I'd certainly get my ip in another state managed, but I'm honestly not missing out on either time nor money managing myself.
perhaps there's simply more than 1 way to skin a cat ? Why do we ned to point out the one is WRONG , evidenced by so many succesful self and non self managers out there, it doesn't seem to be so simple.
******** was mentioend once. you seem to be on pro PM, does that mean you work for REI of your state ?
perhaps I poured a gloass of wine early in the afternooon, but a littel balacne please !
I'd certainly get my ip in another state managed, but I'm honestly not missing out on either time nor money managing myself.
perhaps there's simply more than 1 way to skin a cat ? Why do we ned to point out the one is WRONG , evidenced by so many succesful self and non self managers out there, it doesn't seem to be so simple.
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Maybe my glass (or more) of wine caused me to overreact
, but all through this thread, Kate has been, in my view, promoting ******. It's a tool, and IMO, has nothing to do with making self-managing easier. Self-managing is self-managing; record-keeping is necessary whether you self manage or PM. It's a record-keeping tool, from my read of it. And quite probably a good one. Maybe I simply read too much enthusiasm into her posts!
And, for the record, I don't work for the REI!
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Hi guys,
Thanks for contributing to the poll. So far it's clear that 40% of us still self-manage our IPs using various tools rather than through a PM.
That said, there wasn't an option for "PM + tools/partial self-manage". Do you find yourself still doing any work in addition to your PM? Are there limits to what they'll do e.g. quotes for repairs, body corporate representation, paying certain bills etc?
Thanks for contributing to the poll. So far it's clear that 40% of us still self-manage our IPs using various tools rather than through a PM.
That said, there wasn't an option for "PM + tools/partial self-manage". Do you find yourself still doing any work in addition to your PM? Are there limits to what they'll do e.g. quotes for repairs, body corporate representation, paying certain bills etc?
No it's not clear.
If you set up a poll that simply asked do you self manage or use a PM, I bet you would get a huge swing towards PM.
In this poll I voted 'other' because I do my own record keeping via Myob AND use a PM.
Skater, looking at his footer and his post count, I'm pretty sure the thrust of the thread is to try and garner as much support for his business as possible.
Everyone who is contributing is being taken for a ride. The results will be twisted to fit whatever business outcome s/he wishes.
So i'll make my contribution which is:
Why in the hell would I ever even think about managing myself when for a few measly $$ a week someone else get's the grief!
Why in the hell would I ever even think about managing myself when for a few measly $$ a week someone else get's the grief!
On rent of $495 per week, that "measly" dollar comes to about $40 (at 8% management fee). Start multiplying $40 per week by the number of houses you have, and it starts to get pretty expensive
.I am not against PMs, but I can honestly say that I like that $40 in my pocket each week. We live nearby, so it is easy for us. I spend a minute every week writing a receipt for each property.
Each to his/her own of course, and we have had to "sort out" a few issues over the years, but not many. I'm just too tight to want to pay someone, especially when I have all the time in the world to do it myself (and perhaps I am a control freak
).I agree the cost savings can add up.
Infact it could be significant enough that it could allow you to service another IP.
I have a number of close friends and family holding multiple IP's and they all choose to self manage (except for their interstate IP's) because they feel they do it better than most PM.
If you manage it well because you know how to, then there are few dramas and it takes very little time to do.
Infact it could be significant enough that it could allow you to service another IP.
I have a number of close friends and family holding multiple IP's and they all choose to self manage (except for their interstate IP's) because they feel they do it better than most PM.
If you manage it well because you know how to, then there are few dramas and it takes very little time to do.
Yeah, I know, but I thought maybe some decency would prevail and he might actually do a poll that ment something.
On rent of $495 per week, that "measly" dollar comes to about $40 (at 8% management fee). Start multiplying $40 per week by the number of houses you have, and it starts to get pretty expensive
I am not against PMs, but I can honestly say that I like that $40 in my pocket each week. We live nearby, so it is easy for us. I spend a minute every week writing a receipt for each property.
