The truth of the matter is that managing an investment property and being a property manager can be and is a difficult job at times, catering to and balancing the needs of both the landlord and the tenants. At InvestmentProperty.com we offer plenty of advice and we hope this article will help you further master the task of property management.
In Australia, there are some landlords who have made the decision to self-manage their own properties, which truly has both its pros and cons.
If you too are thinking of making this decision and self-manage your own property, here are some important considerations to be made:-
1. Personality and Professional Distance
For starters, does your personality allow you to be able to maintain a business relationship with your tenant? Often you may come across situations where your tenant is late with their rent, or you find that damage has been caused by them, or they may even want to terminate their lease agreement early, can you deal with these issues unemotionally?
These and many other problems can and will arise at times, and you must try and maintain a business-like and unemotional stand with your tenant.
2. Legal and Legislation
In each state in Australia, there are many legislative and legal structures in place to protect both the landlord and the tenant. You must as a SELF-MANAGING landlord be certain you are current and up to date with the in place Acts and legislation.
Taking a short property management course is a great idea to consider. One that is sponsored by the Real Estate Institute where your property is located will work best for you.
You also want to make certain that you gain access to all documents and standard agreements like bond lodgement forms and lease agreements.
If anything comes up in the future in terms of a disagreement that winds up in a tribunal, the judge will carefully consider that the landlord has indeed taken proper steps in their arrangements with the tenant. If records are provided that show this, then that will be viewed positively by the judge.
As an example, should you ever seek to evict a tenant, it is vital you can show that you have served the correct paperwork at the correct intervals to get the process completed properly.
3. Rent Collection
Certainly, rent collection is one of the most important property management tasks to carry on. It is vital that the process set up is totally clear, and that all money due is rendered on the date specified.
One of today’s most popular forms of receiving rental payments by many property managers is direct debit. This is one the best ways to manage payment collection as it is both timely and doesn’t need you to physically go and collect monies owed.
Right at the beginning of the tenancy, agreements should be put in place to debit the account of the tenant on the agreed upon specified date.
As a SELF-MANAGING landlord you want to establish from the very start that the rent must be paid on time and specifically who is responsible to make certain that happens.
However, should for any reason the rent not be paid when due, you want to issue written notices to remind the tenant of their obligations.
It varies from state to state, but typically after around 10-14 days of the rent not being paid you can begin formal proceedings to correct the problem. Just make certain you keep careful track of all written correspondence in regard to the matter.
4. Leasing Your Property
The time will inevitably come when the property becomes vacant and again needs to be leased. Here are some steps to be considered when this situation arises.
· Advertising
You want to create a positive atmosphere and presentation so that you have adequate competition for the premises. This will allow you to select the very best candidate for the property. The marketing plan you develop should be fashioned in a manner that reaches the sort of tenant you would prefer.
In writing your advertisement, be certain to accentuate all the positives the property has to offer, include vibrant pictures, and don’t be afraid to emphasize the many pluses to be gained by the successful tenant.
· Receiving Enquires
A key part of the whole process is making certain you are available to prospective tenants interested in the property. You want to show them you are interested and care, and that will help give them confidence they are making the right decision.
· Tenant Screening
Be prepared to conduct a thorough screening process including serious questions you want answered so you may make the best choice possible from potential candidates.
You want to make sure you meet with the prospective candidate in person so you can get to know them and get a proper feel for them and why they are seeking to rent your property. Be sure to get whatever references you can.
When you do get any references, make certain to take the time to check them out.
Don’t break any privacy laws, but make every legitimate effort you can to learn more about your candidate.
· Application Acceptance
When you have finally made your decision, don’t waste any time getting your tenant signed up, and collect all fees agreed upon and due at once.
· Move In Day
This is the day the property inspection is agreed upon and the keys turned over to the new tenant.
5. Inspections
Of course, you must, and want, to follow your state’s rules just when and how often you can inspect the property annually. Whatever that may be, make certain you do so when permitted.
Keeping photographs and thorough records of those inspections is highly recommended.
6. Rental Appraisals and Rent Increases
You want to make sure you carefully monitor your area so you know the proper rent to charge and precisely when in your state you are allowed to increase it.
Understanding the market your property is in will invariably lead a good agent to get top performance from their property financially.
7. Repairs and Maintenance
Make certain that as a SELF-MANAGING landlord, you stay current and up to date on all relevant legislation in your state regarding repairs and your responsibility to get them done when needed.
Be certain you establish positive relationships with the right tradesmen to get these repairs done when required. Very often doing so in advance will garner substantial savings to the SELF-MANAGING landlord moving forward.
8. Availability and Time
If you are going to manage your own property, you must understand that it is going to involve your time making certain all obligations on your part are met. Be certain to provide for that time so you can meet all necessary requirements.
Try to arrange for a close friend or family member to be on hand should the need arise in the event you can’t be available for any reason.
9. Technology, Tax and Record Keeping
To be a successful landlord today, you truly need access to e-mail, a mobile phone, the internet, electronic files and a good financial reporting system. You want to keep careful records of all transactions, and in today’s world, these tools are great at helping get things done right.
You will want to make certain you produce an accurate End of Financial Year statement for your records each year.
10. Cost Reductions
Saving money is a primary reason to becoming a SELF-MANAGING landlord. Remember that some costs involved are often tax deductible so keeping careful records which will ultimately reduce your taxable income for the year is vital.
If you choose to go the self-managing route then you have to consider the extra work required to keep on top of things compared to the money you can save by doing so.
It’s a personal choice for most investors and this article has hopefully helped you better understand what is involved with being totally hands on when it comes to managing you property portfolio.