To PM or not PM?

[mike0870]

Hello all. First time investor, just bought a unit locally, need advice about whether I should get a Property Manager or just manage it myself. Pros, cons?

For example, I notice that Terri Scheer wont give Landlord Insurance if the property isn't run by a licensed PM. On the other hand, I don't have to charge myself a PM fee either.

These forums are fantastic. Buying Jan Somers book was the best thing I ever did.....

Cheers...

Mike
Alice Springs

 

[Collector]

Case for self managing:

1) Save on agent commissions
2) Your property - 100% control
3) Educational - you will learn a new skill


Case aganist self managing:

1) http://www.somersoft.com/forums/showthread.php?t=49193
2) Unable to get Landlord Insurance (from the better insurance companies)
3) Not being expirenced - don't know what to do when things go pear shapped (see point 1)
4) Time - can you spare the time it takes to manage the property your self



There are a lot more pros and cons, but these would be the main ones to consider.


If you fell capable and are proactive in both managing your property and learning via reading books/ legislation then go for it.

If you are the type of person who worries about everything, is unable to sleep at night when little things go wrong or is time poor then give it to an agent.

 

[mike0870]

Collector, thanks again for the advice. I'm going to talk to some PM's today, see what they are going to cost and what they offer.

This is my first property, and while I know I can do whats required I also know I don't have all the knowledge yet, so for the first unit the PM can do the job while I figure it out.

Cheers

Mike0870

 

[ianvestor]

Mike, do you plan to have more than 1 property in the long run, maybe 10, maybe 50? Would you want to self-manage 50 properties?

 

[wylie]

I reckon the best way to learn is to "do".

I have never paid a PM, and when I come up with a problem I don't know the answer to, I call the Residential Tenancies Authority (Queensland) who always have an answer.

I find it a doddle, but I grew up with my parents self-managing so it all kind of was second nature. If I was starting now, the RTA would be my first stop, and I would read everything I could about "starting a tenancy", "during a tenancy", and basically anything else on the site.

I have never looked at other states but I gather from this site, that the RTA site in Queensland is possibly easier to navigate than its counterparts in other states. The site is so easy to use and find things, but perhaps other states are not as easy.

If you find it too hard, or too time consuming, you could hand it over. Alternatively, pay a PM to manage it at first, and then think about taking over down the track.

 

[nhb74]

Owning investment properties in areas thousands of kms apart, there is no way I could handle the stress of managing these myself while working fulltime. I think it all depends on your situation and also where your IPs are located (eg. close to your PPOR) but then again I'm too lazy and rather pay someone

 

[Modal Harmony]

Hello Mike, if you are off to see a PM at any stage, might I suggest that an important criteria in this choice is to have some person who is "mature age".

We have 5 IP's managed by a PM and the lady who is our PM knows how to handle all sorts of awkward situations that arise as a result of being in the IP game. Having an inexperienced PM can cause problems later on if they don't have the skills in managing tenants.

 

[jaycee]

Mike, do you plan to have more than 1 property in the long run, maybe 10, maybe 50? Would you want to self-manage 50 properties?

I wouldn't... but I know somoeone who doe s manage over 30, maybe 50, don't know... But in this case, the person has 1, and iis thinking of managing just the one - Nothing to stop them changing their mind & moving either 1 or more properties to a pm if / when they might like to.....

If you are unsure of what to do when this / that happens, perhaps a pm is a good way to start & then you can determine if it is worth doing privatley based on your experiences Although if yuo are keen on self maanging there are websites with lots of infromatin - the equivalent of the misitry of fair trading (now DOCEP in WA) seems to hold a lot of this information, inclduing tem pa,ltes for leases letters etc....

 

[Angelo]

I personally consider my PM as an investment (by the way my PM is Xenia, my wife). That being said however, they should be able to save you time legwork, hassle and should be able to do the job better than you can and get better results. The most important thing to me however is leverage. The time I would have spent managing our portfolio and dealing with phone calls about blocked toilets is much better spent looking for the next deal. I’d much rather someone else deals with these headaches and allows me to do what I would rather be doing.

If you are going to get a PM make sure they are good at what they do so you don’t end up having to manage them. A good PM is very well worth the price you pay.

 

[jaycee]

Angelo,

siga to pragma....

