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Managing your investment property

- Tuesday, April 13, 2010

Should you trust the management of your investment property to an agent or do it yourself?

Seldom has the property market looked so ripe for investment returns. Soaring rental values, rock bottom interest rates and a shortage of supply have created a prime market for investors.

But locating and buying the perfect rental property is only half of the equation – the next challenge is to find and manage your tenants.

The good news is that landlords have the option of taking the job on themselves or outsourcing to professionals, and there are certainly pros and cons with both.

Professional property management services come at a premium, which can range from around five to 10 per cent of the gross rental. While this will certainly put a dent into your rental income there are some distinct benefits to using an agent.

For starters you won’t be called on day and night to fix leaking taps and broken fences. The agent will take care of managing all maintenance issues associated with the property, which can be a big advantage – especially if you don’t live near to your property.

There’s also the advantage of tapping into a broader network of prospective tenants should your property become vacant; what’s more the agency will help assess and select the best tenants as well as organising the collection of rent.

The main downside of using an agency is the reduction in income, which may mean all the difference between a cash positive or negative investment.

Self-managing your property essentially gives you more control over your investment. You can pick and choose your own tenants, and as long as you’re handy with a hammer you’ll be able to reduce the cost of maintenance by taking care of small jobs yourself.

At the end of the day you need to consider how hands-on you’re prepared to be with your investment before making a call on whether to bring in an agent or not. If the property is out of your local area, and you’re not much of a handyman, it may be best left to an expert.


Disclaimer
This article does not necessarily reflect the opinion of the author/s, Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news and information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.





 
David Carruthers is a credit representative (Credit Representative Number [400226]) of BLSSA Pty Ltd (Australian Credit Licence No. 391237).