Lots of property investors like to manage their own rental property. After all, once you’ve found a tenant you can just sit back, relax and collect the rent, right? Actually, there’s a fair bit more to it.
If you’re thinking of managing your rental property yourself, here are some things to consider first.
How are you going to market the property?
Property managers advertise rental properties all the time. They know where to advertise, what property features to highlight and most importantly, how to put it all together as an attractive advertisement to gain maximum attention.
Property managers also have a good understanding of the current market and what price your property should rent for. They may also have prospective tenants suitable for your property already (i.e. tenants moving out of a rental property currently under management, or someone they’ve met at another open home).
How familiar are you with the residential tenancy legislation?
You need to be completely familiar with the current legislation surrounding residential tenancies.
First, you need to ensure your tenancy agreement is compliant with the legislation to avoid any issues later on in the event of a dispute.
Second, the legislation dictates what you can and cannot do in terms of managing the tenancy.
For example, in Canberra did you know that you can only conduct a certain number of routine inspections per year and that you need to give sufficient written notice to the tenant before conducting the inspections?
Do you know what to do if things go wrong?
Sometimes things don’t always go to plan. Whilst the majority of tenants will do the right thing and look after your property like it’s their own, you may come across some who make it more stressful than it needs to be. Rent may be paid late (or not at all), a tenant refuses to provide access to conduct a routine inspection, or could be demanding when it comes to repairs and maintenance.
Do you know how you will handle these situations?
Do you have the time to arrange emergency repairs when you get a call on a weekend to advise the hot water unit is no longer working?
Do you know what insurances and other arrangements you need to have in place?
A good property manager can provide some guidance around lots of aspects of managing your property properly.
For example, aside from the normal landlords insurance you should have in place, did you know that you should have a quantity surveyor inspect your property? This will allow you to properly claim all depreciation benefits at tax time.
In the ACT, you also need to notify the ACT Revenue Office that your property has become rented, so that land tax can be appropriately charged. This is something that investment property owners can sometimes forget to do.
In fact, The ACT Revenue Office is currently offering a “Land Tax Amnesty” for rental properties managed by real estate agents. This means that if your residential rental property is managed by an agent and you’re not currently paying land tax on the property, the ACT Revenue Office will waive any penalty tax payable (interest will still apply) if your agent provides information to the ACT Revenue Office regarding its rental status prior to 31 July 2015. Please contact your managing agent or the ACT Revenue Office for more information.
Property Management fees are tax deductible
Being an expense you have incurred to derive investment income, your property management fees should be an expense you can claim at tax time.
Whilst you will not incur these fees if you manage the property yourself, you have to weigh it up against the benefits and time you will save by letting a property manager handle it all for you.