Landlords are battling financial headwinds including weaker house prices and tougher tax rules, prompting some to try to save money by doing their own property management.
An estimated one third of the Australia’s two million-plus real estate investors manage their own properties rather than rely on professionals.
And while technology is making DIY property management easier, there are key questions you should ask yourself when choosing your path.
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Real estate author, investor and university lecturer Peter Koulizos said these included:
• Do you have the time?
• Can you afford to do without 10 per cent of the rental income?
• How familiar are you with residential tenancy laws?
“Life is getting busier, and the laws are changing, making it trickier if you are managing it yourself,” Mr Koulizos said.
He said there was also a rising number of “accidental landlords” offering short-term rentals through platforms such as Airbnb. “People need to understand that for short-term rentals the residential tenancies acts do not apply — it’s easier to manage an Airbnb than a long-term rental.”
AJ Chand, the founder of DIY property management app Instarent, said the benefits of managing a property yourself included saving thousands of dollars a year, being more aware of what was going on, being able to choose tenants and dealing with issues quickly.
Negatives included time spent on management, understanding the laws and relevant forms, time-consuming record keeping and potentially becoming too close to tenants, Mr Chand said.
“You might become their friends. As a property investment owner it is always important to build good relationships with your tenants. However, it is critical to maintain a professional relationship.”
Mr Chand said property managers might advertise their fees at 5-6 per cent but after including costs such as administration, inspection fees, re-letting fees and other charges it could balloon to 18 per cent of rental income.
“A lot of landlords haven’t woken up to the fact of how much fees they are paying,” he said.
Landlord insurance company Terri Scheer’s executive manager, Carolyn Parrella, said her firm recommended that investors use professional managers.
“We often find that tenants may target a self-managing landlord because they might not do inspections are regularly as a property manager,” she said.
“Maintenance can get away from you if you are not keeping on top of it.”
Ms Parrella said understanding legal obligations was vital. “Every state has their own tenancies act and they’re all going through periods of change around hardship and other things.”