Question: I've just bought a rental property – a two-bedroom unit in inner Brisbane. As this is my first investment property, is it better to have it managed through a professional property manager or should I self-manage? I've heard some cases where I can't get landlord’s insurance if I self-manage, is this true?
Answer: Property management can be a complicated exercise, with legal, administrative and human hurdles to negotiate, but doing it well is critical to a successful investment strategy. Unfortunately, management of a property is often just an afterthought to the purchase process.
There are stringent legal requirements that need to be satisfied to obtain a real estate certificate and property managers are trained to handle and understand all of the paperwork and complex legal documentation involved. Property managers are trained to deal with people, resolve conflict and ensure the effective management of your investment.
Property managers have the skills, time resources and experience to deal with tenant interviews, reference examinations, property inspections, maintenance issues and any other problems.
However, there are also some real advantages of self-management, such as financial savings. In my state, Western Australia, the initial property management fee is two weeks’ rent and then around 9% of the rent thereafter. There are also further charges for inspections, petties and sundries. In my experience, there is a fee for every service.
As a self-manager for all of my properties, my vacancy period is considerably less and, by conducting interviews after work hours, I seem to have access to better tenants. I’ve developed a personal approach with my tenants and now 90% of my rentals are friends and family of existing tenants.
I can deal with maintenance problems in their infancy and I’ve personally selected tradesmen and staff that are both competent and price competitive. I don’t believe insurance will be an issue, provided you disclose your intention to self-manage from the outset.
If you believe you have the time and skills to self-manage, it can be an exciting, rewarding experience. But be warned: it can be easy when all is smooth sailing, but extremely stressful when things turn sour. Breach notices and court appearances are not nice. If you prefer a professional manager, take the time to find the right one; they all have different personalities, experience and talents. Make sure your manager is compatible with your needs.
Answer supplied by Conny Torney, inaugural winner of Your Investment Property Investor of the Year Award.