Do I need a property manager? Can I self-manage?
Owning a rental is the same as running a business - you need to find ways to improve profitability and outsource tasks that you are not able to do well.
As a property investor it is always important to assess costs so that you can continue to work on improving your returns. One area you can save some money is to self-manage, but the real question to consider is “can I afford to manage my own property?”. The answer to that depends on a number of considerations.
Your knowledge of tenancy legislation and compliance
You need to be very familiar with the current rules and regulations contained within the Residential Tenancies Act, the Healthy Homes Standards, the NZ Building Code, Health & Safety legislation. You will also need to keep completely up-to-date with any changes that may be introduced. Failure to do so can result in severe fines and, in an extreme circumstance, severe damage to your property, or even injury/death (yes, that does sounds extreme, but if for example you do not engage a licensed electrician to effect repairs you are breaching legislation; obviously this type of work can be potentially dangerous when not carried out correctly).
Your knowledge of the current rental market
We have seen many self-managing landlords that are completely out of touch with the rental value of their property. We recently started working with a landlord that had their property rented at 23% below market rates. Our up-to-date market knowledge goes a long way to offset the cost of our management fees as we generally achieve higher rents than private landlords.
Your level of competence and experience in managing property and tenants
Managing a rental property is as much about managing the people as the physical building. Here are a few questions that may help you decide whether you have the right attitude and skills.
Maintaining boundaries
Will you be able to maintain a professional distance from your tenants? It is important to understand that your relationship with your tenants cannot be too friendly, otherwise it is very challenging to be firm when tenants don’t uphold their obligations eg issuing 14-day notices for breaches of their agreement or the Residential Tenancies Act 1986.
This point can be exceptionally difficult if you rent to family and friends because getting involved emotionally is inevitable!
It is so challenging if rent is paid late or they ask you to accept deferred payments, or if they expect you to let their other responsibilities to slide ‘because you’re family’. Saying no or issuing 14-day notices will most likely damage your personal relationship, so even property managers with their own investment properties, like ourselves, will never manage it themselves for that very reason, despite their experience.
Overall, it's best that you don't rent to family or friends at all, but if you do go ahead, you will need an agent like us to be your ‘go-between'".
Inspections
Are you happy to conduct regular and thorough inspections? Check with your insurer as they may have requirements regarding the frequency of routine inspections. You need to look closely at any areas of potential water leaks or water ingress, be on the lookout for any damage, and generally be aware of any changes to property condition.
When you go through the property, will you be upset if your tenants don’t do housework as often as you would like? Tenancy law permits landlords to issue notices if a property is being kept in an unsanitary or unhealthy condition but not for such matters as unmade beds, dusty windowsills, messy floors etc.
Communication
If the tenant is not looking after your property satisfactorily you need to be comfortable communicating what you need them to change or do differently without causing unnecessary offence or insult.
You need to be available to your tenant via email/phone and respond quickly to their contact, otherwise they may get the impression that you don’t care about your property. If a tenant thinks you don’t care then they start taking less care themselves, and they often stop letting you know about any little issues before they become big problems.
Regular upkeep of property
Are you an experienced homeowner? Do you know how to prioritise maintenance and upkeep? Do you have a list of reliable contractors and technicians so that you can respond quickly to any issues?
The amount of time you have to devote to managing a tenancy and property
If you are working full-time or have hobbies that demand a lot of your spare time, will you be able to respond in a timely manner to communications from your tenant or requests for maintenance?
Your attitude to risk
With all the best intentions it can be very easy to miss an important detail around the tenancy or maintenance that may cost you eg loss of rent, fines imposed by government organisations, loss of insurance cover.
How close you live to the rental property.
This point is quite obvious, but if you live an hour’s drive away from your rental it will be very inconvenient to respond to tenant requests.
What contacts you have for repairs, maintenance, compliance etc.
To protect our owners and their properties we require our contractors to hold suitable liability insurance and health and safety certification.
Property management companies usually have a few different contacts for each type of job or compliance assessment and choose these based on reliability, affordability, qualifications, and professionalism.
The above points should give you the correct impression that property management is a serious business and should not be taken lightly.
Thinking of switching? Let us take care of that.
Let us take care of everything, including informing your current management company if that is your preference. We will prepare the documents for you to sign, and then liaise with your current manager and tenants to ensure a seamless transition. You will be kept updated throughout the process.
Choose Firsthand for a first-class property management solution that delivers professional service, peace of mind, and results you can count on.
Contact us to learn more about how our property management services can support your property investment goals.
