I have just purchased my first IP
!. There is a tenant in place, which is wonderful, and currently the property management is through the Real Estate Agency I purchased the property through.Their charges for property management are 7% + GST. So out of my $200 a week rent, they take $15.40
.I have spoken with the tenants who are a very easy-going couple and it wouldn't bother them if I was doing the management myself… but, I have no idea about the rules and regulations in doing this.
Does anyone have any advice as to where to find out this information i.e. rules for holding the bond, rights of the tenant etc. And does anyone have any advice about whether managing myself is a great idea, or a dumb idea!
Any advice, thoughts, personal experience would be greatly appreciated!
Thanks
JessI can't find a property manager under 9.35% in Perth so for you to just pay $15 a week is worth the peace of mind in my opinion, in saying that, it would be a good experience for you to manage yourself especially if they are good easy going tenants.
Hi Jess
We tried doing it ourselves. It wasn't a great experience for us, so we're happy to pay them their 7% or 8% these days. As far as we're concerned, if they do a good job, they deserve it.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Jess,
I have managed my properties over the years. I think you will find in this situation for every good story there is a bad story.I myself am ahead financially for managing them myself. One option may be to manage it yourself in this time and if and when your current tennants vacate then hand it to an agency to find new ones and manage it from then on. Sometimes the hardest part is just finding the tennants not so much managing it.
All states will have a website dedicated to legislation and procedures for landlords and tennants etc.
Hi Jess
7% is a pretty good management rate, so if they are doing a good job I would keep them. I think it comes down to if you have the time and tradesman contacts to manage it yourself and you live locally. Also if this is your first property, are you thinking of getting some more? More in one place could work, but if they are geographically apart it my become a bit of a headache.I think your time to learn and costs involved will work out more than $15 per week. I would spend that time and money researching you next property
RichardJessW –
Taking into consideration all of the good advice from the previous comments , my take on your circumstances are simply –
* $15.40 per week or approx – in rounded figures $62 per month, $720 odd dollars per year. What is the conservative capital growth of you IP per annum? More than $720? What are your tax structures/claims?If that worries you, quite frankly, get used to it. Your mindset needs to change. YOU are now building a property portfolio – well done.
I pay 7.7% on my IP's – Agent's organise inspections,bonds, tradespeople/repairs when needed, VCAT claims (Victoria), reletting, leases etc
Do I have the time? Yes, in a perhaps sort of way. More specifically, do I want to spend the time – NO.
Its all about leveraging your time.Regards
Noel
as Bruce Lee said – " the possession of anything begins in the mind"Thanks guys for replying – much appreciated! Hmmm…. some for and some against
I do plan on purchasing more properties, so I can see that it would become very time consuming once I had a few properties to worry about. But seeing as it was my first, I thought maybe it would be a good learning experience, and a good money saver, to go it alone. I know it's only saving $15 a week, but that's about how much I have to put in out of my own pocket to make the payments.
But, as Noel suggested, $720 a year isn't much when you compare it to the property's capital growth, and I could be putting my time into researching my next investment instead of worrying about tenants….
Thanks everyone for your feedback – I need to keep mulling over this one…..
Cheers
JessHi Jess,
I have tried both doing it myself and through property manager. My preference is to have someone else looking after my property specially if the location is far from where I live. The only time I managed myself was when I had bad experience with agent. 7% sounds reasonable to me.
i have tried it myself, without any experience my tennant decided not to pay rent, then refused to move out and when they finally did there was damage. i learnt plenty from my experience at a cost of around 4k
definately worth having someone more experienced manage it
I agree with fredo on this. I manage my IP in the town where I live. I use a property manager for the IP in another state (for obvious reasons). If I bought more IP's closeby I would gladly manage them myself. IMO if you have a good relationship with the tenants and get any problems fixed, you will find they will be happier to go through you personally than the middle man (ie PM). I do not feel it takes up much of my time and I enjoy doing it. With the money I save, I can use it to reinvest instead of paying a PM that does the same job as me.
In saying this, 7% is a very good rate. If you don't feel confident, keep them on. If you do feel confident, do it yourself. You can get all the information off the web.
This is just my opinion
please remember it is not just a % of the rent the property manager gets.
look carefully at your contract, there will be fees for relet, often 1-2 weeks, advertising for new tenants, postage etc.
a good property manager is worth the fees but a bad one will be expensive.
My IP is in Bendigo, where I live, so the proximity isn't a problem at all. It's those stories like shahabr tells that scares me a little. But, going from my gut instinct, these tenants are great and I don't think they'd be any problem at all….
decisions, decisions….
To be honest, we managed ours for a few years, then when the tenant moved out we decided to use a PM. We had an applicant who knew the previous tenants but we had already assigned the PM's so we let them take over the reigns…..it had been over a week that they put their application in and we knew they had and the PM hadn't even told us they had someone interested. So of course I got onto it. They let the IP to them. So basically we got the tenants for the IP without advertising. Then the PM's wouldn't pay us fortnightly (which was on contract). Would only pay us monthly. Didn't give us copies of contract, Prop Condition Report…….and the list went on and on. Of course we got onto that aswell but were not happy. Considering we were paying 10% flat fee (meaning everything was included in rate)
So after a few months we spoke to our tenants and they weren't happy with PM's either so we sacked them and did it ourselves again. They were great tenants. Since then unfortunately they built a house and moved out.