Each to his/her own of course, and we have had to "sort out" a few issues over the years, but not many. I'm just too tight to want to pay someone, especially when I have all the time in the world to do it myself (and perhaps I am a control freak
I know where you are both coming from Whylie & Weg, and I know that I could save a considerable amount of money doing the management of my local IP's, however I think you have to weigh up your own weaknesses and strengths before going the self management route.
Using a PM gives me a degree of removal. I can be as hardnosed as I like, by having someone else manage my portfolio. If I was self managing, then I know enough about myself to know that in person I am a soft touch. I would not keep my rents up to date, because the slightest complaint from the tenant and I would back down. Bearing in mind the large rent increases in Sydney, I would probably be $30-$40 behind the market. Since the amount I am charged is only 5.5%, I am only paying around $55 each month on management for each property. As it stands, most of my rents are very much at the higher end of the market.
Add to this the fact that I would have to do all the hard stuff, like tribunal, etc, it really is not worth my while to even contemplate thinking about doing the management myself.
Wylie my POV is a little different:
I'm also a control freak, so why would i let tenants control my life?
Sure there are times in life when you have to do wateva you need to do, but unless I'm struggling to pay interest I'd use a PM.
It's just a cost of doing business. There's plenty opportunities to make it up elsewhere.
Also I've never paid 8% management unless it was a serviced apartment.
With the serviced apartment the first question was always "how much fees you pay" or "I hear they charge lots of fees".
And while most could'nt get over the amount of fees, it was earning >10% cashflow after all expenses including interest on the capital which was 30% deposit, not including depreciation (4%).
Did i want to go and change dirty linnen every morning? No chance lol.
Just like in the movies, everybody get's a drink.
I still refer to it as my best investment.
"investment" because other than tax times I even forgot i had it.
I did'nt even check the rent/expense account for about 2 yrs and realised there was ~25K in it.
That's what a real pure investment is, you invest and get a return. All else is some elses problem.
That's also what the REIT were supposed to be, good for me I like river views better.
I'm also a control freak, so why would i let tenants control my life?
Sure there are times in life when you have to do wateva you need to do, but unless I'm struggling to pay interest I'd use a PM.
It's just a cost of doing business. There's plenty opportunities to make it up elsewhere.
Also I've never paid 8% management unless it was a serviced apartment.
With the serviced apartment the first question was always "how much fees you pay" or "I hear they charge lots of fees".
And while most could'nt get over the amount of fees, it was earning >10% cashflow after all expenses including interest on the capital which was 30% deposit, not including depreciation (4%).
Did i want to go and change dirty linnen every morning? No chance lol.
Just like in the movies, everybody get's a drink.
I still refer to it as my best investment.
"investment" because other than tax times I even forgot i had it.
I did'nt even check the rent/expense account for about 2 yrs and realised there was ~25K in it.
That's what a real pure investment is, you invest and get a return. All else is some elses problem.
That's also what the REIT were supposed to be, good for me I like river views better.
I'm happy that we all see things differently. My tenants don't control my life though. Far, far from it.
I know of a managing agent who charges 8% all inclusive. Many others seem to be around 7% or less but with lots of add-ons, so 8% doesn't seem too high for an all-up service.
However, I like the money in my pocket, and I am quite serious that I spend less than five minutes doing the receipts. Of course, when there is a problem, and I need to organise a quote for a hot water system, for example, I still prefer to do that myself and have some control over how much I will be paying.
I'd hate to leave my spending in the hands of someone who has no care about what it is costing me.
lol it's a myth.
I'm happy to deal with those who want my biz, and given the times there are many.
"All inclusive service"?, gee even if the place is burning down I only want to know if they can't do the insurance paperwork.
You see I believe my time is much more valuable, even if I'm sitting on the back porch watching the palm tree reflections in the pool.
When something happens, I get a quick concise report on the phone generally followed by "I think this s the best way to proceed" with a yay or nay from me. So I still make the decisions, that's my job.
I look for investments, not other part time jobs. I got enuff to do.
I'll also quote Dazz:
