Autonomy seems to be the order of the day, and this is being reflected in various ways, permeating all aspects of the corporate and financial convention. More people handle their finances themselves without the help of personal accountants, people self-represent in court, and people, even go as far as drawing up houses with little input from architects. As this trend cuts across most aspects of modern life, one can extrapolate that property management follows the same line. After all, it is now prevalent to have property owners manage their properties themselves.
As a property owner, you probably have thought about managing your property yourself, wondering if it is worth the risk as you might not be qualified to do it competently. However, available data shows that these worries are largely unfounded. The Australian Bureau of Statistics has conducted surveys and retrieved incontrovertible information that demonstrates how 33% of the property holders in Australia do the work of property management themselves, as opposed to outsourcing these responsibilities to management agencies. While little data shows how competently they do it, we can guess from how that number is increasing that there are benefits to it that have long been overlooked.
Thus, this is the reality of the private rental market, a realm of transactions and interactions where properties are managed privately and without ""third parties"" in the form of agents, agencies, and property managers. In this milieu, the landlord bargains and negotiates directly with potential renters, going through all applications, acting as a self-counsel, handling maintenance, and organising documents and contracts. The process can become quite tasking, but with the right approach, knowledge, and conviction, one can pull it off without outside help.
As with any asset management decision, diving headfirst can be very costly in the long run. To make a decision, one must weigh choices properly, with all factors ""in favour of and against"" considered. Since there are always benefits and downsides, it is best to be aware of both.
Pros of private property management
Financial expert at Finder (a company that helps people with their financial decisions), Bessie Hassan, asserts that there certainly are benefits of private property management over outsourcing to agencies. A few of these benefits include the reduced cost of administration, more awareness about due processes and property conditions, and more autonomy over management. Let's look at these benefits in-depth:
Reduced cost of management
This goes without saying. Apart from saving precious coins (due to the foregoing of agency fees) that could be invested in other places, Hassan talks about how listing properties as private rentals could help property owners save dollars every year.
With private management, the money being saved annually could run into thousands of dollars. This is expected; most rental agencies shave off an estimated 5-12% of the annual rent.
To paraphrase Hassan, the money that goes into agents' fees is most likely coming from your pocket. This makes private property management and investment a better offer for you in this regard.
Awareness of due processes embedded in management
One drawback to allowing agencies to manage your properties is that you may not be aware of what is going on or how things are done… even though it's your property. Apart from this very obvious conundrum, there also is the problem of having dubious agencies extort you at the expense of your tenants, overcharging on rent and other costs, collecting money from you for maintenance but spending less than budgeted on mediocre work. This makes being involved in the process a boon, allowing you to monitor how the property is being used and projecting prudently how best to maintain it.
It gives you the ability to vet tenants appropriately
There are some truths you would have to face as your property managing career progresses. One of these is that, as much as tenants are the source of income (you can view them as assets in this way), some can be liabilities. Some tenants are challenging to deal with, so outsourcing jurisdiction of the leasing process to agencies can allow these sorts to slip through the line.
Our expert from Finder, Hassan, says that when the property is managed privately, tenants are vetted against personal preferences, an ideal situation for all.
Cons of private rentals
With private rentals being the choice of property management, property owners are held liable for many things. Having a lot of benefits does not mean it is a cakewalk where one gets all without investing in none. The drawbacks of running a private rental are:
It isn't easy to divorce professionalism from personal interactions
Hassan gives the instance of a landlord who has built a personal relationship with their tenants. In this scenario, negotiations on rent and bills and dicey situations like evictions might pose a problem. These are things that a property manager would be able to do and handle efficiently without regard for friendships and relationship ties.
Legal complications
Ordinary citizens would find that they have little to no knowledge about the laws and legislations that guide tenant-landlord relationships, property maintenance, and leasing processes. This would work against a person running a private rental that is oblivious to these legislations. Property managers, on the other hand, are well versed in the navigation of such laws, and as time goes on, this can be a blessing.
How to list a private rental?
Until recent times, landlords that operate private rentals have been at a disadvantage, having restrictions imposed on them on where they can market their properties for rentals. They had only fringe options with no exposure capabilities, relying on social media, online marketplaces like Gumtree, posters, and oral information extension.
The advent of more online marketplaces like homes.com.au has evened the odds in their favour, and they can now sell their rentals quickly.