DIY property management – yes or no?
Should you use a professional property manager or DIY to look after your investment property?
Many people consider managing their property on their own which is ok if everything goes well. Unfortunately things don’t always go well.
The process of managing a rental property is quite a complex procedure and for most DIY landlords the most common mistake made is that they donâ€™t do everything they are supposed to, most of the time without even realizing it.
The legislation under the residential tenancy act is comprehensive and involved so if you don’t do your research; chances are you will be attracting hardship without even knowing it.
A tenancy agreement outlines the conditions of the tenancy and if all the details aren’t included then you may have problems.
The most common mistakes I see DIY landlords make are:
1. Not having a tenancy agreement / lease
The lease is a legally enforceable contract which spells out the amount to be paid, the frequency of the payment, length of lease and the condition the property must be returned to the owner in as well as any other conditions agreed by both parties.
2. Failing to ask for a bond
An amount that is sufficient to cover possible issues or losses must be taken upfront in case the tenant doesn’t meet their obligations. Problems here could include not paying rent, damage done to property or items removed from the property belonging to the landlord. You can ask for up to 4 weeks bond depending on the value of the rent.
3. Before and after inspections.
Here is a biggie. It is extremely important to ensure that the condition of the property is documented prior to the hand over to the incoming tenant. This document should be signed off by the tenant to ensure that the condition of the property is mutually agreed. My tip here is to video the property room by room and then send a copy to the tenant for proof of date and time the inspection was completed. Once the tenant moves out, perform the same video and compare the two. There will be no argument to the facts if required later to prove costs charged to the bond refund if required. Thank goodness for i-phones!
A property should be inspected roughly every 3 months. Before entering the property you will need to give the tenant at least 7 days notice in writing. Inspections are extremely important as they act as an early warning system to issues that may come up with the property. Remember, many people live differently and your idea of neat may not be the same as your tenant so you will need to know what’s acceptable and what needs to be reported back to the tenant.
5. Repairs to the property.
Repairs need to be done in a timely manner and if you are busy at the time of a tenants request it will be too bad as you need to keep the property in good order at all times, sometimes at all hours of the day or night.
6. Rent reviews
A good property manager will complete a rent review every 6 months and you need to know the rent value of your property. If you don’t and the rent is too high, then your property could be empty for extended periods. If it’s too cheap you could be losing money which will normally flow on for years.
7. Other issues which are common occurrence
Some other common issues are, tenants having pets without permission, not managing the gardens properly, unapproved occupants, not reporting maintenance issues and much more.
My TIP for you this month is, don’t try and save a buck on something so complicated as managing a rental property, as it will normally cost you more if something goes wrong and the chances are, it will. Use a professional to manage your property and sleep in peace.
If you need help with a property manager just pick up the phone 1300 719 4121300 719 412 and we will be happy to help.