One of the biggest milestones you’ll encounter on your climb up the property ladder is becoming a landlord. Which means that one big decision you’ll face is whether to hire the services of a managing agent, or take on the responsibility yourself.
I want to preface this article by saying that there’s no wrong or right answer here. Well, generally speaking there isn’t.
Basically, it will boil down to your individual situation.
Do you have the time (and patience!) to manage the property? If so, you can probably save a good chunk of your rental income each year by managing it yourself.
However, if you’ve already got quite a few balls up in the air, then you’re probably going to want to offload the ‘managing the property’ ball to someone else.
Now, there’s a lot to weigh up here, so we thought we’d simplify it by breaking it down into two simple lists.
The main advantages of having a managing agent
If you’re the sort of person that likes to sit back and let someone else do all the hard work for you, then a managing agent will:
– Know exactly how to advertise the property to maximise the number of applicants.
– Help you determine an accurate amount you can charge in rent.
– Vet applicants through tenancy database checks, call references, and create a shortlist.
– Undertake regular property inspections on your behalf.
– Be across all the legal and legislative requirements that are in place. If you decide it’s time to evict a tenant, knowing these legal requirements is crucial.
– Act as a middleman to resolve misunderstandings or disputes.
– Chase up any overdue rental payments.
– Inform the tenant if the property is not being kept to reasonable standards.
– Organise for a handyman, electrician or plumber to undertake necessary works on the building, and may have access to bulk discounted rates.
– Arrange all important documents, such as the lease agreement.
– Allow you to live in an area not near the property.
– Finally, time is money. And it can take a lot of time to manage a property yourself.
The advantages of doing it yourself
Don’t forget, however, that there’s a certain level of satisfaction and freedom of choice that comes with doing things yourself. Here are some advantages of the DIY approach:
– Most importantly, it’s cheaper! You don’t have to pay a property agent 7-10% commission, plus other fees such as a letting fee (one to two weeks’ rent).
– You can get a Lease Pack from your local newsagent for $10-$20.
– If you are retired, or nearing retirement and working part time, the extra money you save might be crucial when it comes to your retirement.
– You get to decide how and where you advertise the property.
– You get to vet, shortlist and interview all applicants.
– No one knows your property as well as you do, so you can diligently inspect it for damage.
– A property manager doesn’t just act on your behalf. They also represent the tenant’s interests. You primarily act on your own behalf.
– If you find a great, low-maintenance, long-term tenant who you build mutual trust and understanding with, your required involvement can drop significantly.
Finally, it’s worth noting that yes, it is your property. But don’t forget it’s also their home or office.
Therefore it’s important you know how to tactfully liaise with a tenant if there’s a misunderstanding or dispute. Emotions can easily become involved for both parties so you need to ensure your workload and mediation costs don’t blow out as a result.
As you can see, there’s a lot to weigh up.
In fact, there are also many other issues that you’ll need to address, including landlord’s insurance, whether to pay for a cheap managing agent or fork out for an expensive one, and reading through the managing agent’s fine print to see exactly what they’ll do to earn your commission.
So if you’re still undecided, or simply want to know more about the pros and cons from a team that’s done all this before, give us a call.
We’d be happy to discuss it with you so that you can pin down exactly what will suit your individual situation.