Pro's & Con's - PM vs Private

[reinhardtslater]

You can have a go managing it yourself and if it gets too hard/bothersome then pass it over.
OR
I know there are a number of firms that will do the initial leasing/open homes/paperwork etc for a fee (one weeks rent?) and then you take it over once the tenants are in. That way, all you have to do is monitor the rent and inspect once a quarter.

 

[DeeHwa]

Got a quick question and would like some opinion on this.

Would you guys 'generally' go with a PM if say, you were leasing out a 1 or 2 bedroom dwelling given that doing it privately would potentially only give you marginal savings? By this, I mean the savings on a weekly basis may result in only $50 or so (just some arbitrary number I plucked) although you run the risk of doing the property inspections yourself, finding a plumber or electrician yourself, answering tenants phone calls yourself, probably copping abuse as well at 3am in the morning etc... thereby wasting a lot of valuable time. I guess it is all fine if you have friends or relatives renting your place (having an element of trust that they would look after the place, pay rent on time and not bother you randomly with menial and stupid demands like painting the walls a specific colour and growing a freaking durian tree in the backyard - a bit of sarcasm obviously but you get what I mean) but not everyone has this luxury.

In my opinion, I would probably only go private if I purchased a run down (but livable) house where I can modify the floor plan and make say, 7 bedrooms and charge each person (probably students) say $150 because the marginal benefits would be great and I don't think many PM's out there would recommend packing 7 or 8 guys in an originally 3 bedroom house.

So, would I be correct to assume that the majority of you guys would get a PM for 1 or 2 bedroom dwellings, as it is not worth the trouble???

 

[bespoke]

I wouldn't dream of doing it myself as I don't have the time or the knowledge and have enough on my plate...

However if I didn't have a PAYE job, and had the time to study on how to do it correctly/leagally AND was hard enough not care about the hard luck sob stories from tenants, I would seriously consider giving it a go.

My husband says our PM is a hard nosed B**** and thats the way he likes it. I would find it extremly difficult to raise someones rent or do some of the other unpleasant things that PM's have to do and I like the fact that the tenants currently have no idea where I live, my phone number or what I look like. I am planning to attend 1 inspection per property this year however so they'll know what I look like then.

At this point (apart from the time involved) I dont think I have what it takes to do it, wish I did but I have to harden up a bit.

 

[DeeHwa]

I wouldn't dream of doing it myself as I don't have the time or the knowledge and have enough on my plate...

However if I didn't have a PAYE job, and had the time to study on how to do it correctly/leagally AND was hard enough not care about the hard luck sob stories from tenants, I would seriously consider giving it a go.

My husband says our PM is a hard nosed B**** and thats the way he likes it. I would find it extremly difficult to raise someones rent or do some of the other unpleasant things that PM's have to do and I like the fact that the tenants currently have no idea where I live, my phone number or what I look like. I am planning to attend 1 inspection per property this year however so they'll know what I look like then.

At this point (apart from the time involved) I dont think I have what it takes to do it, wish I did but I have to harden up a bit.

Thanks for your advice mate. I am also the benevolent kind as well. I would succumb to sympathy and hate to displease anyone - I would probably give them free rent if they demanded it, hahaha. I guess this is one of the rare situations where you should go and employ the biggest d**khead you could find , although there is a fine line between playing hard ball and scaring any potentially 'good' tenants. But that is another issue altogether.

 

[wylie]

Got a quick question and would like some opinion on this.

Would you guys 'generally' go with a PM if say, you were leasing out a 1 or 2 bedroom dwelling given that doing it privately would potentially only give you marginal savings? By this, I mean the savings on a weekly basis may result in only $50 or so (just some arbitrary number I plucked) although you run the risk of doing the property inspections yourself, finding a plumber or electrician yourself, answering tenants phone calls yourself, probably copping abuse as well at 3am in the morning etc... thereby wasting a lot of valuable time.

Seriously, this just is not the case. We never get any 3am calls, actually never get any calls at all. I find managing a piece of cake for 99% of the time. I quite literally leave my tenants alone unless I need to let them know something or organise something like insulation (just recently). This saves me $42 per week for the $495 per week house at 8.5% management fee (before all the "extras" that they take on top for re letting etc).

