People invest in property to make money. Successful investing is about maximising income and minimising outgoings and there is likely to be no greater outgoing than the cost of a professional property management company.
Property managers typically charge a fee of about 10%, all up, of the rental income. So, if your property is renting for $600 per week, then $60 + GST every week is heading to their bank account, not yours.
And there are usually other fees; property inspections at $30 each, 10% commission on accounts paid on your behalf, $500 sale penalties during an existing tenancy, etc. Real estate agent managers even charge tenants a week’s rental, which could put some tenants off your property.
So, surely you should do-it-yourself? Well maybe, but first consider some benefits:
Minimum hassle – they get the phone call about a burst pipe in the middle of the night, not you
Selecting the right tenants – they’ve seen it all before and understand the pitfalls of accepting dubious tenants. You will benefit from their judgment
No more Mr Nice Guy – if the rent is overdue or there is a tenant problem, they are there to sort it, professionally, efficiently and without emotion. Are you ready for potential run-ins with your tenants?
Absentee landlord – if you are based in a different city/country than your rental property, it’s a no-brainer
Time is money – even if you only live around the corner, being an active landlord is going to absorb your time that could be spent doing other things. That’s fine with some, but not with others. What happened to that “Passive” investment?
Admin avoidance – they’ve got the spreadsheets in place and will organise monthly statements, and the like, that will make it easy for you to file you to manage your investment and file your tax returns
They maximise the rent payable and occupancy levels - they have the finger on the pulse of the market and ensure you are charging the correct rent. Would-be tenants are already on their books and should result in a quicker letting or replacement tenancy; occupancy levels are key.
Sure the fee hurts, but remember, it’s tax deductible.
If you simply cannot afford a property manager’s fee, then you have no choice but to handle things yourself. Otherwise, for the majority of property investors a professional property manager is often money well spent.
To find out more about property investment, contact one of our residential property investment experts.