Why would a landlord try to DIY their tenancy management?
Are you a landlord and trying to self-manage your tenancies? Perhaps you're about to let a property out and think the monthly management cost seems pricey? This article delves into why a landlord might choose not to employ a professional property manager and the repercussions of that decision.
Most investors go into a strategy for one reason - profits. And property investment is no different. A property investor wants to hold their cash in a tangible asset that can grow in value (the property) and receive a recurring payment from the asset (the rent). This means there are two revenue streams when investing in property, which is why it is such a popular option.
And, for the most part, property investing is relatively low maintenance. You're not moving money around, buying and selling stocks or hustling for antiques or valuable items to trade. You simply buy the property, rent it out, sit back and watch the cash roll in.
Until that is, something goes wrong in the property. Maintenance issues arise, the tenant loses their job and misses a rent payment, or when they move out, you find out that the property has not been well looked after, and now you have to refurbish. If you have experienced any of these scenarios, you'll know that it's anything but a passive income.
Why, then, do so many landlords try to DIY this process? Most investors don't manage their share portfolio; why is property any different? Is it because we are all familiar with property, because we all live in one? It feels as if you already know everything there is to know because the property itself is familiar and tangible, whereas stocks and shares are more elusive and complicated?
Many landlords will DIY their property investment because they simply don't realise the value of employing a property manager. After all, if the tenant is paying their rent, what is there left to manage?
Some of the reasons noted in a landlords' Facebook group as to why those landlords opted not to use a letting agent are:
- The agent wouldn't let me amend or alter clauses within the tenancy agreement
- The agent didn't reply to calls/voicemails/emails
- With a single tenancy let and a good tenant, there doesn't seem to be any point
- Too expensive
- I know my property more than anyone else, I can do a better job
- The agent calls out contractors for no reason
- I don't trust them
Now, of course, there will always be negative stories where a friend of a friend had a terrible experience with an agent. But, in our experience, most nightmare situations between tenants and landlords happen when no agent is involved, when a relationship has turned sour, and the landlords have to come and ask for help, or the tenant reaches out for advice on handling a situation.
And not all agents are made equal. There are some that will call contractors out willy-nilly or don't answer calls and emails. This is not to say that you shouldn't use an agent; you just shouldn't use that agent. You've simply not found the right one yet.
Property management should be viewed similarly to your car insurance. Yes, you might pay an agent, and the tenancy goes smoothly, there are no issues, and everything is hunky dory. But, that one time that it turns into a nightmare, you will be so glad that you have an agent in your corner. In the same way, you might pay for insurance year after year and never use it, but when you need it, it is there for you if the agent has a terrible time looking after the property for you, dealing with issues or difficult tenants, they won't put the fees up to accommodate for that extra work.
If you are trying to manage your property investment portfolio by yourself, consider what you would do if it all starts to go wrong. Do you have the knowledge, experience and education to know what to do in all scenarios, no matter how problematic? Do you have the time to dedicate, on top of your regular work and family life, to deal with these issues? Can you afford NOT to have an agent in your corner if things start to go downhill?
Get in touch with our team of property management experts to get the insurance that your property, tenants and profits need to be protected, and buy yourself a little bit of time freedom back in your life. It could be worth every penny!