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I often hear people complain about the cost of using a Property Manager to look after their rental investment. “I’ll manage it myself” they say, “to save money” they say.

If your weekly rent per property is $500 and a Property Manager charges 10% of that, and the Property Manager is on call for only 40 hours per week, (which is only 24% of the time) then that’s $1.25 per hour. A Property Manager is actually on call 24/7, which equates to 29 cents an hour.

It’s probably fair to say that most rental owners make substantially more than that per hour in their job or business. Each hour that you put into managing your own property actually costs you your hourly rate in opportunity cost.

What do you get for your 29 cents?

You get maintenance and improvement advice, tenant background and credit checks, inspections, emergency cover, a range of fast response tradies that actually turn up, and you don’t have to answer the phone at 9pm on a soaking wet Friday night after a shite day at the office.

If you have a mortgage on your rental property, your mortgage payments have most likely gone down more than the cost of a Property Manager due to the current falling mortgage rates. Also, the market valuation on your rental property has probably increased in value over the past year far more than the cost of a Property Manager.

Show Me The Money!

Let’s look more closely at your property manager’s income stream of $1.25 or 29 cents per hour. Out of that income you need to deduct income tax, ACC levies, accounting fees, holiday pay, sick pay, KiwiSaver, software expenses, postage, stationery, public liability insurance, office rent, power, mobile phone, vehicle running expenses, photocopier lease.

I can assure you it’s not a highly paid industry.

He Tāngata, He Tāngata, He Tāngata

Another more important element to this discussion is the human factor. Your tenants are people – families, young couples, flatmates, newlyweds, retirees, business owners. Your tenants have lives that they lead in your rental property.

A “web based platform” is never going to replace the power of a property manager’s relationships with their property owners, their tenants, their trades people, their industry trainers, their favourite property commentators, their real estate contacts, and in many cases the tenants in their own rental properties.

Relationships of that calibre take years of effort, education, training, experience, confidence, compassion and bravery to maintain. It’s not really about property – it’s about people and their lives, their needs and expectations.

Knock Yourself Out

But hey, go save yourself that 29 cents. After all, when you get to Tenancy Tribunal court and find yourself arguing the toss with an adjudicator and/or tenant over some differing interpretations of the Tenancies Act, it’s not easy. Or trying to get a plumber out at 9pm on a soaking wet Friday night while you are out to dinner with friends, good luck.

It’s been said that property management is just “money for jam” – but that only applies until something goes wrong. That’s when your Property Manager earns their fee. 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 you can work with to help you move towards your property investment goals.

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.

Admit it – you’ve got better things to do with your time, and a better hourly rate to do it with.



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