self managing
- Thread starter roxy
- Start date
Sheesh, our local PM charges 15% of the rent PLUS 2 weeks to get a new tenant, 1 week to re-sign, more $$ for an inspection and more again to send out statements. Adds to around 20% of the rent all told.
The only one of those costs I agree with is the inspection one, as they are 110km away from my IP. Heck, I'm 35km away myself ...
If I had a PM the maintainence I need to do to the house next week (tenant is one of those ones who doesn't actually tell you what's been damaged, you have to find it yourself) would be via a handyman and I doubt they'd tell me and just dock it out of the dregs of the rent, where we can do it ourselves with a couple of screws and some stuff from Bunnings and it'll probably come to $60 not $200+.
The only one of those costs I agree with is the inspection one, as they are 110km away from my IP. Heck, I'm 35km away myself ...
If I had a PM the maintainence I need to do to the house next week (tenant is one of those ones who doesn't actually tell you what's been damaged, you have to find it yourself) would be via a handyman and I doubt they'd tell me and just dock it out of the dregs of the rent, where we can do it ourselves with a couple of screws and some stuff from Bunnings and it'll probably come to $60 not $200+.
Self-managing is not time consuming: pay bills every now and then and arranging to fix the odd broken thing = no big deal. Even though it's tax deductible, I'd rather save on annual PM fees and use my money to reinvest back in my property e.g. new air-conditioner, new stove. That way the value of my property increases, there's more to depreciate and the tenant is happy. Far better use of my money than PM fees.
In Victoria, all the legal requirements are in the one handy publication produced by Consumer Affairs in Victoria. They have all the relevant forms and everything is in plain English. You don't need to be a trained PM to understand this information.
I've never had an issue with late rent, eviction or disputes with tenants. If I did, I might use a PM to help but Consumer Affairs could also provide free advice.
Really the only time I'd ever use a PM now is to find a tenant. And then I'd only pay $100 for internet advertising + no more than 2 weeks' rent as the letting fee. It's not rocket science to check references of applicants and show people around the property for 15 minutes. I'd do that myself if I wasn't working.
In Victoria, all the legal requirements are in the one handy publication produced by Consumer Affairs in Victoria. They have all the relevant forms and everything is in plain English. You don't need to be a trained PM to understand this information.
I've never had an issue with late rent, eviction or disputes with tenants. If I did, I might use a PM to help but Consumer Affairs could also provide free advice.
Really the only time I'd ever use a PM now is to find a tenant. And then I'd only pay $100 for internet advertising + no more than 2 weeks' rent as the letting fee. It's not rocket science to check references of applicants and show people around the property for 15 minutes. I'd do that myself if I wasn't working.
your right, gross rate is 7.7%, after tax deductabilty its somewhere between 3 and 4% out of pocket expenses.
it really is a case by case issue though, maybe in a few years i may have a change of heart but my time is worth more that the couple of % off the rent 'at the moment', primarly becuase i am in IT and i can get a better benefit from investing my time in self education than doing repairs on the IP.
as noted though, each case is different as is everyones circumstances
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I'm a PM convert.
I self managed for about 5 years and while there were no horror stories, I just got a bit sick of it. Adverstising and finding new tenants was the main issue for me, the 30min drive up the freeway every weekend for 1 or two months (sometimes) got a bit tiresome.
My new PMs are great (one interstate prop already had a PM so handed over two perth props this year). One however is costing me alot of money because they're finding stuff I never would have. Which I don't mind, it's all stuff that needs doing.
Anyway, I recommend both approaches, what you choose depends on how much you value your time, or how much you want to save the extra $$.
Self managing can be fun too, and a learning experience. You might learn that you don't wanna do it. Or you might learn that you wanna be a RE manager
I self managed for about 5 years and while there were no horror stories, I just got a bit sick of it. Adverstising and finding new tenants was the main issue for me, the 30min drive up the freeway every weekend for 1 or two months (sometimes) got a bit tiresome.
My new PMs are great (one interstate prop already had a PM so handed over two perth props this year). One however is costing me alot of money because they're finding stuff I never would have. Which I don't mind, it's all stuff that needs doing.
