If you make an investment property purchase, it is a major commitment most probably up there with your own home purchase. One of the things that goes through peoples thoughts when they make an investment property purchase or think about making the purchase is whether they should employ the services of a professional and trained local property manager or manage the property themselves to save some dollars. There are a number of advantages as well as disadvantages when considering the two options whether to look at self-managing the property or whether to employ a professional. If you are unsure about which is the right option for you don’t hesitate to talk to your mortgage broker about your thoughts and they will be able to advise on who to talk to.
Advantages with self-managing an investment property
Cost reduction: By managing your own property you can save money as you are not paying a property manager or agency a set fee each month. However you need to wonder why do relevant professionals such as property managers charge a fee for their service and are you ready for the potential workload of what is to come? Property management costs can be written off as a tax deduction, however this doesn’t mean you will receive the total amount of funds back.
Tenant selection: You as the property owner may feel that you will be the best person to shortlist any tenant applications that come your way as you are the one who has an emotional and financial attachment to the property. You may feel a property manager will not have the same considerations in place and therefore not be as picky, however the property manager does have a job to do and they do not want to be dealing with headache tenants.
Attention to detail: As you are the investment property owner your attention to detail and attachment to the property will be second to none, if you are handy with your hands and have spare time on your hands should any issues arise you might be able to address the issues as soon as possible whether you are able to do it yourself to save on any outgoing costs or find a professional to rectify the issue. But you need to wonder do you really want a call possibly at four in the morning to say there is a burst pipe in your property or would you rather your property manager be woken by the call of distress and you find out at a decent hour?
Disadvantages with self-managing an investment property
Time management: While you might think being a property manager is easy and think you will easily be able to take on the second job in addition to your daily life, if you do go down this path you will soon find out how much time will need to be invested. You really need to take into consideration what is more important and valuable to you, time and no headaches or money?
Legal knowledge: Managing your investment property might seem very straight forward and easy to do but there are extensive laws and legislation that does need to be adhered to for both the protection of you as the property owner but also the rights of the tenant. This includes the outlined rights, responsibilities, relevant notice time periods as well as the dispute resolution process. If the correct procedures are not followed and executed there may be legal consequences.
Communication: When you employ the services of a professional property manager you essentially create a middle man between yourself and your tenants which means any form of communication has to go through your property manager before the receiving party can hear it. If you decide to take on the role of a property manager you will be the one who will need to confront the tenants about any issues that arise whether it be repairs needed to property, any damage done to the property, unpaid rent and not to mention having to conduct periodic inspections.
Time to decide
If you decide that self-managing your investment property is not for you here are some questions you can ask when meeting with a property manager for the first time:
- Who will you be managing my property, will you be the sole property manager or will someone else be involved?
- What past experience have you had with this type of property in this area?
- What experience do you have in managing properties within a specific area?
- If a maintenance request has been requested by the tenant what is the process?
- What is the process for tenants who miss rental payments?
- What is classed as emergency repairs to the property and what is the process?
- What is involved with your tenant selection process for finding good long term tenants?
- Are vacancy rates high currently in the area?
- On average how many days are similar properties usually on the market for in the specific area?
- What’s the median rental return for similar properties in the area?
- How do I know when rent has been paid or if there is a maintenance issue?
- What are your property management charges and what is the fee payable each month?
- What is included in your services?
The decision of whether you should manage your investment property is entirely up to you. As the investment property owner you will need to base your thoughts and consideration on the amount of time you have available to deal with tenants and any issues, level of expertise within this field and amount of finances available as this will help determine whether you choose to employ the service of a property manager. If you are unsure of how to find the right property manager don’t hesitate to check out our article. If you have any questions about what option you should consider don’t hesitate to talk to your mortgage broker Gerry and he will be able to assist with answering any questions.