Owning and leasing a property can be a highly profitable venture, but money never comes easy, and renting out your investment can be challenging.
Tenants invariably have demands – even the undemanding ones! – and attending to requests, queries and maintenance issues can be time-consuming and stressful. One way of eliminating that stress is to make use of a property manager.
What is a property manager?
A property manager is a third party that acts as an intermediary between you and your tenants. Depending on the extent of the contract you sign with the agent, they can be responsible for
- finding new tenants when the property is unoccupied
- assessing prospective tenants? suitability and performing checks (e.g. obtaining references)
- collecting regular rental payments from tenants
- carrying out property inspections maintaining a condition report
- dealing with and looking after tenants – answering queries, booking tradespeople for repairs and generally acting as a go-between for landlords and tenants.
The case for and against…
Before enlisting a property manager you need to weigh up whether it is the best option for you.
According to Evgeniya Hawthorne, research officer for the Real Estate Institute of Australia (REIA), property self-management is not uncommon. Despite 54.3% of occupied rented properties in Australia being managed by real estate agents, 22.7% are self-managed by landlords.
“Although investors who choose to self-manage their properties avoid paying management fees, the amount of work involved should not be underestimated,” she says.
“There is a cost to managing your own property … investors have to keep themselves up to date with relevant legislation and regulations – something a professional property manager does under their continuing professional development.”
Other benefits of engaging a professional include:
- Marketing resources – a property manager will have a wealth of facilities and contacts available to them, from a strong online presence to connections within the industry, ensuring they can cast a wide net when looking for a new tenant.
- Experience – looking after rental properties is their day job, and they will have encountered all sorts of scenarios. They will also know the right things to look for in a prospective tenant.
- Availability – unless you live close to your rental property, you can?t be on hand to deal with practical issues immediately (many landlords own property in other cities or even states). Employing a property manager means you?re not tied – you can jet off on holiday without having to worry about things going wrong when you?re not around.
So, what of the cons? Is it ever worth managing your own rental property yourself? Like all good arguments, there are two sides to this one. Some of the advantages to DIY property managing include:
- Saving money – property managers, not surprisingly, charge a fee (anywhere between 5% and 12% of your weekly rental yield*). It is worth remembering, however, that management fees are tax deductible.
- Loss of control – With somebody else running the show, you don?t get as much input into the way things are done.
- Priorities – Your property, your baby. A property manager will almost certainly have a fairly extensive portfolio of properties to run, and there is no way yours can always take precedence.
“When deciding whether to use the services of a property manager,” Evgeniya says, “it is worth remembering that there are options … an investor may use an agent to find tenants and handle the bond details and then manage the property themselves. In this case, investors [only] pay the agent a letting fee.”
Whatever you decide, she adds, “weighing the pros and cons and knowing your options are crucial … using the services of a real estate agent to manage your property can help maximise returns and bring peace of mind”.
