Deciding whether to self-manage a property or not is one of the first decisions a property investor will need to make. It’s easy to see why people are drawn to DIY property management: you save money by not paying the fees of a professional property manager (PM). It also gives you more control of your investment property, which is great if you want to be hands-on with the way your investment runs.
The thing is, the benefits of DIY property management don’t always outweigh its disadvantages. In many cases (especially with first-time investors), the scale tips heavily the other way around, providing more trouble and hassle than benefits.
There’s a reason why there’s such a thing as a professional PM and why so few choose to self-manage properties: Property management takes a lot of time, effort, knowledge, and skill.
Without these key elements, you’ll likely end up mismanaging your property and getting minimal returns on your investment property.
DIY Property Management & What Successful Property Management Requires
To better understand whether DIY property management is for you, let’s take a quick look at what successful property management requires. Some of the key responsibilities of property management include:
- Finding Tenants. Advertising in the right channels, screening tenants, and processing applications.
- Setting Rent. Setting the right rent rates, collecting rent, and adjusting rates to reflect the market.
- Setting the Rental Bond. Setting the bond, processing it, lodging it to the right authority, and returning it to the tenant at the end of a tenancy (if applicable).
- Managing the Tenancy. Setting up and managing the lease, and the all-important entry condition report, handling complaints and property issues, and managing move-outs and evictions (if necessary).
- Managing Maintenance and Repairs. Conducting inspections, managing maintenance/repair requests, and using the right suppliers for services.
- Complying with Regulations. Making sure that your property and the tenancy complies with industry regulations for safety and service.
If this all sounds like a lot of work, that’s because it is. There are a lot of things involved in getting property management right, and it’s a task that you need to be fully invested in to do properly.
This isn’t meant to discourage you from managing your property yourself. It simply establishes the fact that property management isn’t as easy and straightforward as most people think.
The Risks of DIY Property Management
Aside from understanding what the work requires, it also helps to know the risks involved with self-managing investment properties.
- Lack of Experience and Skills – Property management is an art as much as it is a science, and you need the right mix of experience, knowledge, and skills to get the best returns for your investment. Without these, you’ll likely end up committing mistakes that could put your investment in jeopardy and cost you more money in the long run.
- Lack of Time – Managing properties unquestionably takes a lot of time. Unless you manage your property full-time and it becomes your main work priority, chances are you won’t have enough time (and energy) to handle all its requirements and processes. PMs have the advantage of doing this as their full-time job. And even then, they often work in teams to complete tasks more efficiently.
- Lack of Resources – Finding the right tenant requires advertising and marketing your property through the right channels. Without full access and knowledge of these channels, you may find it difficult to find the right tenant. We also find private landlords to be a target for bad tenants, as without access to the Tenancy Default Databases that PMs use, bad tenants know that private landlords usually don’t perform as thorough checks into their tenancy history.
- Limited Network of Suppliers –Property management requires regular inspections, maintenance, and repairs. If you don’t have a trusted network of service suppliers, then you’ll likely find it difficult to protect and maintain your property, which can cause it to decrease its value quickly.
- Legal responsibilities and obligations – Property management is more than just finding a tenant and filling the tenancy. It’s also about attending to the needs of the tenant and meeting the standards set by industry authorities. Landlords have several legal responsibilities and obligations to tenants, and there are many tenancy laws that you need to know. If you’re not familiar with the full responsibilities and obligations of a landlord, then you could end up paying hefty fines and penalties.
Is DIY Property Management Right for You?
It all depends on your needs, resources, and lifestyle.
If you have what it takes to manage your property properly (i.e. enough time, knowledge, skills, and experience), then self-managing may work out in your favour.
But if you don’t have what it takes to do it right, or if you simply don’t want to do all the work and go through the troubles of DIY property management, then you’re much better off having a professional PM do it for you.
Ultimately, it’s about choosing what works best for you and what can help you generate the best return on your investment.
If you need help managing your investment property, don’t hesitate to get in touch with a dedicated property manager from Beyond Property Management to find out what we can do for you. We’ll be more than happy to help you make the right choice!