Managing an investment property, whether privately or through an agency, comes with its own set of challenges and considerations. Each approach has its pros and cons, and the choice largely depends on the property owners preferences, capabilities and resources. Here’s a closer look at some factors to consider when deciding between private management and hiring a property management agency.
Private Management
Pros
Cost savings – One of the primary reasons for choosing to manage your property privately is cost savings. By privately leasing, you can avoid management fees, which can be a significant expense.
Direct Control – You have direct control over your property, including tenant selection, rent collection and maintenance choices.
Person attention – You can provide personalized attention to your property and tenants, potentially leading to better tenant relationships.
Cons
Legal Knowledge – A good understanding of the Residential Tenancy Act and Landlord responsibilities is crucial. If your knowledge is limited and there is a failure to comply, this can lead to legal issues and financial penalties.
Time Commitment – Managing a property, especially if it’s your first time, can be time-consuming. You need to be available for tenant enquiries, maintenance issues and emergencies.
Rent Arrears – Handling rent collection and addressing rent arrears requires effective communication and follow up procedures. There are specific forms and time allowances required under the tenancy act you must comply with when a tenant enters into arrears.
Property Maintenance & Emergencies – You must ensure that the property is well-maintained and address both routine maintenance and unexpected repairs. You will be solely reliant on sourcing and employing a trusted contractor to carry out any necessary repairs. You should also be prepared for after-hours emergency maintenance calls and be able to address them promptly and within the time allowances set out under the RTA.
Tenant Selection – Effective tenant screening and selection is essential to avoid problematic tenants. This includes conducting background checks and verifying references.
Agency Managed
Pros
Expertise – Property Management agencies bring professional expertise in managing properties, including knowledge of local laws and regulations. This is something they do every day and have been able to narrow down their set skills and procedures in order to maintain a positive management for both Landlord and Tenants
Time Savings – You can save time by outsourcing the day-to-day management tasks to professionals which allows you to focus on other aspects of your life, knowing that your property is being well managed.
Network of Contacts – Agencies often have a network of contractors, maintenance personnel and legal resources which are incredibly beneficial when issues arise.
Cons
Management Fees – Property management agencies charge fees, typically a percentage of the monthly rent. Whilst this needs to be factored into your budgeting, it is important to know that your management fees are tax deductible.
Tenant Relationship – Yes, whilst an agent handles most of tenant interactions ultimately meaning you have less control over tenant relationships, this can generally ease many uncomfortable conversations you may have with your tenants. A good Property Manager will however ensure that relationships are built between all parties to maintain a positive experience.
Selection of agency – Not all Property Management agencies are equal. You should research and choose a reputable agency with staff that are knowledgeable and experienced.
Ultimately, the decision between private management and hiring an agency depends on your individual circumstances and preferences. Its essential to assess your knowledge, availability and comfort level with the responsibilities involved in Property Management.
If you are unsure on avenue to take with your investment property and would like to discuss further, please feel free to contact Holly at holly@hedgespg.com.au for a zero obligation chat.
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