Self management of Investment Properties

[WebBoard]

From: Dan Hayes


Dear Investors

I am interested in any advice / warnings / encouragement regarding managing your own rental properties.

I have two properties on the Central Coast of NSW that have been managed by a local RE Agent for past 2 years. Whilst I am not totally dissatisfied with their service I am beginning to question their value compared to the cost of their management - approx $2000pa for both properties.

As I am local and have flexibility in my work I am able to respond to emergencies / issues as they arise. I am more concerned regarding finding new tenants when required and also risking my current tenants with this change.

Any comments / advice would be much appreciated. What are the pitfalls? Are you a self managed Landlord? Is it worth it?

Thankyou
Dan

 

[Alan H]

Reply: 1
From: Alan Hill


Dan,

I've self-managed for five years and have never had a 'professional' manager. I don't doubt there are many good ones out there but I think if your local, you keep on top of things and you try and be a responsible landlord, it can be a very educational and rewarding experience while saving you money at the same time. Same with everything, do your homework though and make sure you don't go into it with your eyes closed. Personally I think I take more care and interest who will move into my properties and also it allows me to keep better in touch with some of the issues that otherwise I may not have even been aware. If you start by sticking to many of the standard REI documents such as tenancy application forms, leases etc you will be heading in the right direction. Standard lease packs from any newsagency also include a standard 'Renting Guide Booklet', Bond Lodgement and Claim forms etc. so ensure you read every word of these documents. There are a few books around that might also be useful. 'The Desktop Guide to Residential Property Management' by Bob Walters is one that comes to mind. With regards to rental payments I simple open up a bank account, give the tenant a deposit book and have them pay the rent at any branch. Checking the account on the internet at the beginning of the month allows you to check payments quickly and easily. I have always had an excellent relationship with my tenants but ensure you keep in mind that you are doing this as a business and don't fall into the trap of becoming 'to friendly' with your tenants to the point you feel difficult about raising rent! I hear of it happening! Finally DO get Landlord Protection Insurance. I use CGU and for $250 a year it will give you a lot of piece of mind. Especially when all the pessimists who hear you are self managing start to tell you stories of how they lost tens of thousands of dollars through lost rent or damage. In most cases, if you wind up wearing anything like this it is because YOU haven't taken the necessary precautions such as adequate insurances. In short I've had some amazingly good tenants through to one eviction. Worst case situation was quite manageable though. I'll be interested to hear others experiences but I haven't found it too difficult to be honest. Good luck in whatever you decide to do.

 

[Rolf Latham]

Reply: 1.1
From: Rolf Latham


Hi Alan
Who better than the originl buyer to sell the the nice parts of the property to a tennant !

Must be worth a few bucks extra a week on that basis alone

ta

Rolf

 

[WebBoard]

Reply: 1.1.1
From: Caroline Wilson


Dan,

Being a renter in the past - I was never interested in renting a property that was owner managed- simply because I didn't want to have to deal with the possibility of them being unreasonable - I just didn't want to go there. But hey maybe I'm just weird!

Just another angle to consider.

 

[GoAnna!]

Reply: 1.1.1.1
From: GoAnna !


Hi Dan

I have self managed my properties for over 10 years now without a hitch. I always ensure that I follow all the appropriate procedures and fully check out the prospective tenants. I think that things begin to come undone if you break rules like letting the tenant move in before they have paid bond etc. Dodgy tenants soon sense how far they could push you. For this same reason I have previously turned down the offer of 6 months rent up front.

I agree with Rolf about the "selling" the property I own. The reasons I purchased it are the features i advertise and I am able to explain little details that an agent might be unaware of.

If you currently feel uncomfortable with the letting part you could leave this with the agent but attend to ongong management yourself.

Caroline may have a point about a group of tents preferring not to deal with owners however as an owner manager you can also tap into the group of tenants who do not like to deal with agents. They are frustrated by the lack of responsiveness of most agents as well as the time delay to getting anything fixed.

