Ah, property management and that good old Kiwi DIY / she’ll be right / No.8 wire attitude. You have to admire it in some way. There are still plenty of private landlords out there looking after their own rental property, running their own tenancies and even doing their own repairs and maintenance.
Those days are fading for private landlords doing their own property management. It might pay to take a closer look at the things that are going on right now, because the changes that are coming that will mean you’re taking bigger and bigger risks looking after your rental property yourself.
Money For Jam
It’s been said that property management is just “money for jam” – but that really only works until something goes wrong! That’s when your property manager earns their fee.
And when things go wrong with a tenancy, they go wrong extremely quickly. It’s at times like that when you’ll need someone to be on your side, fighting your corner and protecting you from such disasters. That is when you’re going to need someone on your side, acting as an advocate and supporter; someone who knows how the law affects your situation; someone who can advise you and act on your behalf.
Someone, in fact, who is prepared to roll their sleeves up and get on with the job, however arduous and complicated it might get. And that is when you’ll discover that paying a small percentage of your rental income for such a service is really a very good idea after all.
Know Your Rights
If you don’t know what your rights are and how the process works when that happens, you can lose a substantial amount of hard cash with no hope of recovery.
The Health and Safety Law reforms are probably already affecting you directly. If you haven’t investigated what this means to you, then you need to do some serious homework and soon. Other compliance issues to consider are local building regulations, constantly changing building codes, and of course insurance cover.
Do Your Homework
Here’s 12 questions to ask yourself if you’re thinking of managing your rental property yourself:
- Are you organized and assertive enough to chase up late rent immediately?
- Could you bring yourself to evict a family or someone who has fallen on hard times?
- Are you comfortable with the tenant having your phone number and home address?-
- How will you find out if tenants have previously been evicted or have a poor rental history?
- Are you happy to be on call 24 hours a day, 7 days a week?
- Will your landlord insurance cover you if you self-manage – will your premium rise?-
- How will you manage the tenancy if you go overseas for longer than 21 days?
- Do you know the warning signs for a clandestine drug laboratory or marijuana grow house?
- How would you do standing up in a tribunal and arguing a case?
- Do you have insured and qualified, reliable tradespeople that you can call on anytime?
- Do you realise you could be open to investigation under the Anti Money Laundering Act?
- How much will you save after tax, by self-managing? (Is your time better spent on other priorities…?)
You can work out your own answers to all these questions, and I’d quickly like to deal with that last one for you. Property Management fees on an average Wellington property work out at around $50 per week, or $1.25 per hour of the regular working week. Remember, that $1.25 covers you for 24 hours a day, seven days a week…
So how much do you earn in an hour?
What makes you think you’re saving money by managing your rental yourself?