What do I need to know to self-manage my rental property?
The residential property management and leasing industry in Australia is worth $4billion, and grows by almost 6 per cent a year, according to IBISWorld. The majority of this income comes from property investors – just like you – who forego a percentage of their rental income to hire a property manager.
With that in mind, it’s understandable that many investors ask themselves at least once in their career: Could I manage my own property, and save on the fees? To help answer that question, and to shed light on everything a good property manager does for their commission, we have a look at what you need to know and do to self-manage your rental.
You’ll have to understand state-specific rules down to the minutiae.
Have an in depth understanding of tenancy law
Marketing your property, your lease agreement, frequency of inspections, the amount of bond and rent in advance you can collect, the process around evictions, and the way you handle rent arrears.
All of these things, and more, are governed by tenancy law – which can differ greatly between each Australian state or territory. For example, in Tasmania landlords can introduce rent increases after 60 days notice, but they must be written into the rental agreement. In NSW, rent increases needn’t be written into the rental agreement, but landlords must give 90 days notice.
The law in each state differs in similarly small but important ways. You’ll have to understand state-specific laws down to the minutiae, so that you can be sure you’re acting within them when managing your property.
Save time for tenant correspondence
The average Australian works 35.7 hours a week, according to OECD data. In between your time at the grindstone, family, commuting, and everything else that makes up every day life, you’ll have to find time to keep in touch with your tenants.
They may contact you to ask questions about the property or rent, to report a need for urgent maintenance, to raise an issue or for countless other reasons. This could take up hours of your week, and solving any problems they raise could mean even more time.
If you don’t have spare hours in your day to field your tenants calls and solve their problems – self-management isn’t for you.
After only a few meetings the best property managers can form a relationship with people.
Have personality and keep professional distance
After only a few meetings the best property managers can form a relationship with people. This keeps tenants happy, allows them to feel comfortable contacting the property manager, and reduces the likelihood of disputes in the future.
To self-manage your property well you need to have that knack for quickly building relationships.
Not only that, but you’ll also need to keep your professional distance at all times, and not become too friendly. That’s because if you need to take legal action against your tenants, evict them or raise the rent, you don’t want to be swayed by your relationships.
Carefully manage rent collection
Rent collection is one of the most important tasks involved in taking care of a property investment. It’s essential that you make it as easy as possible for tenants to pay rent, and ensure that they know the exact day that it is due – every month, fortnight or week.
You’ll also have to check your account on rent day, and continue to monitor it if it’s paid late. That’s because when rent is 14 days or more in arrears you’re able to issue a notice for your tenants to vacate within 14 days, or make arrangements for them to pay you back in installments (according to VIC tenancy law – again this varies from state to state)
The way you manage your rent arrears will dictate whether you lose your money, or if you resolve the issue without further problems.
Do yourself a favour, save yourself time and stress, and protect your investment in the best way possible.
Be able to market your property to find new tenants
Regardless of how well you handle disputes there’s a good chance your rental property will become vacant at some point in your career. If this does occur you’ll need to market your property to attract as many tenants as possible in order to fill the vacancy.
Property managers do this using their access to marketing databases, print media and online platforms, as well as drawing on past experience of what works for certain properties. They also screen tenants, host viewings, collect rent and bond in advance, and handle the exchange of contracts.
To manage your own property you’ll have to take care of all of this and more, which can be extremely difficult to say the least. Save yourself time and stress, and protect your investment in the best way possible – hire a local property manager that you can trust.