Self-managing your investment property may seem like an attractive money-saving option, but there might be a lot more involved than you initially expect.
Blogger: Daniel McQuillan, executive director, Investwise
Real Estate Institute of Western Australia (REIWA) figures show that around 40 per cent of properties in WA are managed by their owners.
This is a very large number when you consider the growing legal complexities and responsibilities associated with owning an investment property.
The reality is that it can be a false economy for investors. Managing their own properties and can prove a costly mistake if they get things wrong, especially regarding their legal responsibilities.
For example, a landlord was fined $7,200 last month by the Western Australian Department of Commerce for repeatedly refusing to lodge bonds with the Bond Administrator, not using the proper tenancy forms and failing to provide a property inspection report at the start and end of the tenancy.
Tenant selection is also critical for anyone who owns an investment property, because selecting a bad tenant can result in unpaid rent or damage to the property.
To avoid the problems associated with tenant selection it is worth engaging the services of a professional property management company.
Below are seven reasons why a property investor should use the professional services of an experienced property management company rather than managing the property themselves.
1. Do you possess a thorough understanding and knowledge of the Residential Tenancies Act in order to maintain a fair and professional relationship with your tenants? Recent changes to the act have important implications for landlords.
2. Do you realise that as a private lessor you do not have access to tenancy default databases? Some of the good agencies also possess a national tenancy database, which is crucial considering the number of tenants moving to WA for work.
3. Have you lodged your tenants’ bond money in accordance with the Residential Tenancies Act requirements and within the required time frame? If not, you may be liable for a heavy penalty.
4. Do you have the time to conduct detailed property inspections to ensure that the investment property is well maintained?
5. Do you know the right procedure when dealing with rental payment arrears? Have the correct notices been issued with the required excess days in the calculation of notice period? If not, your advice may be totally invalid and you will have to start the procedure all over.
6. Do you have a concise knowledge of the Residential Tenancies Act to effectively represent in court? The procedure must be precise. If you are ill prepared or have non-compliant documentation, invalid notice periods or lack of evidence, justice may not fall on your side. Minor mistakes may cost you dearly!
7. Could you successfully terminate your tenancy and recover possession of your property without the need to go to court? Do you know the correct procedure, the right notices to issue and the correct time frames? Are your negotiation skills and knowledge of the act sufficient to mediate a successful resolution and outcome?