All Topics / The Treasure Chest / Should I have a property manager..

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  • Profile photo of JohnDesengoJohnDesengo
    Member
    @johndesengo
    Join Date: 2002
    Post Count: 1

    Hi all
    Iam just about to start out on buying one or two properties to rent out…
    Now I have been told that it is a good idea to have a property manager.
    But I see it as a waste of money….am I right…or should I have a manager..

    Hey I know it maybe a silly question but I would like to know what
    most people do..

    Thank you

    Profile photo of Brett_2Brett_2
    Participant
    @brett_2
    Join Date: 2002
    Post Count: 47

    Hi John,

    This is a situation I will find myself in a bit later once I make my first purchase. My personal view is that time is your most valuable asset. By buying the services of a property manager you are infact buying yourself time that would otherwise be spent dealing with the tenant, fixing toilets etc..etc.. If you get a property manager, you’re diverting a small % of your monthly rent to have all the affairs of the property managed so you are free to look for bigger and better deals. On the other hand you could save yourself a little money and manage your properties yourself.

    If you do plan to manage the properties yourself to save yourself the money then I would strongly suggest that you invest the time to learn how to be a property manager and speak to others who manage properties themselves to hear how they’re going, what troubles they’ve had, issues they’ve had to deal with etc. Perhaps there are others here who can give their input on how they’ve gone managing their own properties. [:)]

    Regards,
    Brett

    Profile photo of NessieNessie
    Member
    @nessie
    Join Date: 2001
    Post Count: 73

    Hi John

    If you intend doing your own property management, Brett is quite right- make sure that you know how to be a property manager. I have had a property manager and boy am I glad to be parting company. I am now taking over the management myself because my property manager persuaded my tenant to rent another property, which was on her books untenanted for several months, when the lease was up for renewal. Plus she failed to get the water meter read and now I am left with a large water usage account.
    I acquired a copy of the Residental Tenancies Act and have read it and re-read it so I know the law. In my experience tenants know the system and how to abuse it and the landlord.
    I have discovered that you can make the tenant responsible for certain repairs such as blown fuses, blocked toilets etc. if you put the special clause in the lease. That way you are not at the property wasting time fixing things.

    Hope this is helpful

    Cheers
    Nessie

    Profile photo of HicksterHickster
    Member
    @hickster
    Join Date: 2002
    Post Count: 8

    John, being a former Property Manager I can strongly recommend having the property managed by someone else as it frees up your time and is TAX DEDUCTABLE. The key points are: do you have the time to learn the RTA Act and manage the property professionally? If you decide to have the property managed, MAKE SURE YOU SHOP AROUND AND INTERVIEW POTENTIAL MANAGERS EXTENSIVELY including finding out the support network for the rental department within the office itself i.e. does the principal support the rental department and is your manager a manager or a receptionist/manager – avoid the latter!!! Too many real estate offices put a junior in without training and without any idea what they are supposed to be doing. Laws have tightened up now on the training but only for new managers.

    When my husband and I start investing early next year (finalizing the building of our home first to get the equity) I will manage the properties myself in the beginning as I know the RTA Act back to front but once we get above about 10-20 (depending on time available) I will then likely hand over the management.

    As always the choice is yours, there are always pro’s & con’s. Goodluck!

    Profile photo of ADAD
    Participant
    @ad
    Join Date: 2002
    Post Count: 636