In terms of emergencies I find the yellow pages invaluable ; )

GoAnna !
Why not go out on a limb, that's where all the fruit is. (Mark Twain)

 

[michele_b]

Reply: 1.1.1.1.1
From: Michele B


I agree with all of GoAnna's comments. Property management is not difficult and I would continue to do my own except that time has now become more of an issue - and Murphy sees to it that when one IP needs attention, they all do!

Like any business, you need to systemise all processes and continually look for ways to streamline and improve the way you do things. My advice is to try it, learn from it and eventually when you do use an agent to leverage your time, be a demanding client!

Re maintenance, I have developed relationships with tradespeople who respond immediately to my tenants' cries for help and know when to contact me for out-of-the-ordinary expenditure. They are my preferred suppliers who value and want my ongoing business. There's trust on both sides obviously, but it's an efficient and cost effective way to provide the kind of service my tenants expect and pay top dollar for!

Like GoAnna, I have had many tenants who dislike dealing with agents. so there IS a market there! I unashamedly promote myself as a dream landlord (big selling point for many tenants) but then of course I have to deliver!

Try it Dan. There are lots of experienced people on this forum who can give you helpful suggestions to get you started and give you the confidence you need.

Michele

 

[WebBoard]

Reply: 1.1.1.1.1.1
From: The Wife


Hiya,

I also agree with everyones comments,'

I would like to add, that I dont do my own property management anymore, but I always give my 'rules' to my property managers, they are the same rules I use for nearly every situation.

A terrific summary of these rules are at my home page under :

The Top 10 Ways to Triple Your Effectiveness as a freestyler in one week!

My property managers always give me a weird look when I hand over a piece of paper with the rules on it, but they always call me back, and say how effective they are.

I like them a lot, lots of people have used them, and changed them slightly to suit their needs, I'm very pleased.

Another thing I used to cling to when I was doing my own property management, and things weren't as happy as I would have liked them, was my personal companies mission statement, here it is:

~Wherever you go, go as a leader

Whatever you do, do with integrity.

Whomever you serve, serve with caring.

Whenever you dream, dream with your all,

and never, ever, ever, give up.~



TW
~Life is a daring adventure, or nothing at all~

 

[IanF]

Reply: 1.1.1.1.1.1.1
From: Ian Findlay


Have I missed something TW, what is your home page?

I promise I'll put it at the top of my favourites!

Ian

 

[WebBoard]

Reply: 1.1.1.1.1.1.1.1
From: The Wife


hehehe...

http://users.bigpond.com/goldtree/the_wife/

I have already been told about the spelling mistakes ok *sniffle*

TW
~Life is a daring adventure, or nothing at all~

 

[WebBoard]

Reply: 1.1.1.1.1.1.1.1.1
From: Kevin Forster



My wife and I use an agent because we realized that we are a bit soft hearted when dealing with people directly and that the tenants may be able to sell us a sob story about why the rent is late and we'd buy it. Also when I rented - I stayed away from owner managers after I had problems with one visiting whenever he pleased. Not all owner managers are like that but once bitten, twice shy.

But I think this is just another aspect to consider aside from the financial ones.

 

[Jakk]

Reply: 1.1.1.1.1.1.1.1.1.1
From: Jakk Bass - The SLUM LORD



Hi Dan,
There was a time when I self managed my IPs but I only had a handful back then.
Nowadays I find that having a professional do the task frees up a lot of my time to investigate further opportunities.
The cost of professional management is 100% tax deductible, so why shouldn't I let the tax man pay for my free time.
If I were to self manage again my free time would be reduced and I haven't yet worked out how that can be claimed as a tax deduction. (I'm working on it though)
I get great enjoyment from finding and buying undervalued property, I get no enjoyment from attending Tenancy Tribunal appearances. To me the choice is clear.
Good Luck

regards
Jakk

"-Life is not a "brief candle." It is a splendid torch that I want to make burn as brightly as possible before handing on to future generations."
- George Bernard Shaw