More to the point is that we an individual investors have no control over who will mange the pro[perty - when I sigend to a pm, I signed to a company, then they decied who would manage my property. And then that person changed 5 times in 3 years....... You get no choice on who will manageor take over management.... so how do you suggest we "choose" a good pm, that is the difficulty (?)

Also, you have a portoflio of properties, this chappie has 1.... I spent bugger all time in the last 9 months - 1 call for broken fan in bath / 1 for a broken aircon & 1 letter for overdue rent... Besides the rent, I would have been called by the pm & asked to decide what should be done (cause I found I could not trust them to spend my money), so the total extra time compared to having a pm spent by me was wrrting out 1 letter that a rent payment had been missed..

so depending on how much proreptrties & how many problems they the indidvudal tenatns cause or do not cause, it is quite possible that self amanging may not be so time consuming.. I had already posted regarding possible problems & knowing how to deal with them previously,. those still stand of course as valid reasons to consider carefully using a pm or not, & I beleive may be the things to worry about more than 1 phone call for a blocked toilet etc

 

[Xenia]

Playing small serves no one! Think BIG!!

When you get to around 10 properties and working full time or building businesses as assets as we are, time becomes very valuable and a good property manager becomes invaluable!

I will not waste my time chasing tenants or ringing tribunals, but I do direct a PM company.

Likewise I will not use MY time painting or putting in kitchen cupboards or mowing lawn but have made bucket loads on renovating properties and the only thing I ever picked up was a mobile phone.

You get what your mind is focused on, if you are focused on becoming too big for self management, which you should be or you should stay in a job, then that will happen!

If you are focused on saving money instead of making money you are way behind the 8 ball in this game!

You can start by self managing but aim to outgrow that asap!

 

[pully]

a professional property manager is the way to go. the fees are deductible. they know the law and get the max/optimal benefit for you in terms of cashflow etc. we have had the same since 2000. there have been some interesting moments with tenants but this was dealt with promptly and appropriately.
if problems arise we always discuss any issues with the principal who is very experienced
and knowledgeable.
it is one of adelaides long established real estate companies.
the money has been well spent.
there is also a landlords association but we chose to not self manage. regards
l

 

[mike0870]

Thanks to everyone, appreciate the opinions. I knew these forums were a good idea!

Now, does anyone happen to live in the Alice Springs area, and can recommend a reputable PM?

Cheers...

Mike0870

 

[cgw]

Use a PM, micro manage them, so you know what they are doing ie, knowledge of the laws, highly organised, good communictor to deal with bad tenants, mature enough to read body language to pick the best tenants, then if you think you can do better do it.
I am all of the above, but have found some good PMs, so I let them deal with it whilst I enjoy my life.
Read the contract and change the termination to 30 days.
The first few times ask to view/check the tenant referree checks, make sure they are doing their job. Ring the employer and ask for Joe Bloggs, and then hang up.......

 

[jaycee]

Playing small serves no one! Think BIG!!

When you get to around 10 properties and working full time or building businesses as assets as we are, time becomes very valuable and a good property manager becomes invaluable!

I will not waste my time chasing tenants or ringing tribunals, but I do direct a PM company.

Likewise I will not use MY time painting or putting in kitchen cupboards or mowing lawn but have made bucket loads on renovating properties and the only thing I ever picked up was a mobile phone.

You get what your mind is focused on, if you are focused on becoming too big for self management, which you should be or you should stay in a job, then that will happen!

If you are focused on saving money instead of making money you are way behind the 8 ball in this game!

You can start by self managing but aim to outgrow that asap!

Absolutely agree with you... so you can start either way, as Xenia, much more expeirienced in this field than I.... suggests... I actually started with a pm as I was unsure how to do it myself, they were bought by another company and when they did not do their job, I micor maanged them until we both got fed up with each other.. I self mange now but feel lucky that I have a decent tenant (well the house is still clean & undamaged & rent is paid) - if I had a better pm, I may not have worried about self managing, but could not see the poitn moving frm 1 company to another when I had just been through 2 companies and about 6 pms with no difference in quality of service (unfortunatley).

Who is thinking small ? the person has 1 ip atm and is determining how to mange it, that does not mean they do not want accumulate more in future or he will be stuck with hsi decison of self managing or pm?

