Self Management

[traveller]

Hi All,

I have decided to give the PM of all my IPs to my father. Although he has not involved himself in direct PM before but he is quite experienced in the field in general with the tenancy law and dealings in the RE sector throughout his life. He has also familiarized himself completely with the Consumer Affairs(Victoria) forms and publications thoroughly.

My question for those who are self managing the IPs is that- Do they do it in their own name or do they do it as a company? Are their any liability issues that i need to be aware. ANy other issue i need to be aware of?

For new tenants and lease establishment i have got my current PM to do the job in return for a week rent, so advertising and tenant screening and selection is not an issue.

From Landlord insurance point of view - AAMI is cool with self management.

Thanks in advance.

 

[traveller]

Hello All,

50 views but no reply.

Just wanted to know from the people who self-manage whether
1- They represent themselves as a company or do they do it in their own personal names.
2- Do they take an Professional Indemnity Insurance?

I will like to take over the PM from the Agency asap so any assistance in this regard will be very appreciated.

Thanks-Daman.

 

[wylie]

We self-manage in our own names with no professional indemnity insurance.

 

[Rob Williams]

I self manage in my own name. I have LL ins only.
I use a REA to front for me in advertising for tenants. That weeds out the bad apple tenants who seek out private landlords as a way of avoiding the various tenant database checks etc.

 

[btc]

hi Traveller,

we self manage some of our properties, and we put it under our own name as its no point to put under a company, as all the money go to the same pocket. Unless you are doing it for tax purpose.

get landlord insurance.

good luck.

 

[xcesiv]

Does your landlord insurance cost more because you self manage

what percentage do you allocate as your self managed income.

 

[wylie]

Does your landlord insurance cost more because you self manage

No

what percentage do you allocate as your self managed income.

Hubby pays me roughly what he would pay an agent (without all the extra fees they seem to charge to everything, even for breathing), and I do a much better job . And he gets extras that only a wife can (or should) supply .

 

[jaycee]

Even if you use a PM, the lease contract is between you/your company and the tenant.

Not sure if it matters if you are self managing or not when it comes to whether you choose a company or not..I'd have thought it was more to do with in what name the house was purchased.

 

[traveller]

Thanks for all the replies...looks like doing it in personal name is good enough. I have LL insurance already so will continue with as is.

Hopefully all goes well.

 

[Xenia]

Does your landlord insurance cost more because you self manage

landlords insurance that is all inclusive and covers everything with no excess is only available for properties managed by professionals.

landlord insurances recomended by banks is very limited and does not cover losses fully. I've had many bad experiences with them when I was self managing as an amature investor. Never again!

 

[jaycee]

yep I've heard that bank's insurance is not up to par.. that was for their building insurance policies !

Luckily they aren;t the only options - Rent Cover plus does me ok.

 

[wylie]

landlords insurance that is all inclusive and covers everything with no excess is only available for properties managed by professionals.

That is not correct. We have all inclusive insurance with no issues about being self-managing.

 

[xcesiv]

That is not correct. We have all inclusive insurance with no issues about being self-managing.

have u made a claim

 

[wylie]

Not with this company, but with a claim we made with another company (CGU?) they could not have been more helpful. We had no issues whatsoever, and the loss assessor was not stingy at all. We thought we might have to fight to get what we were due, but no problems.

Our broker put us on to this company, and we go back a long way. If there were known issues with them, he would have pointed us elsewhere.

The main issue seemed that we needed to ensure we had a fixed term lease, which we generally do. Sometimes, we have let tenants run on to a periodic lease, but we need to ensure that we always have a lease in place.

The fact that we self-manage was a non-issue.

 

[traveller]

I echo Wylie's observation. I am with AAMI and have explicitly got this clarified with them that i will be self managing. They said they have NO objections whatsoever...

And if AAMI is ready to do this - which is one of the bigger insurance companies then i think others will also follow suit soon.

Might be one of the things the Agency PMs propogate to scare LL's and increase their business

 

[wylie]

Our current policy is with AMP but we have had CGU and others before this. I know Terri Sheer will not take us on as self-managers, but plenty that will.

 

[Burbs]

Back to the self-management concept in general, I have a couple of thoughts based on my own experiences of running the entire gamut from pm to self-manage to real estate agent.

Stage 1 - Used a PM - good in that I did not know what to do at this stage (first IP), bad in that I naively thought PM's would take care of my property and all related concerns. They did not (neglect, extended vacancies, overcharging, not pursuing bad tenants), which led to stage 2.

Stage 2 - Self-managed in own name, direct contact with tenants - rapid learning curve, many bad tenants which in retrospect I could have avoided but part of the learning process, full control (and responsibility). Bad features are being targeted by bad tenants, time commitment, personal confrontatoins with ferals. Too close to tenants, which led to stage 3.

Stage 3 - Self-manage in own name but some third-party aspects - introduce PO Box (instead of home address - never give out your home address or even suburb to tenants), mobile phone (instead of home phone), third-party rental payment provider (instead of giving bank account details. Still too close to tenants, dont want them knowing I am the owner, which led to stage 4.

Stage 4 - Self-manage in Company name plus third-party - have to be careful here with licensing laws, bit of a grey area, I took the view that there was common ownership between the company shareholders and the properties. Huge improvement here - able to answer the phone and correspond in company name, much more tenant respect, much less phone calls after hours and on weekends. Of course there are the legacy issues for older tenants who still know you from your self-manage in own name days, but they gradually leave. Always good to meet tenants as a company representative, and to check their maintenance request or application "with the owner". Taking a lot of my time now which led to stage 5.

Stage 5 - Self-manage in Company name plus third-party plus an employee - part time initially and then full time- now we are starting to free up some personal time, and develop some distance from every little property matter. Really getting into property management as a profession which led to stage 6.

Stage 6 - Start real estate agency. Totally life-changing, another story entirely. However from a property management point of view, all my tenants are now fully arms length. Huge expense, licensing laws, contracts, employees plural, and dealing with people who can be even more difficult than tenants sometimes...owners! The systems and procedures I have developed and use through my own agency are vastly superior to even my best owner management days. Much lower arrears, almost no home-grown evictions (just imported ones when we take over a management from an owner or other agent's mess). Would never go back to owner management.

Obviously these stages took place over a while, ten years in fact, and the development of property management followed the growth of my own investment portfolio.

Burbs

 

[traveller]

Very informative post Burbs. Its really good to read posts like this.

I was also wondering if there are is any reading material or Books available on the topic of Property Management.

I have found one on the REIQ website:
http://www.reiq.com.au/Shop/bookclub_property_management.asp

Has anyone read this book and is it Queensland specific? Any other good books or courses which can help. Eventually i plan to self manage upto 8 IPs although i will do it in a phased manner, learning along the way.

Thanks once again..

 

[steveadl]

As far as the company name vs personal name - I'm assuming the lease would have to be in the name of the entity that owns the property. I can see all sorts of problems if you own the property in your name but on the lease that everyone has signed the lessor is "Pigs in Mud Pty Ltd". Probably give insurance co's and courts grounds to nullify the lease.

You can always put your name on there and use a PO box if you want to keep your address private - technically not supposed to but one of my PM's has been doing it for years without problem.

 

[traveller]

2 things:

1- Providing PO Box will not hide the suburb. You still have the suburb where the PO Box is open.

2- Lessor will still be the person who own the IP. I think what Burbs meant was that the PM details will have the company name...