In my opinion, I would probably only go private if I purchased a run down (but livable) house where I can modify the floor plan and make say, 7 bedrooms and charge each person (probably students) say $150 because the marginal benefits would be great and I don't think many PM's out there would recommend packing 7 or 8 guys in an originally 3 bedroom house.

That sounds risky anyway..... legality? fire regulations? boarding house rules? fire doors? etc etc

So, would I be correct to assume that the majority of you guys would get a PM for 1 or 2 bedroom dwellings, as it is not worth the trouble???

I think most people get a PM for most IPs because they don't like the personal contact (I don't mind it), don't have time to do it (I do have the time) or don't like finding a tenant themselves.

There were times in our younger days when we simply could not afford to pay a PM because we needed every cent. Now we are not in that position, I still don't plan to hand over $42 per week per house for something that I find so easy.

 

[DeeHwa]

I think most people get a PM for most IPs because they don't like the personal contact (I don't mind it), don't have time to do it (I do have the time) or don't like finding a tenant themselves.

There were times in our younger days when we simply could not afford to pay a PM because we needed every cent. Now we are not in that position, I still don't plan to hand over $42 per week per house for something that I find so easy.

$42 per week per house. Wow, you really did your sums and worked it out thoroughly!!! Thanks for giving me an idea on the general week by week savings. Anyways, I just find/anticipate it being hard because I ain't a confrontational person (probably a weakness I guess) so I would be a sh*t PM anyway, hahaha

oh, in regards to packing 7 or 8 guys in a house. I was coming from purely a cash flow and yield perspective. Most people would do it with very little regard as to whether it is legal anyway (I think) - and I doubt foreign students care about fire doors, acoustic insulation, egress distances etc... as stipulated in the BCA and afterall, it is probably one of the easiest ways to dodge income tax I might add.

 

[marg4000]

oh, in regards to packing 7 or 8 guys in a house. I was coming from purely a cash flow and yield perspective. Most people would do it with very little regard as to whether it is legal anyway (I think) - and I doubt foreign students care about fire doors, acoustic insulation, egress distances etc...

Better read up on leglislation. There are laws regarding these things. Otherwise, in the event of a catastrophe, you may well find yourself in prison, with plenty of time to read.
Marg

 

[gooram]

I find it very satisfying managing myself for a number of reasons.

I know my tenants, I get to talk to them before I pick them, they know me. The result is I look after them and they look after my house.

I get to choose what gets fixed, and who does it, if I can do it myself and save a few hundred banks, that's a good result.

Tenants would never call at 3am in the morning unless the house was burning down, in which case you would want them to call.

I spend all of about a few hours a year dealing with management, of course re-letting is different.

Downside in my experience is that you get alot of applicants that go after the private landlords because they can't get a rental through RE agents. But you can mitigate this by signing up for access to the tenancy database, but liabilities are pretty easy to pick, similarly, good tenants are easy to pick if you check references and use your instincts.

 

[jaycee]

Ahhh, I always wait for this comment to show and it invariably does comes up. Fantastic well thought argument, until the number is a few hundred grand.





Every investor knows that you cannot do what YOU do best all the time, cos the credit boys at the Bank won't let YOU. One needs to wait a few years when YOU are hocked up to the eyeballs to let the values go up and the LVR's go down before YOU can proceed to do what YOU do best.

In the meantime, whilst YOU are waiting.....

even when it is only few grand (we're all so rich, who gives a rats about a few grand hey ?)

Even when it is ony a few grand, it is the 2nd biggest expense on my IP after interest....

PM got tenant in & then I sef managed. Theyve been ther 18 mth and I/m waiting for the signed copy of the new 12 mth lease to arrive in the post any day now. They did te me they woud be moving out after this 12 mth lese, at which point I reckon I'll use a PM to find the next tenant & probably manage it, depends we'll see. For my recent purchse I'll be doing the smae when it settles in a few weeks

 

[Spectre]

For some of the newbies - theres a thread on the forum where Dazz (TAFKAD) - as I understand it - is now a professional 'rent collector'. http://www.somersoft.com/forums/showthread.php?t=50445

I'm waiting for a novel or speaking at property seminars to come out of it. I'd figure a good bit of the book is already on the forum, it just has to be salvaged.

