Property Managers are they necessary?

Its easily possible to manage 1 or 2ips by yourself. The question is really does it suit your personality? We all know there are many ppl around who cant communicate effectively and manage their own breakfast. Those types of ppl would most likely find PM'ing 2 properties a challenge, possibly leading to a huge mess.

If on the other hand the person is organised, communicates well, understands the laws etc around this area then that's another story. Personally I think its not worth it to self manage. Risk Vs benefit for me.

 

I prefer my portfolio to be as passive as it can.

I pay a mere 5.5% for my Marrickville ones, which is tax deductible.

It's money well invested to liberate my time to focus on more important things.

 

I've tried to self manage in the past. For me it was a disaster. We chose the wrong tenant, cheques bounced and ultimately an eviction resulted. We decided that it really wasn't for us.

Some people are great at it. They're good at selecting tenants and managing them. Some people don't do this as well and some tenants will take advantage of this.

Keep in mind there's a lot of legal and compliance elements involved in property management. Done badly, any sort of property management can cost you a fortune. For this reason alone I feel that a good property manager is well worth the cost.

 

Most people on the site are into passive investing. Find someone who can help you automate, streamline and simplify your investing journey.

 

Definitely the PM route for me too. They take care of it all, and once your find a good one, it really is passive, allowing you to focus on more important things while knowing things are being handled according to legislation. What you pay in PM fees is also deductible from your income.

 

I think that self managing is a false economy.

Agreed!

Yep!

And here we have it, all rolled up into one. This is exactly how I feel, added to the fact that there are different rules in different States, which makes things a little more challenging.

Sure you CAN manage yourself, but the majority of self managers don't know what the rules are and don't follow the right procedures and are at risk of getting themselves into a world of trouble. Add to that the dealing with the tenants (yuck) and keeping rents up to date, and, well, give me a PM any day.

 

Be careful managing the properties without an agent. Potential tenants have an extremely good way of making landlords believe their sob stories when applying for private rentals you need to ensure you complete all the relevant checks thoroughly so as not to obtain a poor tenant.

Some tenants will also then play on a private landlord usually by telling them sob stories to make the landlord feel sorry for them and give them leniency with why they cannot afford to pay the rent this week and once they know your an easy target they will keep using that against you. Tenants can be horrible where most agent will not take tenants excuses and need to be very tuff on them from the beginning to show who is in charge.

Make sure you are aware of all the laws and legislation and keep yourself updated on all changes in legislation as if you ever needed to go to the tribunal they can be very hard on landlords and very lenient with tenants. If they find you have made even the smallest of mistakes the tribunal may dismiss your case and you have to start again eg this could be a simple as not having the required notice period on a termination notice etc

Also a lot of insurance companies who cover landlords insurance will not pay out on a claim if the property was managed by a private landlord not an agent so ensure you check with your insurance company on this matter as well.

Good luck if you choose to manage the properties yourself just be very careful it might be in your best interest to use an agent.

 

I am biased.... But

I feel the biggest issue isn't the annoying after hours calls or the time spent looking after the properties, it's learning (and understanding) the legislation and what to do when things go sour.

 

@Shikari

good Property Managers are worth their weight in gold!

DIY PM is good, if you have time and aware of compliance rules and regulations.


PM cost are mostly tax deductible.

it also comes down to how good/bad tenets are!

 

I am very fortunate that I have a good property manager who is proactive. I pretty much informed her that if there are any costs no matter how small to run it past me because maybe I can fix the item myself. Since I work full time and study, there is no way possible that I could self manage.

 

I've learnt so much from self managing one property, I think of it as integral to expanding and knowing as much as I can about property investing. Has helped no end in dealing with pms also and talking their lingo.

 

"If it's a 3am call can you do it?"

You answer the call in the morning. Who answers a phone in the middle of the night?

 

It's tax decucutible. tax dec. tax dec. tax dec. tax dec. Does that somehow make it cheaper? It's a common quote on this (well SS) that its deductible, like it's somehow free.

 

From talking to a few insurers, I get the impression that self-managing is frowned upon. Maybe they just charge higher premiums?

Also using a PM gives you a degree of privacy as a landlord, although your contact details are likely on the lease.

Perhaps an advantage of a company / trust and a PO box which helps to mask your name and contact details???

 

I suggest you use a PM unless you know the laws backwards, have plenty of time and access to realestate.com.au & www.domain.com.au for uploading listings. The trick is to find a good one, I suggest you look to see who's active in the area and ask who would be managing your property and how long they have been at the company. You want a good stable PM. Ive found that all the bad tenants go to the likes of the local papers and Gumtree where average landlords cant do credit and other such searches that Realo's can. If a prospective tenant turns up well addressed and says the right things they get accepted by the unsuspecting landlord. Make sure you ask to see the tenant applications and have your realo agent ring the last PM and get their feedback, most PM's don't screw each other as they trade tenants quite often and don't need the headache. Ps I ran a PM company for 20 years...almost killed me

 

Personal choice with only two to worry about. Just remember they won't care as much as you do - they probably have a portfolio of around 100 to manage, you won't be special.

I've found them borderline useless even with remote properties, and as a renter found that they don't do regular inspections and require many follow ups to rectify issues.

 

for me personally, i would rather pay a PM and let them worry about that property so I can focus on the next one. I'll put that time saved worrying about that property to a much better use, like educating myself more about property investing.

 

I have been managing my IP's myself. Never really had a issue.

Any more then 5 IP's i would consider a property manager but until then i need the cashflow to be as high as possible

 

There are more real estate agents in Australia than armed forces, they are not all necessary but I like to think that some of us are

 

I self managed my 12 tenants [industrial complex] however I was an experienced PM but there were times when I would have liked to drown a couple of tenants. If you are not experienced and aren't familiar with the laws governing leases I wouldn't do it.