Property management: DIY or professional?
Many landlords have asked themselves at one time or another if they would be better off self-managing their investment property. It’s a question that’s especially likely to have come up for consideration if a landlord has had a negative experience with a supposedly professional property manager who failed to deliver the good service they initially promised.
But recent data from The Australian Landlords Panel 2012 shows that landlords who manage their properties themselves are also significantly less likely to have adequate insurances, compounding the very real risks of self-management.
According to the study, around 77% of all Australian investors currently use a professional managing service with an agent, or have used one in the past. Yet while 88% of those investors have Landlord’s Insurance, just 54% of private landlords had the same insurance.
Interestingly, the Landlords Panel study also revealed that landlords received higher rental yields and profits when a property manager was used and generally had better experiences.
Of course, it is possible to self-manage and some landlords do it quite successfully. Critically, if you do make the decision to self-manage, you must be prepared to dedicate the proper time and attention to finding a good tenant and regularly attending to inspections and maintenance issues. A legally binding lease agreement must be in place with the tenant and the landlord must also have good awareness of all relevant legislation, much of which is different in each state and is regularly updated.
Failure to do take these steps significantly increases the likelihood of problems, including tenants falling behind in rent, malicious or accidental damage to the property, or disputes resulting in a legal liability for the landlord.