When it comes to managing your investment property there are a few options. Searching for the right tenants, organising legal requirements such as lease agreements and managing renters’ requests can be a time consuming, stressful process. That's why some investors choose to engage the services of a professional property manager to save themselves the hassle of having to deal with it themselves.
Before you jump to hiring a property manager, there are still some upsides to managing your property yourself which you might like to consider first...
DIY property management
A positive of managing a rental property yourself is that you will save money on management fees and always be in the driver's seat maintaining control over your investment.
To decide whether self-management is for you, it's important to consider the responsibilities involved. Advertising for tenants and showing the property at inspection, knowledge and clear understanding of your tenant’s legal rights, organising the lease agreement and processing the bond payment are the first steps you need to take. Once your tenant has been secured you will need to regularly collect rent or follow up rental arrears, respond to tenant queries, repairs and maintenance. In the occurrence of a disagreement, you may need to organise direct mediation or legal advice if an agreement can't be settled.
Employing a property manager
If you'd prefer to employ a property manager through a real estate agent just be aware that they generally charge a commission on the rent to manage the property. A one-off letting commission that covers the costs of finding the tenants is also usually charged.
Ongoing you can expect to pay a commission rate of anywhere between five and seven percent of rental income, this is the average range. The commission amount is negotiated at the beginning and prices vary among different agents. These management charges are automatically deducted from the rent and are tax deductible. It's worthwhile shopping around and obtaining a number of property management quotes to see which one is best for you.
Future costs associated with owning an investment property can be tricky to predict because factors such as weather, wear-and-tear and market changes are all inevitable. In addition to insurance, mortgage repayments, repair and maintenance expenses, you also need to be aware of the tax implications involved with earning a net rental income or making a loss on the property.
Whether you're thinking about purchasing an investment property or you already own one, we recommend discussing your options with a finance specialist.
KEY TAKEAWAY: Do your research to understand what is involved with managing an investment property and then decide which is the right choice for you. If you decide to go down the DIY path, make sure you are well organised and have a plan for future management. Alternatively, if you decide to hire a property manager, make sure you shop around for a good price and one you trust! Either way it’s good to personally inspect the property at least twice a year. This way you can identify any potential issues arising with your tenants or maintenance before escalated and become a major issue.
Disclaimer: The information provided in this article is not legal or financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the recommendations, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any suggestions provided in this article or on this website.