Updated July 2021 5 Minute Read.
Updated July 2021 5 Minute Read.
Owning and renting out a property in Australia can be a good way to invest your money. Take the right approach and your rental property can end up being extremely profitable through rental income, and capital growth. Your rental property can become an asset that can deliver you financial gains for decades to come. But many things need to fall into place in order to make a rental property a success. Having the right advice and a real estate professional on your side can definitely help.
However, as profitable as a rental can be, it can be challenging to maintain it. Even when you have the nicest and the most reliable tenants in the state there can always be challenges. Tenant demands, maintenance requests and queries can be a stressful, annoying and time-consuming process. If you find it hard to manage an investment property around family and work commitments, then consider hiring a property manager. Hiring these real estate professionals can help eliminate all your headaches and problems.
When most people purchase an investment property, they ask themselves, should I hire a property manager for my property? The alternative would be taking care of all the duties of managing a property by yourself. These duties include carrying out inspections and following up on any request a tenant has when it comes to repairs and maintenance. In today’s article, we’ll take you through all the potential benefits and costs of hiring a property manager for your investment property.
To help you make the right decision we’ll cover; what a property manager is, what they do, how to find a good property manager, the right questions you should be asking yourself, and the advantages and disadvantages of employing a property manager.
A property manager is a person who acts as an intermediary (middle person) between you (the landlord) and the person renting your property (the tenant). They can help improve the communication channel between both parties and make sure that any confusing aspects of the rental process are explained or simplified in a way that both parties will understand.
A property manager will do many other duties for you. These duties can depend on what is written in their contract. So as you’re looking to find the perfect property manager for your property, it’s important to check what’s outlined in the contract before you sign. Compare the range of services that each property manager offers you.
Some managers may advertise exceptionally lower prices than others. But once you see what services they actually offer it starts to make sense why their rates are lower. Property managers are usually responsible for taking care of the following:
When trying to find a property manager, it’s a good idea to find one that is local to the property that you’re looking to rent out. Your property manager will need to visit your rental property in person to inspect it. But it’s not just about logistics. Location plays a much bigger role than you realise.
A local property manager will have good knowledge of the suburb your investment property is in. They will have a good idea of the amount of rent that can be charged for your property. The rent should reflect similar houses in the area. So if you have a three-bedroom house, the rent should be near the average rental rate for a three-bedroom house in the area. As the average rental rate goes up, your property manager may recommend that you increase your rental rate to match the average.
Thanks to the internet it’s never been easier to check how good some of the local property managers are in your local area. Online tools like google reviews can help you determine how good certain property managers are. There are of course many other online platforms out there today where you can find reviews for property managers. These reviews can indicate how good a property manager really is.
Another reliable source for reviews is the good old fashioned word of mouth. Don’t be afraid to get in touch with any locals who may have used the services of a property manager you are considering. Do you have any family or friends that have investment properties? Why not ask them if their property manager has been helpful. It’s a great way to get an honest review about a professional which takes out a lot of the guesswork. This can also save you a lot of time in the long run. So get in touch with a friend or family member’s property manager and set up your first appointment. You may be pleasantly surprised.
Still not sure whether you should hire a property manager? Asking yourself the right questions always helps. In this case, it can help you realise the challenges of managing a property by yourself. Think about your answers to the following questions before you decide on hiring a property manager.
Do you live close to your rental property?
Living close to your rental property can make it easier to manage. It can help you respond and assess issues in person a lot faster. But if you live more than an hour’s drive from your rental property can you really imagine having the time to show up any time there’s an issue?
How many rental properties do you own?
Not everyone has the luxury of owning multiple rental properties. But if you did, do you really think you have the time to give each one the attention it deserves? It’s easy to fall into the habit of neglecting one rental property when another requires more attention.
How much experience do you have managing rental properties?
If this is your first time owning and managing a rental property then you’re in for a few surprises. There are so many little nuances to property management that you won’t learn about until you dive right in. That’s why it’s best to rely on a property manager when you’re new to rental properties. Gain valuable experience and see what goes into property management before you give it a go yourself.
Can you afford a property manager?
It’s common for a property manager to charge you around 7 to 10% of your monthly income. So you may want to think twice before you decide on hiring one. This is especially the case if you have a tight budget with your investment property. As interest rates rise, the revenue you make from an investment property may end up being a lot smaller once you take into consideration all the costs involved. You should always have a little wiggle room so you can afford unexpected maintenance issues with your rental property.
Do you have the time to manage your property?
With the challenges of juggling a full-time job with other family commitments, many rental property owners are time-poor. The amount of time required for rental property maintenance may be very small but it can start to add up. You’ll also need to be on call and ready to act in case of an emergency. Faulty plumbing or electrical components are major parts of a rental property that need to be fixed straight away. Do you have the time to book in the right tradesman and get an issue fixed straight away?
Do you know how to find new tenants?
Finding the right tenant is a skill in itself. Property managers usually have the right experience and knowledge to know when they’ve found the right tenant for your rental property. Can you be confident that you’ll find the right tenant? Pick the wrong person and you could have a tenant that only sticks around short term. What most rental property owners want is a long term tenant that’s reliable and treats your rental property with respect. Property managers are experts at finding these perfect tenants for you.
The standard rate for a property manager in Australia is roughly between 7 to 10% of your monthly rental income. This rate may seem costly. You may be put off from hiring a professional property manager. But think about the time and stress you will be saving yourself. Consider the array of duties a property manager carries out. There are a lot of hours put into duties like inspections, drafting condition reports, and chasing up the rent. Do you have the time to do all these duties yourself around work and family commitments?
The amount of work that a property manager does for you is quite significant and it will save you a lot of time. Imagine having to spend all the time and effort chasing up trade professionals when the smallest issue occurs with your rental property. Do you have a list of local tradies who can take care of maintenance tasks for a reasonable price? A time-poor investment property owner could make the mistake of hiring a plumber that charges hundreds of dollars more than the option a property manager would have chosen for you.
It’s also important to consider the amount of money you’ll save when your property manager has the right attention to detail for your property. A good property manager can identify small issues like a leaking roof that can quickly escalate and cost you thousands in repair costs. A property manager can also identify the right time for you to make your move on a rental increase. Rental increases should be based on current averages, demands, and features of the suburb your property is in. The longer you take to realise you can increase rent, the more money you miss out on in the long run.
Hiring a property manager might not be for everyone. But it is important that you consider the advantages and disadvantages of the services they offer. Self-managing your investment property isn’t just about checking up on the tenants. Good property management also involves staying on top of legislation and regulations.
As recently as March 2021, new standards were introduced for rental properties in Victoria. These included minimum standards for locks, window coverings, heating and bathroom facilities. A good property manager will let you know when new changes and legislation are on the way. This will give you enough time to prepare and make sure your house meets the new minimum requirements for rentals in Victoria.
Here are more of the main advantages of hiring a property manager:
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