self managing

I had an IP that was managed by a PM and one that I self-managed.

I found the one that was managed by the PM was more like a 'lazy' investment - because as rent was being paid and was located 1.5 hours away, I wouldn't think about it much.

3 years later, I decided to sell this IP, and I couldn't believe the state of the IP. There weren't holes in wall etc, but it was disgustingly dirty and needed a complete re-paint before selling. I mean I know this happens but the IP was purchased new only 3 years prior. I felt the PM let me down but dems are the breaks I guess.

The second IP I owned was self-managed. My tenant kept the place immaculate as I would collect the rent personally (old fashioned way) because it was a 2 minute walk from my PPOR. One day I received a call from the neighbour (who knew me) that he was walking around the front yard naked and if I didn't do anything about it, they would.

I ended up talking to him and we were both humiliated and he moved out soon after.

Anyway morale of my story is - choose what suits you - you could have horror stories both ways.

Good luck....
 
We have four IPs and we self-manage all of them. Our strategy is as follows:
1. Buy a grotty property;
2. Clean it up (or do a full-blown reno, depending on what's needed);
3. Furnish property (either just major furniture, or completely self-contained including linen, pots, pans, etc);
4. Self-manage (advertise for tenants, organise application form and lease documentation, lodge bond with the state bond administration board, conduct inspections, etc); and
5. Sell property.

Item 5 is optional of course ;) But we did the whole lot recently, and sold one of our properties for a profit of 30% on what we'd bought it for (including all reno costs). Part of this was because we sold it furnished, and with tenants paying premium rent as a result.

But yes, we definitely self-manage, we find it's very rewarding.
 
Jen_PFR said:
3. Furnish property (either just major furniture, or completely self-contained including linen, pots, pans, etc);
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How much of a premium do you find this adds?

We are building a new house and have plans to upgrade quite a bit of our furniture and kitchenware when we move, so with the exception of a fridge and washing machine (easily sourced) we could leave our old house furnished and even with a largely equipped kitchen. The market for rentals here is mostly out-of-town transient type high income workers who pay frighteningly high rents anyway.

Otherwise we were planning a garage sale to get rid of our excess Stuff, so obviously I wouldn't be fussing too much about the furniture being pinched or damaged by tenants.
 
It depends on what we put in, obviously. For a furnished one bedroom unit (so all major furniture but not linen, crockery etc etc) we can do it for around $1500. This includes fridge, bed and mattress, couches, dining table + chairs, TV, chest of drawers, wardrobe, portable heater, pedestal fans for each bedroom etc. We typically do it by looking through online places like Gumtree and also the Quokka. It's amazing the stuff you can pick up second-hand. If we're going the whole hog (completely self-contained, includes all the above plus linen, crockery, cutlery, pots, pans etc) we use places like Kmart and Spotlight. For a one-bedroom place, this will typically cost an additional $500-$600.

In terms of rental return: For a completely self-contained one bedroom, we get a rental return of $300/week, in areas that usually command around $190-$200/week for unfurnished. For completely self-contained two bedroom units, we get between $450 and $550 per week, in areas that usually get $250/week. It's a significant difference and can definitely make a negatively geared investment become positively geared.

It does take more time and energy to manage, though. For example, we provide a fully itemised list of all contents (eg. six teaspoons, six dessert spoons etc) at the commencement of the tenancy, which we then have to check at the end of each tenancy. We also do all our own apartment 'turnovers', that is at the end of each two-month tenancy we go through and check the condition of every item (eg. are there any scratches on teflon coated pans? Do they need to be washed/replaced? Is all the linen okay or does it need replacement? etc) plus all the cleaning ourselves. However, we find it's worth it for us. Your mileage may vary ;)
 
Ok, that's interesting - that's a very high premium and the option had slipped my mind.

This house is a small cottage with a HIA order on it (which means the SA government decides what rent we can charge for it) but that only affects base rent, not extras like being furnished. Base rent for this house would be around $200-270pw but plenty of workers are willing to pay $100 per NIGHT at the pub and then return to their wives on the weekend. I've seen furnished single rooms advertised for $175pw.

