Would I be crazy to manage myself?

And it's deductible, which brings the expense down even more.

 

Now your job is to manage the property manager or it could get very expensive for you.

My parents had a series of dud property managers in Melbourne. The tenant ended up a long way behind on their rent and the rent was not increased for several years, resulting in the property being over $100 pw under market value for rent.

If you think you can just get a PM and sit back while the rent rolls in, this is not correct. You need to manage the PM just like a self manager manages their tenant.

 

For arguments sake if my time was worth $100k per year then $4500 would be two weeks of full time work. I've never spent anything close to that amount of time on property management, and doubt many PMs would either on 3 individual properties.

I agree self managing is not for everyone, but for the sake of the original poster just wanted to point out it is not necessarily the daunting task it can be made out to be.

 

Should probably also add I always use a PM for initial advertising/background checks/placing tennant, I find the fee for letting only (typically 1-2weeks rent) worth the outlay.

 

It's not so much about putting a dollar figure on it. It's maintaining the relationship with the tenant, keeping on top of legislation, accountability, organising quotes for repairs etc. If you love dealing with that stuff more power to you but I would rather just outsource it for what it costs. I'm still on top of it all, making the decisions etc but the nitty gritty stuff they can do.

If you have 3x properties it isn't a big cost to outsource, if you have 10x you just bought yourself a J.O.B.

You say you are losing 7% of your yield by having a PM but what is the percentage when you compare it to the value of the asset per annum? Not even 1%. If you hold the property for 10 years and it grows by even 50% in that time what has it cost you when you decide to liquidate and look at other options? Bugger all right, but at least someone else was taking care of all the small stuff while you concentrated on growing the pie.

 

It's not in general - BUT if/when things go wrong, a good PM earns their money. Or should be.

 

Some excellent points from Biz. You also really do not want to create a personal relationship between you and your tenant. It's a business, it's your business, and having a PM creates a layer between you and the tenant and it's much easier to, say, evict a non-paying tenant if you have no personal relationship with them....

 

I have been a self manager for over 10 years. I don't find it daunting but it is a certain amount of work. There are basic things to be done such as regular rent reviews, inspections, increasing rent when appropriate, making sure the tenant pays rent on time, issuing breach notices etc. In my experience many self managers do not do these things and some professional PMs do not do them either.

 

It probably took a few years off my life trying to get a tenant to catch up on their rent.
Never again.