Self Managing Investment Property - Any Tips?

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  mini2 on 03/09/2019 - 14:12

  +2

  Check if your landlord insurance allows you to self manage, last time I've checked pretty much none of them will allow it.

  • 

    witsa on 03/09/2019 - 14:13

    yes i already did - I'm with Terri Sheer. It just costs like $60 more per year and I think there is an extra excess if the tenant doesn't pay rent.

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  weezlebub on 03/09/2019 - 14:30

  +1

  It's pretty easy, you should be able to download a form … main things to capture:

  • references (and actually call them)
  • contact details (all of them)
  • family members / guarantors if possible

  But it's generally pretty easy, collect bond, lodge it with tenancies, give them rental agreement and bank account details, call them if they miss a payment …

  Not sure about ACT, but my previous land lord insurance covered me as a self-managed … they even covered all of the stuff inside (rented it out as I moved in with GF, she didn't want my stuff, so rented it out furnished, tenants took stuff, insurance replaced it - win!)

  • 

    witsa on 03/09/2019 - 14:37

    yes i think i definitely want to make sure everything is above board.

    How did you do the paying? I hear you can get a direct debit set up? Is that true?

    • 

      weezlebub on 03/09/2019 - 14:56

      Yep, there's a one page direct debit form they can fill out and I believe you submit it to your bank (not 100%)
      Or you can ask them to transfer it on a particular day every fortnight and harass them if they miss a payment
      direct debit is safer option, but some tenants don't like it

• 

  qwerty on 03/09/2019 - 16:14

  +1

  Ask yourself if its worth 2 grand to monitor tenants weekly to make sure they are paying , chase up tenants for back rent , go to civil court and fill out their bs paperwork to get them evicted

  If yes then go ahead

  • 

    witsa on 03/09/2019 - 16:52

    Yep obviously if it all goes wrong, I'll be kicking myself for not having a property manager.

    Having said that, if they don't pay rent it's going to be stressful even if I'm not the one calling them up.

    In fact it might have been more stressful having to communicate and act though an intermediate.

    I remember last time we needed a tenant and it was a quiet period and took like 3-4 weeks to get someone in. Even though I wasn't doing the inspections, still was stressful.

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  Indomietable on 03/09/2019 - 19:42

  I had to evict my tenant and I'm so glad I had my agent attending all the court hearings and taking care of things until we get new tenant in.

  On the other hand, it's very difficult to find good agent that is proactive and on the ball.

• 

  3beautboys on 06/09/2019 - 21:33

  My husband and I have been self-managing our rentals for years. I do the admin and as my hubby is a handy guy, he does all the maintenance.

  We're in Victoria, and do everything by the book (Consumer Affairs have Landlord packs for free):
  * tenancy application
  * condition report
  * tenancy agreement
  * bond lodged with the residential tenancies bond authority (RTBA)

  We get the rent paid in monthly via EFT. We've just had our current tenants (grown family) sign another fixed lease until January 2021 which will bring them up to 4 years in our property.

  I believe they are happy to stay as we offer far better service than a property manager. Being the owners we are motivated to ensure that any repairs are carried out promptly and we respond to any communications quickly.

  On the flip side, we did have a tenant in a previous rental property go overseas (gave us 2 months notice so plenty of time to get his s**t sorted out), but wasn't and left the place dirty and with HEAPS of personal items both inside and in the common areas, all while he knew a new tenant was due to move in on the same day.

  I took him to VCAT and was able to claim his bond. It wasn't an easy or particularly cheap process, but on principle I did it.

  I wish you all best whatever you decide!

  • 

    witsa on 07/09/2019 - 23:02

    thanks for this advice.

    I'm with you. I think understanding the law is very important and I'm fully committed to doing that. I've also rented for many years so in some ways, I feel like I already am familiar with the law. I think a lot of the ppl that tell me not to do it reference horror stories, where not following everything by the rules is generally the main thing that goes wrong.

    At the end of the day, I feel like I could offer a better experience than any property manager. Maybe not at the start but once I get the necessary experience. And at the end of the day, that's what it is all about.

    People think property managers will protect you through any risk but really, they have no skin in the game if it all goes to shit. Like it might be slightly more comforting to know there's someone in your corner but you as the landlord are still wearing it all.

    So it might all go wrong with or without a property manager, and the real risk mitigation is finding good tenants and keeping them. Every time you gotta find a new tenant costs time and money and introduces the risk of finding a bad tenant.

