Buying a property is “job half done” for an investor. You’ve got a great deal, so congratulations, but now comes the equally important part of renting it out. You need to make sure your asset is working for you and getting you a great return that allows you to pay it off and then get some money on top.

One of the first decisions a new landlord will need to make is whether to manage their property by themselves or engage a professional property manager. Managing it by yourself could mean a better chance of a positive return, because it’s one less thing you have to pay. But you need to think about whether that often relatively small saving is worth missing out on the benefits of professional management.

Cost savings

Property managers’ fees will often range between 5 and 10% of the rental income. So if your property is bringing in $500 a week rent, that’s between $25 and $50 a week. At the lower end of the scale, the manager might collect rent, conduct routine inspections and organise repairs and maintenance. At the higher end of the scale, the manager might also organise landlord insurance, communicate with strata and take care of the bills on your behalf, automatically subtracting from your rental income.

Landlords with multiple properties may find the time saving benefits of having someone else take care of everything far outweigh the fees they pay, especially when you consider that management fees are tax deductible. In fact, investors with significant portfolios often see property management fees as another necessary investment to make, so they are able to handle a large portfolio in order to reap the rewards that it brings.

Time and effort

Self-managing allows investors to maintain full control over their property. They can select tenants, set rental rates, and handle maintenance issues directly. This control can be beneficial for some, but it may not be feasible for others. First, are there any geographical constraints? Most savvy investors purchase assets a long way from where they personally live. Self-managing a property in a different state is extremely difficult. How can you conduct inspections?

Also, how do you know who the best local tradies are for repairs? Property managers often have a network of trusted tradespeople and contractors. They can ensure that maintenance and repair issues are addressed promptly and cost-effectively. This can help maintain the property’s condition and value over time.

And then there are the costs. If you didn’t know, the federal government changed tax rules a few years back so you can no longer claim tax deductions on the costs of travelling to your investment properties.

Do you have the skills?

Not only is managing a property time-consuming, it also requires a diverse skill set. It’s not just about collecting rent, organising the odd plumbing job and turning up twice a year for an inspection. First, you need to be across property law. There’s a reason lawyers spend so many years studying. Legislation is complex and hard to understand. Property laws change frequently and are different in different states and territories. They can also change building by building if you are investing in a strata complex.

Then, there is renting it out. How much do you know about advertising for lease, finding tenants and then checking their backgrounds to make sure they are adequately screened? Where would you even start? Vacancy rates are very low now, but that won’t necessarily always be the case. Once tenants are in place, what happens if they start making complaints? Worse yet, they may fall behind on payments, or stop paying altogether and then refuse to return your calls. What if they damaged your property?

Many things can and do go wrong with tenancies and property managers can draw on experience and their knowledge of laws and procedure for conflict resolution, rent collection and even the eviction process. In these types of instances, going it alone could open you up to major stress, hassle and both legal and financial risk. If you need help figuring out what your strategy looks like or you need more information, reach out to the Investor Relations team at B.Invested.