It might seem easy enough to self-manage your investment property, but have you considered the advantages of hiring a professional?
Blogger: Irene Limnios, managing director, Limnios Property Group
It is estimated that more than 100,000 investment properties in Western Australia are managed privately by the owner of the property. Many of these private landlords overlook the major advantages of using an experienced property management company which include:
1. Rental Appraisal: A property manager will be able to give an independent assessment of the correct rent for a rental property. Many investors tend to over estimate the weekly rent they should charge resulting in lost income through a high vacancy rate.
2. Marketing: A property manager will also have a list of tenants who may like to rent the property. Many prospective tenants contact local property managers directly for information about properties for lease. In addition, a property manager will also have access to Internet marketing which is becoming more important in the rental market.
3. Finding a tenant: A property management company will have access to information on people with a history of being bad tenants and also undertake a thorough background check on all applications.
4. Viewing the property: Showing prospective tenants the property takes time because people wanting to lease a home generally want to view the property during after work hours such as the evenings or weekends. Private land lords are more restricted in their time and therefore may not be able to find the best tenant for the property in the fastest time.
5. Legal Contracts: Getting the tenant complete and sign their contact of agreement is very important as it protects the investor. A clearly written contract should clearly state the responsibilities of the tenant and the owner. Some investors overlook this key part of renting a property with the result that problems are created between the tenant and owner.
6. Maintenance Issues: A property manager will conduct regular property inspections to make sure the investment property is properly maintained and take action if it is not.
7. Accountability: A good property management company will provide the landlord with regular property inspection reports as well as financial statements on rental income and expenditures.
8. Termination of contract: Problems can often arise when the tenant wants to terminate the contract i.e. lack of notice or failure to leave the property in the same condition it was first leased. A property manager will ensure that the contract is properly terminated and that a new tenant can be sourced quickly reducing vacancy rates.
9. A professional relationship: Finally, the relationship between the tenant and the owner should be on a professional basis. Investors who manage their investment properties tend to develop friendships with their tenants which means that problems can arise when the tenant fails to pay their rent or maintain the property. By using the services of a property manager, the relationship is kept on a business footing which will be financially beneficial for the investor.
10. Tax benefits: Many first time investors, in particular, do not realize that the cost of using the services of a professional management company are tax deductible. If you plan to purchase several investment properties, managing these properties yourself can be time consuming and involve your personal time for which you will receive no payment.