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Property Management

Self-manage or use a real estate agency?

This question is commonly asked by many property investors. The first thing to establish is that at the end of the day everything comes at a cost, let us not forget the cost of ones time. One of the main motivators for a self-managed investment property portfolio is to reduce outgoings, being primarily the fees associated with using a property management company. Let's break down the tasks associated with managing an investment property and then assess the pro's and con's of the different property management options.

To begin with there are administrative requirements, property photography, property marketing, online advertising, tenant sourcing, tenant filtering, tenant reference checks, tenancy database checks (it is important to note that some insurers will not cover an investment property with tenants in place that are have defaults listed on tenancy databases - which property management departments have ready access to), lease agreement preparation, deposit receiving and bond lodgment, performing an entry condition report and of course the key handover. Then comes the maintenance of the property, collecting week on a weekly or fortnightly basis, arranging tradesman quotes and getting them access (submitting entry forms to the tenant with the required notice), arranging smoke alarm checks, routine property inspections and dealing with other small issues associated with the property. Finally comes the end of tenancy requirements such as the exit condition report, bond collection and disbursement and then naturally the process starts over.

Understandably a lot of these tasks are one-off at the beginning or end of the lease agreement, however if your time is worth $50 an hour or more, you are most likely better off having the property in the hands of a property management department. Real estate agencies have access to all of the marketing tools, internet portals such as realestate.com.au & domain.com.au as well as a comprehensive database of existing tenants. Property management departments also have all of the required paperwork in order to meet both legislative and risk limiting responsibilities.

In conclusion, there are plenty of property investors that choose to manage their own portfolio as opposed to using a property management department - it just comes down to weighing up what works for you based on your financial circumstances, time restraints and expectations.