If you’re wondering whether to manage your own rental property or work with a letting agent, it’s wise to weigh up the pros and cons. Make sure you’ve got enough information to make an informed decision, so you know exactly what you’re getting in to.
If you've decided to buy an investment property, one of the next big steps is deciding how you're going to manage it. Hiring a property manager to take care of all the administrative issues is one option, but you might decide to manage the property yourself, to save on management fees.
Management fees are based on a percentage of the gross weekly rent (anywhere between 5-12%), plus other costs such as advertising the property and preparing the tenancy agreement. This can make management fees the most significant cost of owning a rental property, after home loan repayments.
So, before you decide which option is right for you, make sure you consider the benefits – and the potential downsides – of both approaches.
The benefits of managing your rental property yourself
- You have better visibility over how your property is being taken care of and can stay abreast of any problems or issues that arise.
- You could save significant money by not paying a professional to manage the property.
- You’re closer to the decision-making process, so have more capacity to vet tenants.
If you decide to manage the property yourself, the biggest benefit is that you save money – the percentage of weekly rental income that you’d spend on management fees can certainly add up.
You can also handpick the tenants. Getting the right tenant into your property can be the difference between a great experience and a terrible one.
When considering which option to take, it's important to understand your responsibilities as a property manager.
As you might expect, these include collecting and lodging a rental bond with your state or territory's governing body – and asking for the first rental payment in advance before handing over the keys.
You'll also need to:
- disclose important information about the property – such as whether the area is prone to flooding or fire.
- provide a standard residential property agreement, which includes the term of the lease, terms for future rental increases and the number of property inspections each year.
- provide a condition report.
- keep a rent payment record.
- chase late rent payments.
- respond quickly to calls for repairs and any problems with utility connections, plumbing, appliances, fittings or fixtures.