Blink Property
When a part-time handyman does a dodgy job on his renovation, it won’t be too long before cracks begin to appear…sometimes literally. The same goes for DIY property management.
If you buy an investment property and want to lease it out, you may be tempted to manage the whole process yourself, so you can save on having to pay fees to an actual property manager.
But there is a lot more to it than you might think. Here are a few of the pitfalls of self-managing properties.
Most savvy investors look to source assets from all over the country. Diversity in markets and their locations can be just as important as in asset types.
You might purchase one investment property that you can drive past on the way home and conduct a routine inspection, but what if the next one you get is on the other side of the country?
If you live in Sydney and purchase assets in Central Queensland or Perth, it’s going to be impossible to manage those properties yourself. Especially after-tax rules were changed a few years back and you can no longer claim travel expenses to your investment properties as a deduction.
Managing a rental property can be demanding and time-consuming. It also requires a diverse skill set. It’s not just about collecting rent, organising the odd plumbing job and turning up twice a year for an inspection.
First, you need to be across property law. There’s a reason lawyers spend so many years studying. Legislation is complex and hard to understand. Property laws change frequently and are different in different states and territories. They can also change building by building if you are investing in a strata complex.
Vacancy rates may be at an all-time low now, but finding the right tenants still takes work.
Would you even know where to start? Where would you advertise the property? How would you amplify the listing across print, digital and social media channels? Do you have any idea how much rent to charge? How will you ascertain market rates?
Potential tenants need to be thoroughly screened for their rental history, their financial capabilities and trustworthiness. As a first-time landlord, it’s unlikely you will have access to any rental databases or online ledger records for rental history. And you will not have happened across suitable tenants at other open houses or who have applied for different properties, because you’re not in that world.
The longer you spend messing around trying to find the right tenant, the more income you are missing out on while your asset is vacant. All these areas are where property managers come in very handy for landlords.
Fancy yourself as a people person who can get along with anyone. You’ll need to be that and more as you deal with tenants. You may find yourself bombarded with hundreds of complaints from a tenant, which you will have to take seriously even if you don’t agree with them or think they are unreasonable.
You may find a tenant falls behind on payments or stops paying altogether and then refuses to answer or return your calls. Would you know what to do?
What if there was damage to your property or that of a neighbour caused by your tenant?
Many things can and do go wrong with tenancies and property managers can draw on experience and their knowledge of laws and procedures for conflict resolution, rent collection and even the eviction process. You would be learning on the fly.
Properties can take a lot of maintenance. Tradies often have agreements with property management firms where they will discount their work in return for a lot of jobs. You won’t have that advantage.
Then there are the emergency repairs. If a burst water system is flooding an apartment at 2am, you will be the one to get the call to do something about it.
You will also need to conduct routine property inspections to help catch problems now that may turn out to be costly down the track. These need to be thorough with pages and pages of itemised issues or checklists satisfied.
