Should I self-manage my rental property?
It’s only natural to wonder if you should self-manage your rental property sometimes. After all, it seems easy enough, and maybe you can save some real estate handling fees in the process. But do you know what’s involved in managing a property? Do you know what that looks like on a weekly basis? Do you know what your property manager actually does for you?
We thought we’d take you through some of the ins and outs of property management, so you can see if self-managing your rental portfolio might be for you.
Knowing your legal obligations
Tenants are granted certain rights at law when they lease a property. There are certain things you must do, and there are time frames that you must observe when dealing with tenants. Unfortunately it’s not enough to have a rough idea and be willing to look into it on the weekend — if you’re self-managing properties, you need to be completely aware of the law. You’ll also need to be aware of things like building standards and other physical property–related requirements.
Note that while this sounds daunting, it’s probably not the worst way to spend your time. You’ll get a stronger insight into tenant–landlord relations, and you’ll probably impress your friends as well.
Choosing the right tenant
Okay, let’s say you know the laws and you’re happy to rent out the property. One of the first things that needs to happen is finding a tenant. This is a little more involved than just handing some paperwork over to the first applicant that you like the look of. How can you tell if someone is trustworthy? What kind of checks are you permitted to run on prospective tenants, if any? What kinds of questions should you ask, and which ones aren’t you allowed to ask?
Choosing a tenant is a legal step that obligates you to work with them for the term of the lease. You need to make sure that you choose the right tenant, with a good rental history, who won’t just disappear in the middle of the night without having paid rent. Or, even worse, doesn’t pay rent and won’t get out either!
Serving your tenant
Being a landlord has its own responsibilities, but being a property manager as well (which you are if you’re self-managing), is something else entirely. Your role is no longer just the maintenance of the property, it’s now also handling communication directly with your tenant. One of the benefits of property managers is that they give you some distance between you and your tenant. If there’s a problem at 3am, it’s not the landlord who gets woken up, it’s the property manager. If you’re both, well, that falls to you. You also lose the buffer of ‘I’ll have to ask the landlord’ — the tenant will be talking directly to you. In a lot of ways this is like any other client-facing position, but it’s harder to fire a client if they have a year-long contract.
Doing the boring bits
Property management is a lot of monotony. It’s a lot of fixed tasks happening at fixed intervals. Property management agencies have the software and tools to automate a lot of these reminders, but you might not have access to those resources. You’ll likely need a dedicated space to keep track of all of the paperwork generated by your tenants — rent receipts, bond payments, leases, maintenance requests, condition reports, receipts from repairs etc.
You’ll also need to keep track of your own insurance, and try to be proactive with property maintenance. We’ll talk more about this in the next section. A huge part of day-to-day property management is making sure that your records are complete and up-to-date, and also that you’re responding to anything that needs attention in a timely fashion.
Doing the tough bits
It’s one thing to remember that the rent is due, but what happens if the tenant doesn’t pay? What happens if week after week it’s just excuses, or worse, just silence? What happens if you drive by one day and see broken windows and car bodies in the front yard? Do you know the eviction process? Even worse, do you want to be the one to approach them? Managing your own property might seem easy if you have good tenants, but a bad tenant will leave you pulling your hair out.
There’s also the issue of property maintenance. Property managers have a big experience advantage as they’re used to dealing with tens, if not hundreds, of properties. This means they’ve seen the warning signs, and they’ve seen what can happen when a small problem is left unfixed. Imagine that your tenant contacts you to say that the extraction fan in the bathroom is broken. You might think it’s not a big deal, but you might not have pieced together that it’s winter, which means that everything is colder and wetter. Left unfixed, that extraction fan could result in mould in the bathroom (and possibly the adjoining spaces), which could be expensive to fix. You’ll also still have to have the fan fixed.
This might read like it’s trying to dissuade you from self-managing your rentals. It’s not, honest! It’s more that property management is one of those jobs that looks like it would be relatively easy, until you actually think about how much time it would take up. However, once you have the skills and some experience under your belt, the scenarios we’ve discussed look more manageable, and it becomes more worth your time to manage your own portfolio, especially if your plans involve a number of properties. In fact, some people might even be excited at the idea of doing all of this — this article could be inspiring the start of a new property management firm.
Of course, if you’ve read this and realised that you don’t want to self-manage your properties, no worries — that’s what property managers are for! But if your current property manager isn’t pulling their weight, why not look at a change? It’s relatively easy to change who’s handling your rental, and you’re probably spoiled for choice in your area. At the end of the day, you should be able to choose your level of involvement with your portfolio — whichever option you choose, make sure that it’s working for you!