Once you’ve purchased a property, the most significant decision you will make in your investment journey is how to manage the rental. Whether to self-manage your rental or hire a professional is a significant decision that can directly impact your investment returns. Even seasoned investors can find themselves considering their property management options to save on costs or due to negative experiences.
In Australia, rental properties can be managed either through a professional property manager, or independently with themselves as the landlord, but the way you manage your rental is a critical factor in the success of your investment.
At Access Property Management, we want to use our understanding and experience of the Perth property market to guide investors on their journey. To help you make informed decisions about your investment, we’ve explored the different sides to managing your rental and put together this guide to property management. Keep reading to learn more about how to decide your property management strategy.
If you’re looking for some personalised advice on your investment property, you can request a free rental appraisal here, and we’ll be in touch to help you out.
Self-Managing Your Rental Property
You don’t have to be a registered real estate agent to self-manage your rental property. As long as you understand and fulfil your obligations as a landlord, you can become your own property manager. The number of self-managed properties is an estimated ⅓ of Australian landlords managing their own rentals (Source: AFR). Despite this, there are many different factors to consider when deciding how to manage your rental property.
Saving on expenses is the most common reason landlords choose to manage their own rental property. Although there is no direct fee for self-managing your property, there are many other costs that should be considered when working out the finances of your investment strategy.
Managing the property yourself cuts out the middleman. As the direct point of contact for your tenants, you’ll be the first to know if something happens and when it happens. For some, keeping a very close eye on the rental and doing property inspections themselves can be reassuring.
Without a property manager, you will have complete control over your rental property. This means you will have to make all the decisions yourself, such as how much rent to charge, the lease agreement terms, the marketing strategy and which tenants are most suitable.
There are legal landlord obligations you must follow, and if you choose to self-manage your own property, you will need to be aware of them all. It will also be your responsibility to stay up to date if the legislation changes. Failure to correctly adhere to these legal requirements can result in tricky legal disputes, and significant fines such as:
- Collecting more security bond than legally required $5,000.
- Not lodging the bond correctly $20,000.
- Failure to keep a record of rent received $5,000.
- Not issuing a Property Condition Report $5,000.
Significant time and effort are involved in managing a rental. Property management is not as simple as just collecting the rent. Finding ideal long-term tenants, maintaining the property, and juggling ongoing management duties is challenging and extremely time-consuming. It can be almost impossible to fit into your schedule if you have another full-time job or more than one investment property. Being on call if an issue arises can really add pressure to your daily schedule, let alone holidays!
Only professional property managers can have listings on some property websites. Without a professional listing, you will not have access to the vast number of potential tenants they attract. Many self-managed properties are advertised on social media sites or marketplaces such as Gumtree, which can be risky. You may run into issues as tenants who are unable to find a rental, often due to previous bad history, are likely to search for rentals on these sites.
Without a professional property manager, you will not have access to industry expertise and detailed market information. Experienced property managers are key to avoiding costly disputes. Their experience and knowledge are necessary to stay ahead of any potential issues and avoid them altogether.
The benefits of a professional property manager
Property management comes in various forms and styles, both for commercial and residential buildings. Simply put, property managers are hired to oversee the day-to-day operations and maintenance of your investment. They handle everything required after purchasing the investment property, to when you eventually sell it. These duties include finding and vetting potential tenants, setting and collecting the rent, dealing with any issues arising or solving disputes.
Property management isn’t just about addressing issues when they arise. Proactive problem-solving is a crucial part of the job. An effective property manager not only provides solutions when they arise but will also know how to get ahead of them before they even become problems. For professional property managers, your rental is their priority. This means they are available to assist when unexpected or urgent issues arise.
Liaising and communicating with clients can be simple when everything is going smoothly, however significant problems can arise other times. Professional property managers are great communicators who can deal with tenants effectively. Without professional experience negotiating leases, communicating rent increases and handling maintenance issues can be challenging, and setting expectations is crucial. In fact, many reliable tenants prefer dealing with property managers as they are easy to contact when needed and also understand their rights. Your property manager will also be able to hold an unbiased perspective, taking any emotions out of the issue.
Navigating the property market can be tricky, let alone when you add increasingly complicated legislation into the mix. Professional property managers have a comprehensive knowledge of these subjects and understand the ins and outs of the market. Every year they do hours of new study to stay on top of the ever-changing legislation. From ensuring proper notice is given on some forms, timing on certain maintenance, correctly implementing rent increases, and using prescribed forms when necessary, there’s a lot to remember. On top of that, you will need to keep a record of inspection reports, accounting, legal documentation and tenant communications. In addition to all of the admin this requires, the systems required to file and maintain these records can be quite costly for just one property.
Finding the right tenants for your rental property is a key factor in the success of your investment. This is where a property manager is advantageous. They will be able to provide effective marketing strategies for your property and access their prospective renters database. Finding reliable tenants you can trust to look after your property long-term can be very challenging on your own.
Finally, your property management fees are tax deductible.
How to choose a property management strategy
Although it can be tempting to choose your property management strategy based on price alone, there are many factors to consider. While fees need to be considered, you will also need to balance the risks of self-managing your property, which can cost you more in the long run. In addition, insurance companies may charge higher premiums for self-managed properties to offset this risk.
Successfully self-managing your investment property comes down to your skills and circumstances. If you have an eye for detail and plenty of time to dedicate, you might enjoy being your own rental agent. On the other hand, the opportunity cost of your spare time might be too high, and who wants to be disturbed by a leaky tap on the weekends?
Finding a good property manager who provides high-quality service is just as important as getting a good price. Your property manager should understand your long-term goals and be willing to work with you to achieve them. At Access Property Management, we have your best interests in mind. We want to help you maximise returns and give you peace of mind that your property is being looked after.
Looking for tailored strategies to help you reach your investment goals? Request a free rental appraisal here, and we’ll be in touch with some tips.