How hard is it to self manage?

So I've got an investment property and I've had it for about 2 years - being new to real estate - we had a property manager manage it. This probably costs like 2k per year and that's not including extra costs like them putting a tenant in etc.

Anyway, the tenant has been fairly quiet. There's been a few repairs needed - but essentially the property manager just ends up being a middleman anyway and most of the time, I end up just going there to do the work myself.

So as my wife is out of work right now, money is a little tighter than it used to be. I've been considering just doing the work myself to save on costs. I just wanted to get everyone's views on how much work it actually is and whether it's worth it.

I've made a list of things that I would need to do

- Find a tenant -> this seems like it would be fairly easy. I live in the ACT and the vacancy rate is quite low
- Vetting a tenant -> this i would probably need to get advice on, but it's just a matter of asking them for the right information, reference checks etc.
- Getting a tenant in -> I'll have to look up what to do here (eg. lodge the bond, sign the lease, condition report)
- Collecting the rent -> is there some sort of service that'll allow me to check each fortnight that the money's been paid?
- Paying bills -> No probs with that
- Keeping track of finances -> Yes I'll probably need a spreadsheet to keep track of finances
- Inspections -> I'll have to figure out what I should be looking for

All of these things I feel like I could either do, or learn to do.

Is there anything I need to be aware of? How do I cancel the property management service? Has anyone ever had to do that? Do you just need to give them notice and then we just coordinate loose ends like when the rent goes over to a new account and the bills gets sent back to me?

 

Yes, how to give correct notices of termination for various types of breaches. How to prepare to attend tribunal. How are you going to take holidays?
Are you going to pay a subscription to TICA to check the bad tenant databases?

 

Everything

 

Yep, so there's various legislation stuff I need to abide by. Happy to read up and be prepared for those things.

Not sure what you mean by take holidays? I don't think my PM is checking up on my house every week. They get an email when something goes wrong and they talk to me if I want to fix it myself or hire someone. I imagine that would be the same process if I was on holidays - except I'll just hire someone to fix it.

I've considered a subscription from TICA but not sure if it's worth it. It's not like Yelp where anyone can submit a review - there is a long process to even get listed. I'm thinking anyone whose on one of those lists, they're not going to have great references or represent well in all the ways I can search for them (eg. facebook/ google etc). Plus the property is a house in a nice suburb. It's unlikely to attract low income earners due to the cost of the rent. However, I don't know, maybe I do need it - I'm happy to pay for that subscription if required - it looks like it's about $220 a year.

 

Rather put those hours into some overtime work..

Cut corners in this case could end up costing more before you know ...

 

You have to decide whether you're in the property management business (which has a lot of overheads for just 1 property), or the investing business. Do you like getting calls at the Christmas dinner table that your tenant has no hot water? Or the roof is leaking from yesterday's storm while you are in Paris on a 2nd honeymoon? Good luck with arranging the tradies long distance.

 

The thing is whenever something like that happens, the property manager still has to email me for approval. I'm not willing to let them have a blank check to make repairs at unlimited cost unless it's an emergency.

It's also a new house so there's very little repair costs. I fixed a door the other week for the tenant - that was the first time i'd heard from her in about nine months and it was only raised during a routine inspection.

 

Time and time again we see this penny-wise pound-foolish mentality cause novice investors so much grief. You have to learn to delegate and employ experts when you are not one and/or you need an expert result. The other side to that coin is pay peanuts and get monkeys, blah blah you've heard it all before but there is a lot of truth to it. Property management isn't hard, you've just got learn the ropes and gain some experience to handle different situations and have the wisdom to pre-empt/prevent them, the question is how long can you afford to be learning and making mistakes which is costing you time and money?

 

I think the 2k outlay you pay for the property to be managed competently would be eaten up pretty quickly, if you were to have to take the time yourself to deal with any issues.
As most will attest to, the key is having a "Competent" manager.

 

It's true but there are just as many stories about incompetent professional property managers. My novice property investor mate got stung by a firm charging big fees but providing very poor service. By the time they got the tenant out he was out of pocket by thousands because landlord insurance does not cover malicious damage.

It's all well and good to demand that people learn to delegate but they must delegate to people who are more competent than they are. Otherwise, what is the point? And how does a novice investor know that a property manager is any good until the tenancy goes wrong? By that point it is too late if the PM is incompetent, as many seem to be.

 

Make sure you are familiar with the RTA in ACT

 

RogerP, self managing is very common and is also very often done poorly. As a result there are heaps of websites (many by government departments) with information. I'd start by googling "ACT landlord information" and see what you find (there is a PDF available called "The Renting Book" which you may find useful).

