According to the last census, a third of all properties are self managed by their owners, while VCAT reports around two thirds of all tenancy disputes brought before the tribunal relate to privately managed properties. These numbers alone should serve as a clear warning to anyone looking to self-manage an investment property, but let’s look a little closer at the three key issues facing a private landlord.
Firstly, private landlords are unable to access tenancy databases that include details of any previous judgements, outstanding debt and rental history. These details are only available to licensed agents, so while a private landlord can check the references a prospective tenant gives them, they cannot access the most relevant information.
Secondly is the sheer amount of work involved. Property management is not just collecting the rent; at the very least, there are repairs and maintenance to take care of as well as regular inspections. A good agent will also offer a comprehensive range of services.
Lastly, there is the serious issue of accountability. The legal regulations surrounding property management are complex and if not adhered to, can leave a landlord wide open to significant cost. This is why specialist landlord insurers will simply not provide cover to private landlords. Even the general insurers who do provide cover only do so with far greater excesses than agent managed properties, to counter the higher risk.
The real question a landlord should ask themselves when considering how to manage their property is, why would a tenant want to rent from a private landlord? Unfortunately the most common answer is because that tenant knows their previous rental history will not be available to the landlord, which can only spell trouble. And worryingly, with the proliferation of new websites that specifically encourage private landlords to advertise, the ease with which these tenants can make a targeted approach has become even easier.
Given the average agent’s fee is just 7%+GST (which is fully tax deductible) anything other than engaging a professional property manager is just not worth the risk.
Source: Channel 5 Website
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