Owning and leasing a property can be a highly profitable venture, but renting out your investment can be challenging. Even the nicest of tenants invariably have demands, and attending to these requests, queries, and maintenance can be frustrating, stressful, and time consuming.
One way to eliminate these problems is to make use of a property manager.
This article will discuss what a property manager is, as well as how to find one, and the pros and cons of both hiring a property manager and doing it yourself.
What is a property manager?
A property manager is a third party that acts as an intermediary between you and your tenants. Depending on the extent of the contract you sign with the agent, they can be responsible for:
- Finding new tenants when the property is unoccupied
- Assessing prospective tenants’ suitability and performing checks (e.g. obtaining references)
- Collecting regular rental payments from tenants
- Carrying out property inspections maintaining a condition report
- Dealing with and looking after tenants – answering queries, booking tradespeople for repairs, and generally acting as a go-between for landlords and tenants
Where do you find property managers?
When searching for a property manager, you would do well to look locally. In real estate, having a sound knowledge of the local area of your property is crucial, and a local property manager will do better in this area than one who isn’t.
You can find a property manager by doing your own independent research; real estate websites and other review sites like productreview.com.au and Word of Mouth Online are great places to look, and property manager specific websites such as rent.com.au and Local Agent Finder are designed to find you a property manager nearby.
As long as you have 20-30 minutes of free time and an internet connection, then finding a property manager to suit your needs is easy.
Canstar does not rate property managers, but we do rate landlord insurance, which you’ll need if you’re thinking of renting out your investment property.
How much does a property manager cost?
According to localagentfinder.com.au, a property manager will usually cost you between 7% and 10% of your weekly rental income. For a lot of people this is too much, and this fee really adds up over the course of your investment property’s life.
However, the services that property managers provide are quite significant and require a high level of commitment and time, something that a lot of property owners don’t have, as their time is focused on other things.
It is also worth remembering that management fees are tax deductible.
Pros and cons of property managers
Before enlisting a property manager, you need to weigh up whether it is the best option for you. According to the Real Estate Institute of Australia (REIA), property self-management is not uncommon. Despite 54.3% of occupied rented properties in Australia being managed by real estate agents, 22.7% are self-managed by landlords.
REIA’s research officer Evgeniya Hawthorne said, “Although investors who choose to self-manage their properties avoid paying management fees, the amount of work involved should not be underestimated.
“There is a cost to managing your own property. Investors have to keep themselves up to date with relevant legislation and regulations – something a professional property manager does under their continuing professional development.”
Therefore, we have compiled a list of the pros and cons of property management into the table below.
Hiring a property manager vs DIY
The advantages of managing your property yourself are the same as the cons of hiring a property manager; you can save money on fees, you can make changes on your own time, and you won’t have to take a chance on getting someone who isn’t as experienced dealing with tenants. By DIY, you can more closely manage the property to your standards and keep a closer eye on its condition.
Of course, there is a middle ground you can use to find a good balance between managing your property yourself and letting a professional do it.
“When deciding whether to use the services of a property manager,” Evgeniya says, “it is worth remembering that there are options. An investor may use an agent to find tenants and handle the bond details and then manage the property themselves. In this case, investors [only] pay the agent a letting fee.”
Whatever you decide, she adds, “Weighing the pros and cons and knowing your options are crucial … using the services of a real estate agent to manage your property can help maximise returns and bring peace of mind.”