We want to buy ourselves new toys for the new house - TV, bed, crockery, cutlery, kitchen appliances, kitchen table etc as ours are all mismatched and/or getting a bit old (and our fancy 2 slice toaster just doesn't cut it with 3 kids) so we'd literally only need to come up with fridge/washing machine/saucepans and possibly linen to fully furnish this house for a single, which is only a few $100 secondhand. If that translates to $100 extra a week just for making a checklist of Stuff and being willing to insure and replace said Stuff when it breaks, that makes the yield here jump to 30% gross :eek:

Edit: should mention that we are building next door to this house, which is pretty much ideal for a self-managing situation :) I considered offering my old house furnished with our excess 'stuff' but workers weren't interested as it is 35km away. So I have pensioners with their own pittance of furniture in there instead.
 
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wylie said:
We have had no problems getting landlord insurance as a self-manager, though some companies will not come to the party.

From memory, we have used QBE, Westpac and I think we now are with Suncorp.
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Any reason you are no longer with QBE or Westpac? Is suncorp the better of the three?
 
From memory my parents houses are mostly with QBE (and still are - on one of them we share ownership) and I think when I last checked, Suncorp was slightly cheaper than Westpac.

I tend to not shop around too much but I think I checked Suncorp after another poster (Ozperp?) sang their praises. I think from memory I got similar cover for a little less. I do know that I have combined building and landlord insurance on the one policy, but cannot really remember the details.

One reason I like to stick with one company is the myriad questions I am asked about previous claims (ALL insurance claims - vehicle, house, backing into our gate :) etc) and I worry that I will miss something.
 
I've been with SGIC just for regular insurance for ages, never had issues claiming with them, but when we got loans with CBA they sold us far cheaper insurance so I had that for about a year.

Then when it came to needing landlord's insurance, home business insurance etc, CBA couldn't help and back to SGIC we went. And by the sounds of it, its a good thing we didn't need to make any claims the year we were with CBA.
 
Jen_PFR said:
It depends on what we put in, obviously. For a furnished one bedroom unit (so all major furniture but not linen, crockery etc etc) we can do it for around $1500. This includes fridge, bed and mattress, couches, dining table + chairs, TV, chest of drawers, wardrobe, portable heater, pedestal fans for each bedroom etc. We typically do it by looking through online places like Gumtree and also the Quokka. It's amazing the stuff you can pick up second-hand. If we're going the whole hog (completely self-contained, includes all the above plus linen, crockery, cutlery, pots, pans etc) we use places like Kmart and Spotlight. For a one-bedroom place, this will typically cost an additional $500-$600.

In terms of rental return: For a completely self-contained one bedroom, we get a rental return of $300/week, in areas that usually command around $190-$200/week for unfurnished. For completely self-contained two bedroom units, we get between $450 and $550 per week, in areas that usually get $250/week. It's a significant difference and can definitely make a negatively geared investment become positively geared.

It does take more time and energy to manage, though. For example, we provide a fully itemised list of all contents (eg. six teaspoons, six dessert spoons etc) at the commencement of the tenancy, which we then have to check at the end of each tenancy. We also do all our own apartment 'turnovers', that is at the end of each two-month tenancy we go through and check the condition of every item (eg. are there any scratches on teflon coated pans? Do they need to be washed/replaced? Is all the linen okay or does it need replacement? etc) plus all the cleaning ourselves. However, we find it's worth it for us. Your mileage may vary ;)
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WE have a property that has 11 self contained all inclusive nachelor suites.
We provide an inventory list to the tenant. We ask the incoming tenant to tell us if there is anything missing, and we replace it.
We use to count spoons etc, but gave that up after the first year.
It is amazing how many tenants buy things and leave for the next tenant.
Makes us happy.
Our rentals are anywhere from 1 night to 1 year.
We have had nothing but positive response for this type of accommodation.
Many rent sight unseen.
 