 

[Angelo]

Jaycee

By all means feel free to property manage yourself. This may suit your situation just fine, however, there is no way that I could personally be bothered managing the properties myself. I remember the student accommodation I tried to self manage. I had students ringing me up and asking me to come and change light bulbs at 9pm. Forget about the toilet, students would call when the cleaner was a day late. I at lease know that in the hands of my PM, any late payments or any problems (and believe me, at lease for us, it is more than one phone call/year and our properties are not in problem areas and the majority of properties are not student accommodations) they will be dealt with effectively. I literally have not seen some or our properties in 2 years and some are only a few kilometres away from where we live. I don’t need to because I am completely up to date with what is happening. Before we got the property managers on board I was like a paranoid little bug buzzing from one property to the other checking to see if everything was OK. Thankfully I don’t do this anymore. However, once again this is only my situation. As for your PM I still think you want to know who is personally managing your property and you may also want to know what systems are in place to ensure you get proper service. There may be turnover in the office, however if good systems are in place and if they are adhered to, things should run smoothly. I feel your pain because I agree that a lot of PM agencies are not that good. If you are going to pay them though you would want to make sure you are getting good service, otherwise, NEXT. Find someone better.

All the best

 

[jaycee]

Hi Angelo,

I was just pointing out to pple that many do self manage - and when you have one property, is it relevant if you would welf mange 50 properties... ?

If the pm I had was good, I would have most likely kept it managed... however, I have found it ok self managing so far, everything is up to date & I dont have to worry about anything & I can pass it back to a pm when I feel the need, which may actually be when these tenants move out.. I have not been buzzing around like a paranoid little bug etc - I did that in the pm's ear though when I had to micro manager her to the point where she was as sick of me as I was of her.... If I had student accomdation like you were saying there is no way I personally would have self amanged that - particualry if it was my first ip... but again, that is irrelevant, as I, and I am pretty sure the person who started the post, is talking your standard resi house/unit which gets rented to a family etc..

Seriously if I got even a 2nd property, I think I would get at least that one manged - and probably move the current one to that pm when something like lease was due to change...

I personally have not worked out exactly the path to take to wealth, I am stil learning & deciding, thefore, the couple of hours every 6 mnths is not detracting from my ability to concentrate on "more important things".

I mean, other people pay painters , other paint themselves... Others emply cleaners, others clean themselves.....A painter / cleaner might suggst you get more proffesional work etc done,I still beleive the answer is "IT DEPENDS".

I know a family with over 40 resi ip's, all self managed , they even sell and have sold every one of their properties privately, and they seem to be doing allright....

If it took up so much of their time that they could nou concentrate on their investment plan & opportunities, would they have gotten to 40+ houses ?

 

[wylie]

To counter Angelo's claims about his experience with student digs.....

I self manage, and have just signed new leases on two houses. During the previous twelve month lease, I had one call from the tenants. Only one call.

We choose our tenants carefully, and when a tenant leaves, we focus on finding a new quality tenant as quickly as we can.

The house next door our ours has been empty for approaching two months. It is just one of goodness knows how many houses the agent is trying to find a tenant for. It was open for inspection for 15 minutes several weeks ago. Apart from that it just sits empty.

I look at the empty house next door and thank goodness I am looking after my own houses.

I agree that everyone is different, but for me, managing our own places is far superior to handing over control (and money) for something I can do with my hands tied behind my back.

I would pay a PM only if the houses was not nearby.

 

[Dazz]

For not the first time in my life wylie, I am in full agreement with you.


I do not subscribe to the theory that you are wasting your time on a menial task by managing your assets.


We don't own that much property, but find the time to manage them without any PM's. Distance is not a hurdle thus far. Knowing the relevant laws and the contracts controlling your assets is not a burden to carry in your head.


Can't wait to get bigger down the track whereby I can afford to employ a PM cos my time will be too valuable. Trouble is, finding a gem is very difficult.....keeping them is even harder. A 19 yr old secretary who has sat a 1 week course does not qualify as a "gem" in my book.


Angelo & Xenia, due to your business interests, your comments are no doubt valuable to the discussion but must be discounted heavily due to your financial bias. I could not ever imagine a PM agency owner saying that PM's are a waste of money.

 

[Xenia]

Who is thinking small ? the person has 1 ip atm and is determining how to mange it, that does not mean they do not want accumulate more in future or he will be stuck with hsi decison of self managing or pm?

Jacee that is the benefit of thinking, you can think big and have zero properties

Broke millionaires continue to think big while people with a poverty mindset continue to think small even after they had won millions in a lottery. Money and assets have nothing to do with the way you think.