But this time we advertised ourselves and found another awesome tenant who is fantastic. We have an excellent relationship with them and have never ever had a problem. Lucky us…..Im not saying tenants like this are easy to find but they are out there. And I know there are excellent PM's out there too because we have a good PM for another IP but I definitely prefer to do it myself for the one close by
Firstly Jess, Congratulations on your 1st investment property.
Please understand that I mean no offense to your tenants as they may be just the perfect tenants.
Let me say this though. All tenants are the best when you 1st get to know them. When things go wrong, no matter how small, this is when things can get sticky. you will be bombarded with stupid phone calls at all times of the day & night. I would advise you to stick with your agency, especially if they are charging only 7% and doing a good job. I am not sure what research you have done but 7% is a fantastic rate.
Another important thing to remember is if you are looking at buying further investment properties in the future a good relationship with your agent can get only be in your favour. Of course they can not give you preferencial treatment but you will be one of the 1st to know of any great properties that may come along.
Stick with an agent 100%
DanAs people have pointed out there are pros and cons. I self-manage one property and have agents manage my other properties.
Advantages of agents are:
a. hopefully shorter vacancy periods
b. they get the phone call saying the HWS needs fixing and I don't have to take time out of a busy job to organise. They ahve the connections with trades and handypersons to get jobs done when needed.
c. hopefully they have better knowledge of rents and can keep the rent at market rentals
The property I self-manage is let on annual tenancy to tenants I know who pay through their employer and are proactive and willing to organise a repair if necessary after approval.
The RE that currently manages the property do have a good reputation – I wouldn't have an qualms about them as PM. So hopefully what happened to 'thirsty' – as described above, wouldn't happen! (but of course you never do know!).
Dan – I was thinking the same thing, of course the tenants seem great now, but it could all go pear-shaped if something goes wrong in the future….
I am so totally undecided! I've just received all the paperwork from the agent for me to sign if I wish to continue using them, so I've had a good read of that, and honestly after reading it all I think it may possibly be easier to just stick with them and pay my 7% etc.
Hi Jess
7% is pretty good rate actually.
I use a PM and actually I think they are worth it. 7.5% I pay.My advice to you would be spend $600 bucks and do a real estate certificate of registration coarse. Its a 3 day coarse and qualifies you to manage and sell real estate. This will give you some incite into what PMs actually do and also will prepare you to take on the role yourself.
Lets assume your tenant gets behind in rent or stops paying rent. Do you know what steps you need to take to protect yourself and your investment? Do you know whats needed to take a tenant court? If you answered no, then get yourself educated first before you go a head and manage the property yourself.
I would say that most people that had bad experiences with managing their own properties, were not educated in managing a property and thus made costly mistakes. More than the $15s a week.
If are not interested in doing the coarse, then I would say talk to all the PMs in your area and compare prices and cut the best deal possible. You might find that one PM might give you a better rate just to get your business. Having said that remember that a good PM is worth paying more for.
Good Luck
GOk – It's decided! I'm going to stick with the PM. It's only a small price to pay for peace of mind. Decision made – thank goodness for that!!!
Thank you so much to everyone who has replied and given me their experiences and opinions. That's what I love so much about this forum is that everyone is so generous with their time and feedback.
Thanks again
JessHi Jess.
Lots of good advice for you so far. I would say we have managed several ourselves and found it to be ok, but my husband is very good with people and a multi-tradesperson able to do repairs. In particular it has been great to get rent straight away, and not have to forego the first two weeks of rent to the property manager. However, you do get phone calls as has been mentioned, sometimes when you are away on holiday, etc!! You need some back-up with tradespeople who will respond to problems if you can't do it.
We use property managers for a couple of houses, and their particular strength is in getting the best rental. Also they are a third party and I believe its easier for them to be professional with tenants than for you or I. If you want to look into doing it yourself down the track, contact the department of business and consumer affairs (equivalent in your state) they have a package for landlords that has all the official forms for inspections, pre-inspections, lodging bonds and so on. You might like to draft a form to hand out to prospective tenants that details your property, and one for them to fill in so you have all their information (such as references). I would recommend books by Margaret Lomas. She has some great stuff about selecting property managers which is information we all need to bear in mind. Also read the previous discussion on this site about experiences with property managers. If your future properties are not close by and possibly in less desirable areas, property managers can be essential. In fact, I have rung them to discuss buying in the areas I am considering and they can provide great insights. Good luck!
G
Hi Jess,
That is a good rate, ours is 8.5% and I know in some places on the coast is 12%, do your research, check out your Real Estate ask lots of questions, check out others in your town, your Real Estate should have given you a pack from the RTA with all the rules and regulations if not ask for it, You can do it yourself by ringing the RTA, but remembering that Real Estate (if they are a good one) are trained how to deal with a lot of situations/personalities and can be a God send and worth that 7% and more, the tenants might be easy going on the outside or the start, but when it comes to money and cents they can turn really nasty, if you read up on your rights and work with the Property Manager, you can build a good relationship. By the way I started out as a Property Manager and now in Sales and alot of my Rentals have turned into Sales and the good relationship flows though. WE ARE NOT ALL EVIL LOL
!. There is a tenant in place, which is wonderful, and currently the property management is through the Real Estate Agency I purchased the property through.
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