 

[Dazz]

I'm waiting for a novel or speaking at property seminars to come out of it.

Don't hold your breath chief.

 

[Spectre]

Ok. Just Channel 7 in the morning then with Kochie, Mel & Ross.

 

[BayView]

I think most people get a PM for most IPs because they don't like the personal contact (I don't mind it), don't have time to do it (I do have the time) or don't like finding a tenant themselves.

There were times in our younger days when we simply could not afford to pay a PM because we needed every cent. Now we are not in that position, I still don't plan to hand over $42 per week per house for something that I find so easy.

We have PM's because;
a) we are nowhere near or properties to do regular maintenance (Frangers is the closest at 30 mins away)
b) I can't afford the time right now.

I guess it can be equated to what your time is valued at too.

If you are earning $50 per hour, and pay the PM $42 per week, it's cheaper to simply get a PM and stay at work of you want to.

 

[Dazz]

If you are earning $50 per hour, and pay the PM $42 per week, it's cheaper to simply get a PM and stay at work of you want to.

.....and, if you earn $ 70 per hour, and pay the PM $ 3,000 per week, it might be cheaper to just do it yourself.


Numbers always dominate principles.

 

[wylie]

We have PM's because;
a) we are nowhere near or properties to do regular maintenance (Frangers is the closest at 30 mins away)
b) I can't afford the time right now.

I guess it can be equated to what your time is valued at too.

I forgot about distance. Our IPs are in the same suburb as us, so quick repairs are cheap and easy for hubby.

Regarding what my time is valued at....... I am a "domestic engineer" so I have all the time in the world. To be honest though, after holding say two opens for an hour each to find a tenant, spending an hour filling in and printing the forms at the beginning of the tenancy, I (truly) spend less than ten minutes each fortnight writing receipts.

We only have a couple of IPs though, but my mum has always handled multiples of ours even when holding down a full time (actually twice the hours of full time) position as a real estate agent.

The difference (I think) is that I was 15 when my parents got their first IP so I am extremely comfortable with all aspects of the management role. I can understand someone new to the game being hesitant.

 

[BayView]

.....and, if you earn $ 70 per hour, and pay the PM $ 3,000 per week, it might be cheaper to just do it yourself.


Numbers always dominate principles.

I'd love to have a $3,00 p/week PM bill.

 

[jaycee]

lookin gat a pm for my recent purchase settling next week.

So I got emailed the charges & services offerd by one.

I listed all the ones which would apply to getting a new tenant for 1 x 12 mth lease and manage it till the tenant leaves in 12 mth, including outoging inspection. I worked it out to eequate to 16.6% of the rent paid...

They include a charge for depositing money into your account (?) annual statement / 1 wwek's rent for lease renewal / $55 internet advertising & print advertising "at cost".... On top of the 8.5% + GST fee..

Difficult one, I see charges for things I dont think you should get charged for (paying money into account ? my bank doesn;t chrge me I'm sure...)....

 

[our obsession]

Snort:

I personally don't think i want the hassle of collecting rent etc... Opening the home for countless inspections etc... However, i also know i'd do a better job reporting on the condition of the home given i know how slack the PM's were when i was renting (EG: Inspections supposedly every 3 months but we only have 1 visit in 3 years - and i found out from the owner he was being charged as if it was every quarter).

Anyone have any advice for a first time IP purchaser that hasn't done either before?

No advice for you, but can share what we decided. We do a bit of both.

Those closest we manage, rent money is direct credited into our account.

We have never had to open FI...our places have been rented before paint dries.

Our PM's do their work. We are discounted on management fees because of multiple IP's listed/rented with each of them.

So far so good.

 

[Xenia]

I like to use my time to make money not save money.

 

[Bazza]

I like to use my time to make money not save money.

Do you really mean that you don't manage your own IP's. I thought this would be too easy for someone who is a PM?

Cheers,

Bazza