    Top discussion and great points.
    For me I look at this way. I currently pay 8% flat for all mgt. They collect all the money, chase people if they have to, organise quotes for repairs, tenant the property, etc.
    At the moment they have about $600/week of rent they manage. This will soon be 900+/week due to recent purchases.
    so on 900 I pay around $80/week in mgt fees (including GST).
    $80 per week is $4160/year. This may seem like a bit of dough but on the flip side I don’t have to deal with all the little problems. My time is very precious to me and so what time I have free is spent out there doing deals. $4000 is nothing when on the average deal I am making about $10-15K on the buy and they are paying for themselves as they grow (cash positive).
    As another example my first wrap generated $3500/year with a back end of around $10K, these are average numbers for a wrap and I know the next one will be much sweeter. I guess I see the money as being cheap because I don’t want to waste my time doing property mgt things when I could be doing deals that make more money.
    I was very tempted to self manage but I am glad I went this way as now that I have 5 (nearly 6) properties under mgt the numbers get harder as you get bigger. I currently have 8 properties and I want to achieve a minimum of 17 by tax time so for me to do this I must spend my time wisely.
    8% to me is a small amount to pay for a professional to manage my tenants for me when I am making a profit by growing.
    Steve always says to look at leveraging your time and knowledge. To me this was an easy lever that enabled me and still enables me to do more deals.
    It does take time though to find a good property manager so spend that energy and find a good one.
    I also used a property manager form one onwards because I wanted to see how they handled my sole property because if I want to buy many more then I want to feel confident in their ability with one.

    Hope this helps.

    Enjoy
    AD [:0)]

    A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
    -Sydney Smith

    Profile photo of Brett_2Brett_2
    Participant
    @brett_2
    Join Date: 2002
    Post Count: 47

    As discussed the options are relatively straight forward:

    1. Spend a small % of your cashflow on getting proffesional property management so that you have more time to look for bigger and better deals.

    2. Manage the properties yourself, increase your cashflow a little bit but spend more time dealing with tennants, problems, learning how to effecitvely manage etc.

    So lets assume that want to go down the track of getting professional property management. Where do we begin? What issues/criteria should be covered in meetings with potential managers?

    Here is a small list of issues which I think you should make sure your property manager has the capacity to deal with, perhaps others would like to add their own issues so we can put together a comprehensive list for people to use in the future as a reference.

    They should:

    * Advertise the property to prospective tenants in an efficient manner to minimise property vacancy and personally interview and reference check all prospective tennants.

    * Have all Tenancy Agreements in writing, incorporating all the terms and conditions of the Tenancy.

    * Lodge the rental bond with the appropriate agency.

    * Have the tenant sign a written report on the condition of the property prior to tenancy.

    * Provide a monthly statement with rental monies.

    * Notify owners about necessary and prevenative mainenance.

    * Conduct a routine inspection of the premises every six months and provide written report over 12 months (unless one is needed sooner).

    * Have a team of maintenance contractors on immediate notice.

    * Inspect all major maintenance work prior to payment.

    * Pay property accounts and statutory charges as directed, including water rates, council rates, body corporate fees, public lighting, insurances etc.

    * Provide effective follow-up of rental arrears.

    * Prepare applications and serve notice to the Tenant and the Residential Tenancy Tribunal in compliance with relevant legislation and/or the Tenancy agreement.

    There’s a bit there to think about, but looking it over I think I will be more than happy to have a proffesional deal with all that. :)

    Regards,
    Brett

    Profile photo of JohnDesengoJohnDesengo
    Member
    @johndesengo
    Join Date: 2002
    Post Count: 1

    To everyone that replied to my question….thank you all so much. It was great to read the views of all the replies and now I feel a bit more at ease in the direction I will go….

    Cheers
    John[:)][:)]

    Profile photo of MatthewKellyMatthewKelly
    Member
    @matthewkelly
    Join Date: 2002
    Post Count: 17

    John,

    If you are worried about performance of property manager’s, why not approach them with a contract between you and them based on performance? A little like a Key Performance Indicator (KPI). Perhaps you could have it corresponding to the vacancy factor on your properties. Eg: Say you are prepared to pay 10% for 100% tennancy, 9% for 95% like a sliding scale.

    I haven’t done it myself but it just came to me whilst reading your post. Food for thought though. If the agent was serious and committed, then they may be happy to go by it….

    Regards.
    Matt

    Profile photo of SooshieSooshie
    Member
    @sooshie
    Join Date: 2002
    Post Count: 974

    Hi John,

    You’ve been given really good advice! There are property management courses available. I’d read the posting about Bad tenants..perhaps put yourself in that persons shoes and see how you would handle it. It’s enough to scare me off! You might be really good at that sort of thing…
    Which ever way, I wish you luck…it never hurts to learn!?#?!

    Cheers [:)]

    Sooshie

    There are no problems, only solutions!

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