imugliMember@imugliJoin Date: 2005Post Count: 87
Am looking at purchasing an IP that is currently tennanted and the tennant wants to stay.
The property is approx 2.5 hours from where I currently live.
Am after people's opinions – is it better to rent it privately (and deal with the potential calls in the middle of the night myself) or have it managed by an agent? What are some reasons for and against both options?
J.maree_bradrossMember@maree_bradrossJoin Date: 2007Post Count: 401
We privately rent. It has been working out fine – tenant pays straight into our bank account. We charge slightly below market rent (as we don't pay fees). She appreciates this and has used this money towards a gardener, fantastic for us as the property is very well kept and presentable.
The property is a 3hour drive away.
So far – so good for us.
Edited to say – she pays fortnightly by direct debit, which we agreed to as she gets paid fortnightly (better for us)
CheerscorhigParticipant@corhigJoin Date: 2007Post Count: 37
Personally, I would get too emotional managing the properties myself. We have 5 and go through PM's every time. They actually don't get much money for what they have to do. I know that if I got to know a tenant, after a year, when normally I would ask the PM (or they would suggest to me) to increase the rent, I would personally find it difficult to ask the tenant to pay more. So I would employ a PM every time. Especially when its not your thing, and you don't know the exact legislation.Wealth AccumulatorMember@wealth-accumulatorJoin Date: 2008Post Count: 67
The biggest issue I see with some property investors is becoming to emotionally attached to both the property and the tenants. Spend your time earning income to fund your next property venture rather than get tied up with the ins and outs of dealing directly with the tenant. Time is money – a good property manager makes the investment more passive.
Hope this helps in making your decisions.jkmtMember@jkmtJoin Date: 2004Post Count: 25
Usually we get a PM to look after our properties. However, we did have one that we privately managed, which worked out well. Tenant deposited straight to our bank account. As we were distant, we also paid a small fee to a local to keep an eye on the property and to handle any maintenance issues. We were happy to self manage this one, as it was a quality tenant with a good track record and immaculate housekeeping, and we probably would have got a PM in if that tenant had moved on. In the end, the tenant eventually bought the house from us. Do think about things like can you cope with giving rental increases, and how would you handle issues such as non-payment of rent or damage to the property.
CheersBuying_FreedomParticipant@buying_freedomJoin Date: 2008Post Count: 16
When I first started investing in property, I privately managed my property. I found it very hard to increase the rent. I also found that the tenants seemed to ask for things a lot more since they had direct contact with me. They would ask for things like curtains instead of drapes in the bedroom, vinyl instead of carpet in the lounge…the list goes on. When the lease ran out, I got a property manager and they marketed the property $25 per week more than what I had it rented. Since that first property, I have put all further property purchases with a property manager. I would recommend getting a property manager as I think they pay for themselves. They usually know of good maintenance people and it saves you having to receive calls from a tenant at inconvenient times.imugliMember@imugliJoin Date: 2005Post Count: 87
I appreciate the advice. Looks like most are generally in favour of having the property managed.
I'm a debt collector, so have problem at all asking for money but the legislation point is a good one as is the time factor.
Thanks again!BanjoSmythParticipant@banjosmythJoin Date: 2007Post Count: 44
Just the other day i posted an article on my blog about this exact question. Ive posted it below if your interested
When you are leasing out your property you will be faced with two main options. You can either employ a real estate agent and let them do all the work for you – or you can rent it out yourself. There is no right of wrong answer; it simply depends on your situation.
The Positives of using a Real Estate Agent when leasing out your property.
– You will be able to completely forget about your investment property and concentrate on new and more exciting things (like figuring out how you can buy your second investment property
– Real Estate agents know what to look for in tenants and ‘should’ be able to pick a high quality tenant.
– If something goes wrong they will be there to fix it. If you live a very busy life the last thing you want to have to do is fix a leaking tap after work.
– They will handle all the paper work and rental agreements.
The Negatives of using a Real Estate Agent when leasing out your property.
