The path to becoming an investment property owner can be fraught with challenges – finding the right property in the right location, negotiating the sale and ensuring the finance and insurances are all in order.
Once all that is sorted, there’s the very important matter of becoming a landlord. Do you handle the relationship with the tenant yourself, or hire a professional property manager to do the job for you?
There are some pros and cons with both scenarios, and time and geography will probably be the deciding factors as to which choice is made.
If you live in Melbourne and your investment property is on the Gold Coast, it makes it more difficult to be a hands-on landlord. If something goes wrong with the property, it would be hard to get there in a timely manner and then you’re relying on sourcing tradespeople from the local area to ensure the work is done.
If you engage a professional property manager from a local real estate firm, chances are they have a network of tradespeople they work with and can also carry out inspections regularly.
If geography isn’t a factor, time may well be. It’s one of the things that most of us are short of, and having the time to make regular visits to the property, carry out maintenance and ensure the rent is paid on time.
Doing it yourself also means you’re responsible for placing the advertisement, interviewing tenants, and lodging bond declarations etc.
Naturally, it costs money to hire a property manager to do the work for you. Normally, their fee is between six and nine per cent of the rent the tenant pays. It is advisable to shop around before settling with one agent.
Self-managed landlords retain more direct control over their property and any dealings therein whilst also remaining free from the constraints of agent’s fees and commitments. Similarly, a central concern of many property owners is being assured of priority – while your property is understandably of the upmost importance to you, an agent generally only gets around six per cent commission – that’s approximately $36 per week on a property that rents at $600 per week. Agents also tend to work on volume so can be handling 40 or so properties at any time.