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Would I be crazy to manage myself?

Discussion in 'Property Management' started by Thread, 30th Mar, 2016.

  1. Thread

    Thread Member

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    I'm just about to rent out what is currently my PPOR and have met with 8 potential property managers (amazing how different they all were).

    I'm struggling with the typical 7.7% fee (and all the other fees) and wondering if I'd be crazy to consider managing it myself?

    On the negative side
    • I've never done it before,
    • I don't have the skills to do maintenance myself and
    • I plan to be overseas for extended periods.
    But I can be contactable, organised and follow processes - I'd love to hear your input on paying for a property manager v doing it myself.
     
  2. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    I'd be very careful about it all. I've managed before and it can be beneficial but it can also be a disaster. You really need to read up on your states laws and dedicate time to it. I did it for a few years and never had a problem but was working seven days a week so when problem arose I couldn't deal with it straight away so decided to bite the bullet and pay for a PM again. A week after switching over two tenants lost their jobs and I didn't have to deal with the mess. Good luck with it all.

    DK
     
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  3. JacM

    JacM VIC Buyer's Agent Business Member

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    Hi @Thread

    Work out how much you'll actually be paying for PM fees at 7.7%. By way of example, on rent collected of $350 per week it will be just $1401.40 for someone else to cop all the calls, stay across legislation etc, for the entire year.

    I think it could work out an expensive mistake for you to self-manage at all let alone overseas. One slip and you could find yourself copping extensive legal bills.
     
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  4. HUGH72

    HUGH72 Well-Known Member

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    I think it comes down to understanding the legislation, your obligations and as you will be outsourcing maintenance do you have electrical, plumbing and handyman contacts lined up? Who will carry out regular inspections and entry/exit reports if you are overseas?
    Can you still get LL insurance?
    Many people do this themselves often after they have been landlords themselves for a while and have a bit of experience and know how to answer what if type problems. Do you have experience being a LL?
    If the answer is no to any of these questions then the answer in my opinion would be don't do it, the fee is tax deductible.
     
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  5. datto

    datto Well-Known Member

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    Ah look Thread, it can get tricky.

    I managed myself for a little while and ended up in a relationship with the tenant while her partner worked the night shift.

    I slept in one time and the partner came home, jumped into bed dead tired, wrapped his arms around me and started snoring. Getting out of that situation was tricky let me tell you.
     
  6. Xenia

    Xenia Adelaide Property Manager Business Member

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    I have taken over heaps of self managed properties and they are a mess each time. Wrong contracts used, legislation not followed. Inaccurate records - one lady thought the tenants were a few thousand dollars in arrears when she handed the property to us. It was close to $11,000 when we went through her bank records. Had to take a magistrates judgement as she did not have insurance, nor served breach notices, nor did she have an ingoing inspection report.

    Fines are triggered for private landlords all the time. I am biased but I think allowing a professional to handle it is the best thing and a good one should make you more money than you can yourself, even it is just in reducing vacancies and chasing through those few extra invoices and days.

    My disclaimer: people only contact professional agents when they totally stuff it up so I get to see people who have really got it wrong but off course I don't get to see all the self managers that are great at it because they don't need me.
     
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  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Do you want another job?
     
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  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yep :)

    A PM will save (and make) you way more than the fees involved. Any monkey can collect rent every week, but when your perfect tenant turns sour do you have the skills to handle that? Do you know the procedure for doing background checks, chasing rent arrears, doing inspections if the tenant doesn't let you in, if they don't move out on their vacate date?

    If you aspire to be an investor, you need to learn how to delegate tasks. This means using investor savvy team including a broker to sort your finances, pm to handle your properties, BA, Accountant, Conveyancer etc etc etc
     
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  9. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Every mans dream to wake up next to you :p
     
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  10. Thread

    Thread Member

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    You make a good point - no, I most definitely do not!
     
  11. Thread

    Thread Member

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    Well that's pretty unanimous - really appreciate your wisdom. I think I'll be signing with one of the eight tomorrow.
     
  12. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Sounds silly not to pay the 7% then.

    Do you really want to deal with tenant dramas whilst you're away?

    Cheers

    Jamie
     
  13. Marg4000

    Marg4000 Well-Known Member

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    We self managed one property with absolutely no problems. We bought a small unit with a pensioner tenant. She requested a change in rent payment date so that she paid fortnightly on pension day. She kept the place pristine and even haggled for the pensioner discount on the occasional repair cost.

    Sold after 11 years at triple the purchase price.

    However, this was in the 1990s, so probably would not do it today with the more complex legislation.
    Marg
     
  14. Azazel

    Azazel Well-Known Member

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    Struggling?
    Do it. You'll soon find out why you should have gone with a property manager.
     
  15. Biz

    Biz Well-Known Member

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    DIY property management is something I have never understood. You get into this game to free yourself up to eventually be in a position to live off the fruit. DIY PM goes totally against this train of thought.

    Yes some PM's are not great but if you are in a capital city or major regional area there should be someone with half a clue who can look after it for you.

    The fee's are nothing in the grand scheme of things. Think bigger.
     
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  16. Cbrgirl

    Cbrgirl Well-Known Member

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    Thread - I feel the same as you. I've been looking around at PM's too and haven't been overly impressed. I guess you just have to choose the one you feel would do the best job (responds to your queries, seems to know what they are doing etc.). It's all a bit of a gamble. My advice would be to get a copy of all of the PM agreements - read them carefully - and also check what they want to charge you (and the time frames) if you decide to terminate the agreement. If you sign up and they turn out to be crap, you want to be able to get rid of them asap. Good luck!
     
  17. Blueskies

    Blueskies Well-Known Member

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    I would put a vote forward for the pro side to self managing. I self manage all properties that I own, have saved thousands over the years and am in no doubt that would have been wasted money had I engaged a property manager.

    I recall reading somewhere that an agency pm may have up to 150 properties they manage, and often the role is done by less experienced members of the staff. I have doubts as to the amount of time they are able to dedicate to my interests.

    I would not self manage in the following situations though:

    - regional or interstate
    - low socioeconomic areas
    - if I was not someone who is prepared to educate yourself in relevant tennant laws and be organised and methodical in managing.

    Ps not taking anything away from the PMs on this site, I'm sure they are above average.
     
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  18. Blueskies

    Blueskies Well-Known Member

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    Disagree with this, I see it that in the acquisition phase of building a property portfolio free cash is critical, sure when you reach the end game you can step back but for me giving away 8% of my gross yield at this point would really be for no reason other than laziness.
     
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  19. Biz

    Biz Well-Known Member

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    Even if you had 3x properties renting at $350 a week what are you saving? $4500 a year. That's not going to make a dent in anything in terms of paying down debt or adding servicability.

    What is your time worth?
     
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  20. willair

    willair Well-Known Member Premium Member

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    We need more people like you Datto,just wondering how did you explain why you were in his bed?,must be hard running down the road trying too pull your pants up..