I self manage but I headlease to housing commission so my situation would be a bit different to yours (I don't have to find new tenants, or chase up late rent - although I am trying to resolve an overpayment of rent at the moment). I do most of my maintenance myself, but have a couple of tradies that I have used before that I can call on. I received a call about an urgent issue when driving through SA (I live in NSW, and my IP is also in NSW) and I was able to phone between the tenant and plumber to arrange things to be fixed. You do need to have a contact list in your phone so that you can still sort things out whilst away, or delegate to a friend/family member or paid handyman if you are going to be out of mobile range.

You see things every so often where a self managing landlord has made a mistake (such as a recent thread here where the LL had their eviction notice overturned as they were one day short on their notice period, the LL incorrectly thought that the day they gave them the notice was counted). If you come across a situation where you need to evict, or chase for unpaid rent, or the tenant has damaged the property, etc, then you can do some more research to ensure that you are dealing with it properly (either read other people's experiences, or read up on how to do it - or preferably both). There is a fair bit of history on this site, whirlpool and flat-chat (for strata). You can ask for advice here, although you will need to scroll past all of the "you wouldn't be asking this if you had a PM" responses.

Regarding your question on collecting the rent... I get my rent paid by direct deposit directly into my offset account. I can then check that it has been paid by looking in my internet banking.

You can pay a PM to find you a tenant, this will take care of the advertising, checking references and checking TICA. Since you manage most of your maintenance then this may be a possible solution (or at least a stepping stone to see if you want to fully self manage later), note that you will still be the one having to deal with late rents, tenant damage, and any tribunal appearances.

A couple of things which I think are important...
Record keeping. You need to keep all of your documents (I scan mine and synchronise them between several computers - including my work one), this includes leases, condition and inspection reports, any notices sent to tenants, tenant identity documents (in case you need to take them to court after they have moved out), etc. You also need good documentation on when things happened (eg, when a tenant rang you with an urgent problem, when the problem was fixed, when notices were sent to the tenant). As there are many timeframes specified in the legislation, these are vital if anything is ever disputed.
Be proactive. Don't let things slide or get forgotten, make sure you do your inspections, always insist on the tenant paying rent on time, know when you need to send out rental renewals if you want to renew at the end of a fixed period, etc.
Be nice to your tenants, but don't be their friend. You are not taking on their financial issues, you still need the rent as the bank still needs to get paid.
Triple check your insurance coverage. Building insurance and landlord insurance. Have a quick skim through the PDS for your policies so that you have a rough idea of what is covered, and keep the PDS to refer to when considering claiming.
Be prepared to have to tough it out at the tribunal. If you are self managing, nobody else will do this for you (PMs don't seem to like taking on someone else's problem tenants, and I don't believe that you are permitted to have lawyers helping at most tribunals). If nobody does this, then some tenants will sense the weakness and take liberties. If you start having issues then you need to nip them in the bud (within the bounds of the law) so that your tenancies are kept manageable.

Finally... Yes, there are risks associated with self managing, you may bork it up entirely and end up being liable. Having said that, many people do self manage and the system is set up with this in mind. Furthermore, there are many stories around where a landlord has lost out big time when a PM has failed to do their job, as well as a PM who used to post on this site that went into liquidation with many questions being asked about various landlords' money that should have been in the trust account.

 

I have self managed for over 10 years, even interstate from Perth. I pay a real estate professional to find a tenant and take it from there.

You have to treat it like a job, chase up late rent, conduct regular inspections, issue breach notices etc.

Where it is good is when your tenant calls at 9pm on a Friday night that the hot water is not working and you have it fixed in under 30 minutes. That would not happen with a property manager.

Only one time I may have been out of pocket when a tenant hearing took more than half a day so I took a low offer to get out of there as I had booked appointments for the afternoon. I would not guarantee a pro could have got more. The amount I was out of pocket was a lot less than the PM fees during the tenancy. In any case I was renovating so damaged carpet was being removed etc. Financially I ended up ahead.

If you are prepared to learn the paperwork and legislation and keep on top of it, prepare for hearings and present evidence then it is doable.

If not, find a great PM. Bad PMs cost more money than you save buy doing it yourself.

 

I wish I could give @G.. & @Perthguy posts more than one like !

I have two properties
One I self manage, the other I have with a PM

The one I self manage is commercial, sure it was a very steep learning curve, and because it is commercial the lease terms and responsibility are mostly that of the tenant.

Domestic rentals tend to be more "complex", with greater responsibility and liability on the owner, so this is defiantly with A PM

(I spent my time finding a good PM = I sleep well. Also, I limited their spending/repairs allowance without reasonable contact attempts and time line for approval prior to proceeding).

 

I'm the master for diy and finding bargains. But pm is not something I would ever do. Unless it's room by room let out

Pm is easy when things are going right.

When it goes wrong, that's when the drama starts

 

thank you everyone for all your advice.

Have plenty of things to consider now.

Thanks a lot.