Anyway, I recommend both approaches, what you choose depends on how much you value your time, or how much you want to save the extra $$.
Self managing can be fun too, and a learning experience. You might learn that you don't wanna do it. Or you might learn that you wanna be a RE manager
I've always managed my property myself. I make sure they use direct debit and that they know there is no such thing as arrears. I try to be direct about this and tell them quite seriously it's not going to happen. I also type up a list of things which are the duty of the tenant, Such as no vehicles allowed on the grass. septic tank care etc. It's probably got no real legal legs but it shows you're serious about enforcing the rules.
Actually Dylan if that list is included in the special conditions of the tenancy agreement, it certainly has real legal legs. I now self manage too and include special conditions such as changing light bulbs (got burned when an agent left that one out years ago and not a single bulb worked after the tenants vacated).
I believe in treating tenants (like all people) with respect and courtesy. In return, I've always had my rent paid on time and after all these years have never been to a tribunal or had eviction issues. I always prefer to give tenants their bond back in full, so I'll give them a reasonable opportunity to reclean or fix anything after vacation. People really appreciate this.
I also carefully select tenants that I believe will stay long term and I don't overcharge to encourage them to stay (made the mistake of overcharging years ago, resulting in a property being vacant for months which cost me a fortune).
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Interesting time for this topic to come up. As I have just purchased my 1st Ip yet to take ownership, 3 weeks to go (bugger). Then a fair size reno before I can put a tenant in.
So I have been reading with mixed feelings to engage a PM or just have a crack myself.
I spoke with the agent that I purchased from and he was 7% plus one week rent to get tenant ($300). Which is not a great deal and unless I got the figures wrong is a little under $1400 a year if I only get one tenant in a year otherwise will go up I guess $300 a shot.
As the place will be all but new after the reno and I intend on taking heaps of photos to keep on record just in case.
Now the things I am looking at are Landlord insurance, legal stuff re tenant and landlord rights, organising the correct paperwork for tenant to sign, have started to set a folder up with all the forms and timings for inspections.
Will organise a list of local trades for any emergencies that may arise in case I cannot get there. Property is only 30 odd k away so not that bad.
While I'm sure I have missed things I'm trying to be as informed as I can.
I also noted people appear to do a list of conditions up, now I have a standard one but what else do you include in your list? Do you ensure they have content insurance? not sure you can ask this anyway.
The advantage I see in a PM is they can check a tenant out re past history on a data base so $1400 my be a cheap investment
Are there other things I should be considering?
Being my first IP it maybe a better option to have a PM to get the ball rolling until I am more confident to take the task on.
Brian
So I have been reading with mixed feelings to engage a PM or just have a crack myself.
I spoke with the agent that I purchased from and he was 7% plus one week rent to get tenant ($300). Which is not a great deal and unless I got the figures wrong is a little under $1400 a year if I only get one tenant in a year
otherwise will go up I guess $300 a shot.As the place will be all but new after the reno and I intend on taking heaps of photos to keep on record just in case.
Now the things I am looking at are Landlord insurance, legal stuff re tenant and landlord rights, organising the correct paperwork for tenant to sign, have started to set a folder up with all the forms and timings for inspections.
Will organise a list of local trades for any emergencies that may arise in case I cannot get there. Property is only 30 odd k away so not that bad.
While I'm sure I have missed things I'm trying to be as informed as I can.
I also noted people appear to do a list of conditions up, now I have a standard one but what else do you include in your list? Do you ensure they have content insurance? not sure you can ask this anyway.
The advantage I see in a PM is they can check a tenant out re past history on a data base so $1400 my be a cheap investment
Are there other things I should be considering?
Being my first IP it maybe a better option to have a PM to get the ball rolling until I am more confident to take the task on.
Brian
Thanks Y33 I was aware of this, but just wondered how much REAL effort they put into this if they don't get the running costs, so to speak.
I have so many questions to ask from more knowledgeable people on here in this field than I, I'm sure I will being asking soon enough.
I mean the agent I was considering was going to send me information and costs to manage my place, that was 4 days ago have not heard anything so far, SOOOOOOOOO I have to wonder if this agent is even worth bothering about.
