After 16 years in real estate we’ve seen, some pretty horrific stories involving property management. What I believe to be true is, you can self manage successfully for years, but as soon as there is a problem you need a professional.
Most people don’t cut their own hair, build their own houses or do their own tax. You can try, but generally speaking you won’t get the same outcome as a professional would. Overall I believe it’s a false economy to try and save a bit of (tax deductible) money to manage your own investment property.
Here are two common issues.
Tenants not paying rent then abandoning the property.
This was a doozy. The owner had been self managing for almost 5 years before he came to us. He said the tenants were always a bit late, but recently payments were irregular and the tenants were now 3 weeks overdue and not returning his calls. He was concerned and didn’t know what steps to take next.
We immediately went to see the tenants and put them on a payment plan which they did not honour. We issued a termination notice which they ignored. We took them to NCAT, where we were awarded possession by a set date, but the tenants did not return the keys.
We applied to a sheriff to help us evict the tenants and change all the locks. When we initially went to the premises it appeared the tenants had fallen on hard times. The property was in a terrible state and one of the tenants had moved out after their marriage broke down.
Because the tenants had historically paid their rent regularly the investor had not conducted any inspections. (It’s important to recognise that situations change for people and if you are not in regular contact with them you can miss the warning signs)
If he had a property manager they would of conducted regular inspections and quite likely picked up the change in circumstances for the tenants, and been able to act accordingly.
It took 5 weeks to remove the tenants then another 3 weeks to clear out and repair the property before we could advertise it again. On top of the 3 weeks of late rent plus all the repairs required, the owner was left considerably out of pocket.
Coming to us meant we could put our expertise to work straight away, we knew the legislation and the required timeframes to issue orders to terminate the tenant. If order dates are wrong or the correct process is not followed the tenant can claim compensation from the investor. Unless you knew the legislation you could not know what to do and in what order. Even through the investor lost a lot of money it was far less than if he had tried to resolve this himself.
Accidental damage.
The tenants had turned on the dishwasher then left to go on an overseas holiday. Whilst they were cruising around the Bahamas the property was slowly being flooded from the back of the house to the front door. The damage was only discovered 10 days later when they returned. As soon as they called us we went to inspect the swollen damaged floorboards throughout the whole downstairs area of the house. We got straight on the phone to the investors insurance company and arranged for the assessor to come to the property the next day.
From here, it was liaising and meeting with tradespeople to quote to fix the damage asap, then dealing with an anxious owner and tenants who had to be relocated while the floor was replaced. The floorboards and the kitchen cupboards were all water damaged and needed replacing.
Navigating and following up an insurance claim, whilst organising major repairs plus providing temporary accommodation to the tenants is certainly a job for professionals. It’s time consuming and requires thorough documentation to support the claims plus a lot of patience.
A self managing investor may not have had the time to take action quickly which would of lead to more weeks of lost rent, also they may have not known they needed to relocate the tenants and could of opened themselves up for a compensation claim. You also need to be practical, not emotional which is where a professional property manager in the middle is hugely valuable.
