For a lot of property owners, the next step after buying an investment property is determining whether they want to self-manage it or hire a property management company.
Hiring an independent property manager is also an option, but if you are on a tight budget and rather save on management fees, you could choose to manage your investment properties yourself. But is saving some money worth the effort of handling the administration and ongoing maintenance by yourself? Lets take a look at the pros and cons.
Self-Managing a Property vs. Hiring a Property Manager
Before choosing between DIY or hiring a manager, you should consider agency fees and services they offer. Agency fees are usually based on a percentage of the monthly rent, as well as on extra costs that roll in such as advertising and marketing costs, preparing necessary paperwork, and hiring contractors. Fees will also depend on where your property is located, the current market supply and demand, and the services that a property manager offers.
It's also important to know what responsibilities a self-managing landlord has. Some of your key tasks will include collecting the rent, dealing with tenants that are late on rent, implementing late rent fees, and handling evictions.
You are also required to provide a standard residential rental property agreement that should include the following aspects:
- The term of the lease
- The terms for future increases in the monthly rent
- A maintenance inspections schedule
- A pet agreement in which you clearly state whether or not you allow pets on your property. If your property is pet-friendly, you should include the additional terms regarding pet deposits and pet care
- A condition report in which you offer a detailed description of the property. The condition report should include high-quality photos
Knowing obligations and legal rights associated with managing a property
If you are currently leaning towards managing your own properties, then you should start familiarising yourself with the obligations that you have, as well as your legal rights. State laws and regulations will probably change quite frequently, so staying current should be a priority.
Before tenants move in, you have an obligation to ensure that the property is safe, secure, and clean, and that all the facilities and appliances featured in the advertising are functional.
Once tenants have moved in, it will be your responsibility to handle maintenance tasks and repairs in a timely manner and to have a good relationship with tenants.
Set rent in accordance with current market conditions
While you are figuring out what to charge for rent, its important to find a balance between what you think you should receive and what your local market can deliver.There are many websites that offer rent reports to update you on the current market conditions, allow you to compare properties, and to know what others are charging for similar rental properties.
Once you’ve come to a fair solution, find a convenient payment method, and start making arrangements with your tenants. Don’t forget to set a late rent fee.
Finding out if a tenancy applicant has a bad rental history
As a self-managed landlord, it may not be easy to run background tenancy checks on your potential tenants. A professional property manager is more likely to have access to these resources.
However, landlords can also get access to these platforms, but they will have to pay a fee. By requesting an online rental report on a tenant, you will learn whether they are a suitable choice or not. If the tenants have a bad rental history, your should consider rejecting their tenancy application.
Managing the property
When you self-manage a property, you might have to handle emergency situations yourself. These can occur unexpectedly and even during the night. As a property manager, you will have to make sure that your tenants are safe and find optimal ways to minimise the damage.
Some of the most common property management tasks that you will have to handle are problems with:
- Utility connections
To protect your investment property, regular maintenance checks should be conducted as well as a record of any incidents and observations. The feedback should also be passed onto your tenants, along with clear instructions of how the issues will be handled.
The best thing to do when dealing with plumbing or electricity issues is to hire licenced professionals. The easiest way to find local contractors is by using Bricks + Agent's cloud-based property management platform.
Simply sign up, list the job, and wait for local contractors to place their quotes. For more helpful tips and self-managing advie sign up to our newsletter below!