Blogger: Diane Bukowski, managing director, Eezirent Pty Ltd
The simple truth is that no one cares as much about your investment property as you do. It is also a truth than not everyone wants to manage their own investment properties and are happy to outsource this to a property manager. But like the growing number of Australians who are taking direct control of their superannuation, many residential property investors are taking control and saving money by self-managing their rental.
Australian Bureau of Statistics figures show that nearly a third of all dwellings are rented, of which just over half are management by real estate agents. After we remove public housing and charity run properties, the data shows that approximately 30 per cent of rental properties are privately managed. This equates to about 680,000 dwellings. That is a sizeable group of people who see value in self-management.
But can you do it yourself? There are some questions to consider when making this decision.
Is it physically possible? Though not essential, self-management is most efficient when you live in the same city as the rental. Not only are inspections a lot more convenient, physical proximity allows for the occasional drive by to be sure things are in order. Having said that, a compromise would be to engage a local real estate agent on a ‘let only’ basis. This means they find the tenant and do the sign up then you take over the ongoing management. Remember to that travel expenses incurred to monitor your investment can be a tax deduction.
Can I access the resources I need to do the job? The short answer is yes – and many of them are free. As residential tenancy law is a state concern, you’ll find that every state provides a range of resources on the topic. States which have the requirement of ‘prescribed documents’, meaning that things such as the leases and tenant notices must be on a particular form, provide these free of charge via the internet. Self-managing landlords can also access the bond lodgement services – and these cost nothing.
There are some key resources that are not so easy for self-managing landlords to access namely, effective internet advertising and tenancy database checks. Many of these will only deal with licenced real estate agents. There is a way around this though. Companies such as eezirent.com.au will link up self-managing landlords to mainstream internet advertising and can also facilitate a tenancy database check.
Do I want to dedicate the time? Certainly managing your own rental property is going to take more of your time than if you put the job in the hands of a real estate agent. But you’d be surprised how little time it takes – as long as you are organised. The biggest drain on your time will be when you are searching for a tenant and have to conduct inspections. You don’t have to drop everything when a tenant calls requesting an inspection. Holding set open homes will help considerably – say two, 30-minute sessions per week. Once you’ve got the tenant in place, the demands on your time reduce considerably.
Will I save money? You will save the costs of the letting fee, the management fee, administration charges as well as any other add-ons a real estate agency will try to impose. You will also save GST costs – not an issue though if the investment is owned by an entity registered for GST. Letting fees are typically the equivalent of one week’s rent. Though an increasing number of offices are charging two, and we have reports of some WA agents charging three weeks. You can expect management fees to be between 7 per cent and 10 per cent of your weekly rent. Administration fees are usually between $3 and $5 per month. Typical add-ons are things such as charging you to do routine inspections, a fee to give you an end of financial year statement and a lease renewal fee.
You can easily to the maths to calculate the savings on self-management.
If you’ve ever wanted to run your own business, self-managing a rental property is a good start. You need an objective, business minded approach, efficient record management processes, marketing and communication skills. Your tenants are your customers, the property is your stock and the rent is the price.
So give some consideration to self-management. If it turns out that it is not your cup of tea, you can always engage a property manager down the track. It is certainly worth a shot.
About Diane Bukowski
From school teacher to website entrepreneur, Diane Bukowski is the managing director of Eezirent – an online service delivering professional tools to self-managing landlords.
After many years running an award winning real estate office, Diane took up the challenge offered by her business partner to set up a service that would level the playing field for self-managing landlords. The result is Eezirent, which allows these investors to advertise their property on www.realestate.com.au, verify their applicants with the National Tenancy Database, and access the documentation and knowledge needed to efficiently manage a lease.
Diane’s blogs aim to provide practical advice to the self-managing landlord.