Experienced Investors Wise to False Economy
Investors want to save as many expenses as possible on their rental properties. They keep repairs and vacancy to a minimum and some also decide to save on managing agent fees and manage the property themselves. How much money do they save?
Inexperienced investors work on the assumption that once they have selected and installed a tenant the real work is done and they can sit back and relax and count their rental dollars.
However, once they start looking after the property on a day-to-day basis, most landlords quickly realise they don’t have the level of expertise required to maximise income and minimise expenses. They realise that they cannot do the work cost-effectively because it takes them a disproportionate amount of time to make sure they get it right. Even then they worry that they haven’t thought of everything and soon realise that tenancy legislation is best left to the experts. Most find it an enormous relief to hand over to an expert who has the up-to-date legal knowledge to prevent problems developing. After appointing a managing agent, most investors report an increase in their net income as well as in their leisure time.
Happily, most people hand over to an agent before things go wrong. They realise that staying up-to-date with week-to-week fluctuations in the rental market is difficult for those not in the business. It takes a lot longer for trends to become apparent to people who are looking after just one or two properties. Do-it-yourself investors do all the work themselves and it may still cost them money in higher vacancies. It’s also very hard to keep a distance from demanding tenants when there is no third party to liaise.
Communication and arbitration is also an area where the objectivity of a third party is essential. Dialogue via a third party minimises income-reducing anger and personality conflicts. Even negotiating rent is difficult for a landlord, firstly because of the emotional involvement and secondly because of lack of experience. What is a reasonable rent to set? What are fair and reasonable repairs? How can I make sure the lease covers every contingency?
The answers? Do your homework, find out who are the most professional managing agents in your area and ask them to manage your precious investments.