I am seeing another agent this Saturday re a house just down the road he is keen to manage the place I have just purchased. Be interesting at least.
Brian
I have so many questions to ask from more knowledgeable people on here in this field than I, I'm sure I will being asking soon enough.
I mean the agent I was considering was going to send me information and costs to manage my place, that was 4 days ago have not heard anything so far, SOOOOOOOOO I have to wonder if this agent is even worth bothering about.
I am seeing another agent this Saturday re a house just down the road he is keen to manage the place I have just purchased. Be interesting at least.
Brian
Hi Brian. What area is the house you are wanting to have tenants found for and/or managed?
We found over many years that agents were happy to take our details, find us a tenant in return for a week's rent, but never came through. We just never heard from them. I used to wonder why they bothered saying they were happy to do it.
However, over the past few years I have had great service from Harringtons (based in Morningside) and also Brisbane Realty (based in Greenslopes). Both have found us fantastic tenants and happy to do so knowing we were managing ourselves.
We found over many years that agents were happy to take our details, find us a tenant in return for a week's rent, but never came through. We just never heard from them. I used to wonder why they bothered saying they were happy to do it.
However, over the past few years I have had great service from Harringtons (based in Morningside) and also Brisbane Realty (based in Greenslopes). Both have found us fantastic tenants and happy to do so knowing we were managing ourselves.
Hi Wylie,
It is in Woodridge, spoke with agent that I purchase off and he was sending info through BUT, gut feeling is not the person to go through, asked for information last Saturday and I had to ask again today and I also asked for other properties for me to look at and ummmmmmmmm NIL and I do know he has some.
Another agent is shwoing me places tommorrow so will ask him about managing etc. Will say not that keen to buy two in the same street rather spread to other areas in case this area falls short so to speak.
Brian
It is in Woodridge, spoke with agent that I purchase off and he was sending info through BUT, gut feeling is not the person to go through, asked for information last Saturday and I had to ask again today and I also asked for other properties for me to look at and ummmmmmmmm NIL and I do know he has some.
Another agent is shwoing me places tommorrow so will ask him about managing etc. Will say not that keen to buy two in the same street rather spread to other areas in case this area falls short so to speak.
Brian
Manage yourself as getting a good PM is a matter of luck.
Those in business appear competent from what I have seen but their staff ( PM)let them down, and usually move on after a year or so.
PM are usually dealing with around a 130 properties more or less so its easy for them to not be so concerned with your property.
If you stuff up you can always revert to a PM.
The most important thing is picking the right tenant.
Those in business appear competent from what I have seen but their staff ( PM)let them down, and usually move on after a year or so.
PM are usually dealing with around a 130 properties more or less so its easy for them to not be so concerned with your property.
If you stuff up you can always revert to a PM.
The most important thing is picking the right tenant.
You are assuming the PM will do a proper and thorough job and will earn the money you pay them......................IMHO big mistakeInteresting time for this topic to come up. As I have just purchased my 1st Ip yet to take ownership, 3 weeks to go (bugger). Then a fair size reno before I can put a tenant in.
So I have been reading with mixed feelings to engage a PM or just have a crack myself.
I spoke with the agent that I purchased from and he was 7% plus one week rent to get tenant ($300). Which is not a great deal and unless I got the figures wrong is a little under $1400 a year if I only get one tenant in a year
As the place will be all but new after the reno and I intend on taking heaps of photos to keep on record just in case.
Now the things I am looking at are Landlord insurance, legal stuff re tenant and landlord rights, organising the correct paperwork for tenant to sign, have started to set a folder up with all the forms and timings for inspections.
Will organise a list of local trades for any emergencies that may arise in case I cannot get there. Property is only 30 odd k away so not that bad.
While I'm sure I have missed things I'm trying to be as informed as I can.
I also noted people appear to do a list of conditions up, now I have a standard one but what else do you include in your list? Do you ensure they have content insurance? not sure you can ask this anyway.
The advantage I see in a PM is they can check a tenant out re past history on a data base so $1400 my be a cheap investment
Are there other things I should be considering?
Being my first IP it maybe a better option to have a PM to get the ball rolling until I am more confident to take the task on.