SelfMade said:
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...In my experience, there are a few good PMs out there but they're not easy to find.
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Couldn't agree more. Self managing is not rocket science, but it's not suitable for everyone's circumstances. Here's a handy checklist: http://blog.rentwise.com.au/index.php/2010/06/01/are-property-managers-worth-it/

SelfMade said:
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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Over my years of self-management, I've sent a bunch of flowers when tenants had a baby and dropped in a bottle of bubby while inspecting for tenants who got engaged. Being firm and fair is critical, but you can also be welcoming and courteous without getting emotionally involved. Tenants respect you for it (perhaps because greedy, mean landlords are more common!) and they will stay with you for years, caring for the property as if it is their own.
 
Dylan33 said:
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.
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Dylan33, just wondering how you set up direct debit arrangements? Where did you obtain the authorization form for the tenant to fill in? I contacted my bank (westpac) to ask for the appropriate paperwork but they said this is something only companies can do, it can't be arranged between two private individuals.

Do you have a special kind of bank account/company structure that allows you to set up direct debit? Or is it only westpac who won't allow direct debit arrangements into personal bank accounts?

Or do you mean 'direct deposit/bank transfer' rather than direct debit (which is automatic and can't be cancelled until the direct debit contract is up)?
 
Another quick question for self managers, can you ask for applicants to submit payslips / proof of income with their application form?
 
^^ Yes I asked and also asked for ID obviously. I also tell them that I will call their Property agent to check rental history.

Anyway skeetaboat - You sound very worried about tenants not paying rent. I rented for ages with a lot of different agencies. Hocking Stuart, MICM, Private owner, some local one I cannot remember and Rendina. I have never ever once set up direct DEBIT. I always did a direct deposit into the company's BSB or I used MICM's rent card -> it's like Bpay. Hocking Stuart and the small local one wanted to charge for rent card payments or if I use a credit card. And sure some months I am a few days late, one SMS from my prop mgr as a reminder and I always made sure I did the transfer that day. So even if you use a PM, tenants don't have to set up Direct Debit.
 
My understanding is that setting up some type of direct debit would involve a monthly cost to the tenant, but I don't know for sure.

All our tenants transfer funds regularly, and have no issues with it, and don't think we have ever had to remind any of the tenants. Only one tenant pays by cheque because he doesn't trust internet banking.
 
ACTInvestor said:
If you are going to insist on direct debit (recommended), go to your bank and ask for a form. Your bank will debit their account. Include this with the lease and have the tenants sign this at the same time.
Hope this helps.
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Interested to know what bank this is with? As mentioned above, I asked westpac for DD form but no success.

Lamingtons, thanks for the info. Also just for convenience sake - with direct debit I can be assured payments will go in and then just set up a regular payment of the required amount to make up the mortgage payment, rather than leaving a few thousand in there "just in case" or needing to check every week/fortnight to make sure rent has been paid. Direct debit would save some time as well as guarantee payment.
 
Skeetaboat said:
Interested to know what bank this is with? As mentioned above, I asked westpac for DD form but no success.

Lamingtons, thanks for the info. Also just for convenience sake - with direct debit I can be assured payments will go in and then just set up a regular payment of the required amount to make up the mortgage payment, rather than leaving a few thousand in there "just in case" or needing to check every week/fortnight to make sure rent has been paid. Direct debit would save some time as well as guarantee payment.
Click to expand...
Direct Debits do NOT guarantee payment. If the tenant did it by this format and there were not enough funds in the account the Direct Debit was due to come out you would NOT get your payment. The tenant would incur a dishonour fee by by their own bank but you wouldnt have your payment. PLUS they can have 'blocks' put on their Direct Debits coming out of their bank accounts without contact with the company concerned. No system is 100% guaranteed. Just the $$$$ in your bank account when payment is made
 
First Experience is not good.:mad:

Rented and people stay in 4 days and want to move due to some stupid reason ( their personal) So what can i do now?

i got 2 weeks bond + 1 month rent but haven't send to bond authority yet.. still 4 days..

Thanks,
 
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