– The most obvious negative is the cost. Most real estate agents will charge you a management fee of 7.7% of all rent, plus a set up fee of 5.5% of the annual rent.
– Therefore if your tenants were to move on every 2nd year you would pay 10.4% (on average) of your annual rent to your Real Estate agent.
– So if you were renting your house for 300 per week you would pay the real estate agent $1622 per year out of your annual rental income of $15,600.
The Positives of leasing out your property yourself.
– You will save money.
– You will be able to oversee all maintenance and problems which will probably mean that you will be able to save some money on repairs (especially if you are a bit of a handy man/woman).
– You can personally choose the tenant and find someone that you think will suit the property. Don’t underestimate the ‘good’ feeling that you will get when you make somebody very happy by giving them the opportunity to live in a great house.
The Negatives of leasing out your property yourself.
– The main negative is the ‘time’ factor. If you live a very busy lifestyle it can be annoying if you are constantly getting phone calls from your tenants.
– You will need to organize your own rental agreement and lodge a bond. This is much easier than it sounds and all the relevant information is readily available on the internet.
It really comes down to deciding what is more important, your money or your time?
If you do lease out your property yourself I think the best way to look at it is to think that you are employing yourself. If we use the above example you would basically being paid $1622 per year to be your own real estate agent. If that sounds like a pretty good deal then I would have no hesitation in recommending that you lease out your property yourself. Best of luck.maree_bradrossMember@maree_bradrossJoin Date: 2007Post Count: 401
One other point I forgot to mention is that we have lodged a spare set of keys with the local locksmith.mick64Participant@mick64Join Date: 2012Post Count: 45
Are there any private managers on the forums subscribe to Tica or other similar reporting agency's?
I would appreciate any opinions both positive and negative.
I don't think you can subscribe to TICA unless you are a Real Estate person. However there is a new thing I saw in November's Australian Property Investor magazine (pg 10). http://www.tenancycheck.com.au . Private managers can indeed use this.mick64Participant@mick64Join Date: 2012Post Count: 45
$22 is a lot cheaper than Tica anyway!
Veda own the site and they are one of the main credit reporting agencies so should be credible.
No worries Mick, best of luck with whatever you decide. Do try to remember that a PM gets what, 7% of say the $15k rental roll… so less than $1000 to handle everything, while you get on with the business of earning cash to fund more properties, and analysing the market. Do you really want to spend the entire year ensuring you are up to speed with the latest tenancy laws, all to save less than $1k ? Give it some thought. Also check what your insurer has to say about it. Some increase premiums on self-managed properties.Gazza21Participant@gazza21Join Date: 2012Post Count: 54
If the insurance is more expensive that says it all, its higher risk.kong71286Participant@kong71286Join Date: 2009Post Count: 261
Thanks for sharing the website JacM
Will come in quite handy when it comes to filtering through potential tenants to sublease rooms tomattstaParticipant@mattstaJoin Date: 2011Post Count: 604
I am for a professional property management. Private management might work out, but it is more benefits in having a person or team who know what they are doing managing your property.vyvyenParticipant@vyvyenJoin Date: 2004Post Count: 21
Hi, We privately manage our investment properties that are 2 hours away from where we live. We previously had them under management but found they were not actually managed at all. We have found it much better to manage ourselves and everything is contractual and done by the law. God luckJpcashflowParticipant@jpcashflowJoin Date: 2007Post Count: 575
Property management fees are tax deductible where your time isn't.
I would rather pay some one x amount of dollars and spend my time focusing on other things
I worked as a real estate agent and still had a property manager looking after my properties
Spend your time on making money rather then chasing moneymurfspcParticipant@murfspcJoin Date: 2010Post Count: 1
There are heaps of great opinions and advice in this post. I think that a PM is easier IF they are professional and do what they are supposed to do. I am very happy with my current PM but I have been on the receiving end of a poorly managed property. It turned into a nightmare and eventually in court. One good outcome was that we were very particular about the next one we chose. We went to everyone available in the area and there was one that just stood out above the rest. It pays to do you homework.