Brian
brian, you seem organised and thorough. go for it
ONLY if you are paying 50% tax.
Don't forget that on top of the 7.7% (or whatever you pay) most agents charge postage each month (some $7) which is another $84 plus statement at end of year (some $30) which is another .5-1% (roughly).
NBS- don't forget to check your landlord insurance. Some won't cover you if you self manage.
I self managed my first only because I kept the existing tenants and it was self managed. I just got them to sign a tenancy agreement. They didn't direct debit and I had to ring them often. I really don't have time now but once I cut to part time work I'll do them myself.
Although I'm not paying high fees like some people. If they were 10% plus I'd rethink my situation.
True, for the majority of people, it would be about 5% net, oif it was 7% gross... not 3 or 4%.
And as poitned out, it sems rare that this would be the total charge anyway, it woudl be higher. In Perth the average fees for everythign else uis the same as the first management fee.
Not saying that's a problem, but if we are going to advise / compare etc, should we try and be a little accurate.
And as poitned out, it sems rare that this would be the total charge anyway, it woudl be higher. In Perth the average fees for everythign else uis the same as the first management fee.
Not saying that's a problem, but if we are going to advise / compare etc, should we try and be a little accurate.
I have a booklet (more like novel) from an insurance company re landlord insurance and sometime this weekend was going to read it, mind you will now check the self manage bit first may save a lot of reading
. I just got the agents cost structure and the Management fee 7.5% + GST , Monthly Statement fee $5.00 + GST, Letting fee One weeks rent (approx $300) + GST. From what is on his information they have 550 properties being managed with 7 staff to manage them which is about 80 each.
Brian
Interesting time for this topic to come up. As I have just purchased my 1st Ip yet to take ownership, 3 weeks to go (bugger). Then a fair size reno before I can put a tenant in.
So I have been reading with mixed feelings to engage a PM or just have a crack myself.
I spoke with the agent that I purchased from and he was 7% plus one week rent to get tenant ($300). Which is not a great deal and unless I got the figures wrong is a little under $1400 a year if I only get one tenant in a year
As the place will be all but new after the reno and I intend on taking heaps of photos to keep on record just in case.
Now the things I am looking at are Landlord insurance, legal stuff re tenant and landlord rights, organising the correct paperwork for tenant to sign, have started to set a folder up with all the forms and timings for inspections.
Will organise a list of local trades for any emergencies that may arise in case I cannot get there. Property is only 30 odd k away so not that bad.
While I'm sure I have missed things I'm trying to be as informed as I can.
I also noted people appear to do a list of conditions up, now I have a standard one but what else do you include in your list? Do you ensure they have content insurance? not sure you can ask this anyway.
The advantage I see in a PM is they can check a tenant out re past history on a data base so $1400 my be a cheap investment
Are there other things I should be considering?
Being my first IP it maybe a better option to have a PM to get the ball rolling until I am more confident to take the task on.
Brian
Brian,
you can do most things a PM does yourself. For example, it is now possible to do a tenancy database check even if you're self-managing. Self-manaing really isn't as daunting as many think. At the end of the day, no PM is going to care as much you do about your property, so why would they do a better job than you?
Brian,
you can do most things a PM does yourself. For example, it is now possible to do a tenancy database check even if you're self-managing. Self-manaing really isn't as daunting as many think. At the end of the day, no PM is going to care as much you do about your property, so why would they do a better job than you?
I agree wholeheartedly with Michaela. I have both managed and self-managed properties. My concern with PMs is not so much the cost but how good a job they do and how they treat my tenants. For properties close enough that I can physically keep an eye on them, I would rather self-manage than leave the job to someone who has a hundred other properties to manage. In my experience, there are a few good PMs out there but they're not easy to find.
And just one more little tip for property owners. I ALWAYS send my tenants a small gift when they move in (usually bottle of wine and a box of chocolates) and something at Christmas to thank them for looking after the place. In 7 years of owning several properties I've only ever had one tenant not pay the rent on time and I've never had a single issue with tenants not maintaining my properties. Be firm up front and do include your conditions in the lease but be fair and treat them well and you will generally reap the rewards.
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