The Challenges (or Pitfalls) of Self-Managing Your Investment Property

We’ve come across many Landlords who have been self-managing their investment properties over a period of time, and for one reason or another have decided to make the change and engage us to manage their properties for them.

Unfortunately, most of these decisions are based on situations that may have started as a minor hiccup, and then developed into a catastrophic disaster in some instances. They then find themselves in murky waters and look to us to throw them a life line.

It’s prompted us to delve into the world of self-managing a property and whether or not the rewards outweigh the challenges.

At a glance, self-managing a property appears to be easy.  There are oodles of websites shelling out bucketloads of information on the topic of property management. All legal documents such as general tenancy agreements and entry notices are available on government websites. Lodging bond and collecting rent can all be done electronically so cash handling can be avoided.

But if you hear a rattle in the engine of your car, or feel a strange pain in your chest, or get confused about your superannuation options, do you go online and research about fixing the family car, self-diagnosing  health problems and weighing up the risks of different investments? In all likelihood, you would go to a professional who can give you advice based on their expertise and experience.

So for an asset as important as an investment property, why would you do anything different?

Yes, there is certainly an abundance of information online regarding managing a property. But how do you keep up with this ever-changing landscape? Legislation abounds – and differs for each state. Tenants have rights – and will do their own research to ensure they are being fairly treated. Fronting a tribunal with a legal dispute requires hard evidence to show correct documentation was used and procedure was followed – otherwise you don’t have a leg to stand on and could be at the mercy of a long and drawn out legal battle. Meanwhile, money is draining from your hard-earned investment, particularly if the legal battle means the property has to remain empty until a decision is made.

Scary stuff.

But what’s the benefit of self-managing? You save money of course. But do you? Did we happen to mention the possibility of long and drawn out legal battles? But we’re not here to scaremonger. We are here however to outline what is obvious to us because we work at the frontline of the industry, but may not be so obvious to a first-time investor who wants to give it a crack themselves.

So what those property management fees are paying for.  Ask yourself these questions:

• How much rent is my property worth? Do I have the tools to appraise it and compare it against what else is on the market?
• Are there minor adjustments or renovations I could do to make the property more attractive to a potential Tenant? What exactly are Tenants looking for?
• How do I market my property? Websites? Newspaper? Social Media? And how do I get on to the websites that are only accessible by real estate professionals?
• When I find a Tenant, how can I check and see if they will take care of my property and pay the rent on time?
• Am I up to date with compliance requirements such as smoke alarms and swimming pool regulations?
• What documents are required to sign up a Tenant, collect bond, receipt rents, issue breach notices, instigate or respond to a dispute?
• What is an ECR? And why is it vital?
• Do I have time to take phone calls about dripping taps, a door that won’t close properly, the hot water system not heating, the air-conditioners not cooling – and then the extra time to further investigate those issues, book a contractor, check to see if he/she has completed the work properly, wait for the invoice, and pay him/her?
• Do I have time to regularly inspect my property to make sure it’s been taken care of? Do I know how often I’m allowed to go into the property for these regular inspections? Do I know the legislation around what I require to enable me to regularly inspect my property? And if I find the Tenant is mistreating my property, what do I do?
• What do I do if the Tenant keeps paying rent late?

And the list goes on…

It’s a confronting industry. There are various tensions at play which involves not only being able to maximise your investment at a business level, but also dealing with a person and their rights and responsibilities of living in their home (even though you own it) at a personal level.

The path is often not smooth – it can be a veritable minefield – but with the right checks, processes and procedures, and open communication, the small bumps avoid becoming mountainous obstacles.

For any further information on property management (yes, there’s loads more!), feel free to contact us on 4755 9559.