Should you hire a property manager or do it yourself?
You've spent hundreds of thousands in investment funds on a property, now what? Deciding whether to hire a property manager – often a real estate agent – or to apply a more independent approach and self-manage your investment property is a choice every property investor has to make. Ultimately you need to decide what's right for your situation, but weighing up the pros and cons of using a property manager can help you come to a more defined conclusion and a plan that works for you.
What is a property manager?
Quite simply, a property manager is someone who looks after your investment property for you. They'll often handle everything from listing the property and finding the right tenants, to collecting payments and handling tenant issues. For their services, most property managers take a percentage of the rental income, usually around the 7-10% mark.
Pros of property managers
- Save you time – This is the big one for most investors. Managing an investment property can be very time consuming. A property manager's job is to: list the property, conduct tenant inspections, find the right tenant, manage rental and bond payments, handle tenant issues, conduct property inspections, and generally act as the conduit between you and the tenant.
- Save you the hassle – Getting your investment funds to work for you is what an investment is all about. A property manager can take away some of the stress by sorting out any property maintenance issues, such as a plumbing emergency. Without a property manager you'll need to be on call to sort it out, as well as have a good list of emergency contacts for all the key tradie jobs. Your schedule is probably busy enough, without having to worry about the hassle of dropping everything to sort out a tenant issue. A property manager can also chase up any unpaid rent, and have those hard conversations that sometimes need to be had.
- Sort out the legal stuff – As part of being a licenced professional, property managers have a good understanding of tenancy law and the rights of both tenants and landlords. They're well versed in giving tenants correct notice of any contract alterations, e.g. rises in rent or notices to vacate. They can also handle any tenancy disputes with you if it comes to that.
- Remove emotion from the equation – A property manager has your financial best interest in mind, without having the emotional attachment that comes with owning an investment property. Therefore, they're often best equipped to make decisions objectively.
Cons of property managers
- Property management fees – You can save money by managing your investment yourself. Most property managers take anywhere between 7% and 10% of your rental income for their services, which can eat away at your precious investment funds.
- Not all property managers are created equal – Property management agencies often have staff at varying levels of experience. And while an experienced manager might handle the big stuff, they may delegate the day-to-day running to a junior manager, whose skills might not quite meet your expectations.
- Your number one asset may not always be theirs – Property managers look after more than just your property, which can mean that they're not always putting your property at the top of their priority list.
Having an investment property can be a very rewarding experience. Whether you take on the task of managing this property yourself, or you get a professional to do it for you, all depends on how much of your own time and effort you're willing to invest.
If you're thinking about investing you should always seek independent financial advice. A qualified financial planner can help by discussing your financial objectives and needs. A financial planner can also advise you on an investment property loan, as well as any tax effective investment strategies, such as negative gearing .
Information provided is general advice only and has been prepared without taking into account any person’s particular objectives, financial situation or needs.
The information should not be used as a substitute for professional advice. No responsibility is accepted for any loss incurred as a result of reliance upon any information presented – please make your own enquiries.
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product