    Self managing, as you say, I can be way more reactive to tenant's needs, I will have much less overheads. I can afford to not raise the rent every year if I get a good tenant. I can basically be $40 below market rates and still earn more per week than if I had a property manager. If I find a good tenant - I would definitely be keeping the rent below market rates to encourage them to stay longer.

  • 

    bohn on 08/09/2019 - 21:30

    all while he knew a new tenant was due to move in on the same day.

    wtf.
    why would you have someone moving in on the same day haha.
    it's so common for cleaning not be be done, some agents require tenants steam clean carpets etc (if they were steam cleaned when they moved in) and if the tenants don't do it, it gets taken out of the bond. in and out on the same day isn't realistic.
    also there could be other issues that need attending to.

    this is probably a common occurrence with people who manage their own properties ;)

    • 

      witsa on 09/09/2019 - 00:50

      agreed - you'd want a week or so.

      not always possible though i imagine. Depends on the tightness of the market - you might find that there's times you may not get many offers - and if one group passes all the clearance checks etc. but need to move in urgently - be pretty tough turning them down to let a house sit vacant.

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  Sofie519 on 08/09/2019 - 21:08

  +1

  $2.1K tax deductible agency fees Vs no deduction on your time and effort.

  if you reduce your rent by $40pw, you lose $2080 and you have to self manage? So net effect isnt zero, its negative (if you pldace any value on your time)

  Self managing sounds easy because you think its just collecting rent when you have good tenants and you dream to boast how seemingly easy it was to save $2k. Problem is when things go wrong, every document, every correspondence every detail needs to be by the books, or you will have all sorts of issues.

  Stress isnt only when tenants dont pay rent. I can imagine self managing landlords saying or doing the wrong thing when ht happens, as they are emotionally attached.

  • 

    witsa on 09/09/2019 - 00:36

    the emotional attachment thing is something that I'll have to manage sure - but I think I'll be okay - I've never lived in this property - it's strictly business really. I'm also planning to buy a couple more investment properties in the future - so really, it's about learning the ropes now and then the saving is really 2k x n number of properties.

    But as I explained somewhere else in this thread, I'm saying the saving of $40pw isn't the main motivator. It's the fact that if I can afford to keep the rent to not raise the rent by up to $40 below market rates once I get a good tenant. This increases the likelihood they'll stay with me. That's a much bigger risk mitigator than having a property manager because that's really the biggest risk - having a crap tenant.

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  bohn on 08/09/2019 - 21:23

  If I rented, I'd much rather rent through an agent than direct with someone.
  Make sure you have an emergency number set up (or make sure you never go away and don't answer your phone etc - you would have to give authority to someone else to act on your behalf in that case - and they would need to be available to be called), as tenants are allowed under law to spend a certain amount to fix urgent repairs if they are unable to get a hold of you. This may not bother you, but they may contact a tradie who gives them a shit price, but oh well. You'll have to pay it.
  Best option (if you want to go this way) may be to get an agent to rent it out for the first year, then take over - often bad tenants (not always obviously) can be picked up in the first year. Second best could be to get the agents to do a leasing only, where they lease it for you then you take over.

  • 

    witsa on 09/09/2019 - 00:44

    Would you? I actually think it's the other way - tons of people want to rent privately, mainly because they know an agent is going to be a massive hard-ass whereas the private renter may not know all the rules and likely to be pretty lax. That's an expectation as a private renter that I need to manage on day one - that it's business and I'll be acting professionally and follow everything by the book.

    Good suggestion about the repairs. I'll have to ask my current tenant what the set up with with my current property management. I imagine they probably do have an on-call person that's available 24 hours a day for emergencies.

    • 

      bohn on 09/09/2019 - 07:35

      whereas the private renter may not know all the rules and likely to be pretty lax.

      Exactly. This can work against tenants. Eg cases on the news of private landlords turning up unexpectedly without proper notice, husbands/wives who are 'handymen' but possibly not qualified for some tasks - or may not do a professional job of repairs but do it to save money. Also the repairs may always have to take place on a weekend (or at night time??) because the private landlords may have full-time jobs. Tenants out and in on the same day causing possible problems when the place isn't ready ;)

      Also it's their job. Many private landlords have other jobs that they do, so when a tenant calls with an issue it's not always dealt with in a promptly. Some issues are urgent and need urgent attention. On this point, and this is a real problem for private landlords - agents put a lot of business through certain plumbers/electricians etc, and I know that those tradies give them great service. If an agent says that there is a problem with a hot water service/aircon, the tradie will often go around within a very short time to check it out. A private landlord who only has a very small property portfolio will not get the same attention from tradies (you know, the tradies that either don't turn up or leave you waiting hours at the property or whatever hehe).