DIY Property Management - Is it worth it?
Managing your own investment property has its advantages – you get to maintain control of the process and it can save on agency costs, but a recent story from the Gold Coast Bulletin raises some traps.
A "tenant from hell" has left Sunshine Coast man Garry Peters heartbroken and facing a monumental clean-up after a two-and-a-half year ordeal.
Mr Peters' investment property in Lumeah Dr, Mt Coolum, was turned into a stench-filled squalor and left trashed by a man he had thought to be "a wonderful guy".
"It's been the worst experience of my life," Mr Peters said yesterday following the tenant's eviction last week.
"It was a pig sty. There was over 100 empty bottles of rum, the floor was ankle-deep in dog poo - it was heartbreaking."
Admitting he had erred in judgement by opting to lease the property privately, Mr Peters said he could never have imagined what was going to happen to his former home, which was meant to be his superannuation fund.
"At the time I thought he was a wonderful guy. His references seemed all up and wonderful," Mr Peters said.
"The big mistake I made was not to give it to an agent... I'd never go privately again. It's been the worst experience of my life."
Still owed close to $10,000 in unpaid rent, Mr Peters was forced to go through the court system to have the man removed from the property.
That drawn-out process has left the aged-care volunteer ready to give up on his plans.
So what are the most common mistakes that self-managing landlords make.
- Access: Many self-managing landlords believe they should have unlimited access to their property and will turn up with limited or no notice to the tenant. Retaining control over management does not mean you can ignore the rules about access. It is a requirement that tenants receive 48 hours notice prior to any visit.
- Bonds: Some landlords don’t collect any bond or keep rental bonds in their own bank account. All Bonds must be lodged with the Rental Bond Board. Also some self-managing landlords may request more than 4 weeks rent as Bond – which is not allowed.
- Documentation: Landlords need to remember that owning an investment property is like a business, you need to have everything in writing. Make sure there is a written Tenancy Agreement in place – it’s difficult to prove that someone is a tenant and not a guest without a Tenancy Agreement. Keep track of the condition of the property with a written description of the state of the property prior to the tenancy – with photos – and the same at the end of the tenancy. Without these documents it is difficult for the landlord to prove who caused the damage.
With rental payments it is wise to provide rent receipts and to keep a tenant ledger so that you always know that the tenant is up to date with their rent. It is also a good record for tax purposes.
- Charging for Utilities: Landlords sometimes make the mistake of charging for utilities when they are not allowed to. For example if there is only one water meter for multiple residences, such as an apartment building, you cannot charge the tenant for water usage.
- Staying in Touch: Some landlord just give their tenants a mobile number making it difficult for the tenant to contact them. It is important for the landlord to give the tenant their full name, address to write to, telephone number and email. If something does go wrong, it is important to try and contact the tenant and discuss the problem. Keep written records as to what was discussed and agreed.
So is it worth it? Consider carefully what is at risk and what a management fee actually covers and you may think twice about self-managing.