Landlord’s guide: Should you manage your own rental property?

First-time landlords who assume that managing rental properties mainly involves just collecting rent are unfortunately in for a rude awakening.

Any seasoned property investor will tell you that being a property owner is one thing — but managing a rental property is a whole different ballgame. 

When investing in rental properties, there are a lot of tasks that need to be done on a regular basis if you want to find long-term success. Aside from minding rental payments, managing a rental property involves placing ads, addressing maintenance issues, screening potential tenants, showing properties and more. 

However, all that work doesn’t need to be done by you. There are plenty of professional property management companies that can take care of most of the above list and more. However, hiring a proper manager may not be a perfect solution either.

So should you manage yourself or hire a property management agency? While there is no “one-size-fits-all” solution, there are key issues that a real estate investor should consider before making a decision.

Costs 

One of the key reasons that a landlord may choose to manage their own rental property is to save money. 

Usually, property managers charge for services as a commission of your weekly rent plus goods and services tax (GST). However, it’s hard to get a sense of how much you can expect to pay, or what the average cost of property management is, as there are various factors that may influence the amount you’re charged, such as location and type of property etc. 

According to the comparison site Finder, landlords can expect to pay a commission of between 7 per cent  and 10 per cent of the weekly rent plus GST. However, agencies that were surveyed reported commissions as low as 4 per cent  in some areas and as high as 15 per cent in others. 

So, if you manage your own property, you’ll be able to save on property management fees. For some landlords, the extra cash flow can be invested in other assets or can be used instead to boost the rental yield of the property. 

On the one hand, it’s important to keep in mind that property management costs are tax-deductible and should be claimed to reduce your taxable income. 

Additionally, the cost of hiring a good property manager is typically offset by the value they add to your business operations. After all, an experienced and highly skilled professional manager knows how to minimise operational expenses.

Plus, some of them often have partnerships with local vendors and tradespeople, which means you have a higher chance of getting discounts.

When talking about costs, it’s also not just about money. It’s no secret that managing a property can be a time-consuming and stressful undertaking. And for some landlords, the peace of mind and the amount of free time that comes with hiring a full-time property manager can be priceless. 

Real estate industry knowledge 

Of course, people are not born with natural landlord skills. But if you choose to manage your property, you must be willing to invest the time needed to learn how to become a great landlord. 

This means you will take the time to read landlord books, listen to real estate podcasts, talk with local landlords, and learn more about the real estate market by doing your research.  

The more you will learn about the inner workings of real estate investing, the easier it will be to grow it. 

There will be setbacks in the beginning, but self-management can help you to become sharper and smarter in the rental industry. Hence, making it easy for you to find the best ways to maximise your returns and grow your investment over time. 

But while it’s true that self-managing presents you with an opportunity to learn and gain experience, it also means that you’ll be experimenting with your rental property. 

If you didn’t take the time to learn about being an effective landlord and you only established bad practices, there are many mistakes that can lead to massive losses or even closure.

On the other side of the coin, a good property manager will have the proper knowledge to help get you started on the right footing. They have time-tested systems for different processes that can help improve how your rental property operates.

If you have a good property manager in your corner, it’s also likely that they’ll help you to learn a thing or two about rental management.

Investment control 

If you choose to manage your rental property, this means you have 100 per cent control over everything, as you will be responsible for the day-to-day property management tasks.

Whether it’s collecting rent, marketing your property, screening prospective tenants, handling tenant issues, property maintenance and repairs, you will be in the front and centre of these tasks. 

On that note, the DIY set-up is ideal for those who find motivation if they are more hands-on with their approach to their investments. After all, it’s your money on the line, and chances are you’ll be highly motivated to make things work and grow your investment.  

But while the DIY set-up gives you full control over your investment, it’s important to ask yourself if you are truly ready for the professional obligations that come with being a property manager and if you are able to separate business from emotions. 

Remember that being a DIY landlord means you have to face difficult issues head-on and with no middle man to help you out. Picture the following scenarios and evaluate your potential answer/reactions:  

• Are you prepared to evict a tenant?
• How will you handle maintenance and repair requests?
• How will you handle late rental payments? 
• Do you have the personality type that can keep your relationship with your tenant a business one?
• If a tenant wants to break their lease early, can you assert your legal rights as a landlord?
• Can you roll out a full marketing campaign? 
• How will you tackle legal disputes involving rental payment, lease conditions, and bond claims? 

Unfortunately, these uncomfortable scenarios come with managing rental properties. As a DIY landlord, you need to be certain that you are going to be able to do these things without getting emotionally involved in the situation.

For landlords who think they are up for these challenges and are willing to roll their sleeves up and feel they can thrive under pressure, it can be a great learning opportunity on how to handle difficult situations.

But if you’re willing to take a backseat, it may be a better option to hire a property manager to take care of these tasks for you.

Final word 

There is no definitive answer as to whether you should hire a property manager to manage your rental property or if you should go the DIY route.

While there are plenty of investors who have managed their properties from day one and found enormous success in the long run, there are also those who found it more worthwhile to employ a property manager in order to help manage their real estate investments. In the end, the decision will depend on your personal circumstances as well as your financial goals and objectives.  

If you’ve decided to hire a property manager, we’ve got you covered! Read our guide on how to choose the right property manager for you.

For those who are looking to step up their property management game, learn how to better manage your properties via the latest market updates and investor tips by checking out the Smart Property Investment’s Property Management page. 

Disclaimer: The information provided is of general nature and should not be considered as financial advice. It is not to be acted upon without advice from a qualified professional who understands your particular circumstances.

Tune in to our podcasts covering a variety of topics related to the real estate market. You can also follow Smart Property Investment on social media: Facebook, Twitter and LinkedIn. 

Share