Being a property investor can be a rewarding experience, with mortgage rates reducing and signs of a recovery in the property market on the horizon, especially since we are still in a buyers’ market.

But it can also come with its fair share of challenges. One of the most important decisions you’ll make (after purchasing a property) is whether to manage your properties yourself or hire a professional property manager.

It is important to remember that although there are many self-managing landlords who will tell you that you will never find a property manager that will look after the property as well as you will, there are equally as many property investors who will tell you that life is way too short to manage your own rentals. So how can you decide which is the best option for you? Let’s take a look at some of the pros and cons for each.

DIY landlord

Pros

• You have more control over your properties and how they’re managed.
• You can save money on property management fees, which helps with the cash flow
• You can build relationships with your tenants (NB: you should always maintain a professional relationship, not strive to be their friend)
• There are several excellent platforms designed specifically to make things easier for DIY landlords e.g. KeyHook.

Cons

• You’re responsible for all aspects of property management, including arranging repairs and maintenance, advertising, tenant selection, property inspections, managing rent arrears, and attending tenancy tribunal hearings if required.
• You may not have the time or expertise to manage your properties effectively.
• You could be held liable for any mistakes you make, and the amount that you may have to pay the tenant for those mistakes could range from (for example) $350 for failing to give a receipt for rent, up to $7,200 for failing to meet healthy homes standards.
• You may have difficulty finding reliable contractors.
• You may need to take time off work for property inspections, tenancy tribunal hearings etc.
• If you are going overseas for more than 21 days, you need to appoint a local property manager in your absence.
• Some landlord protection insurance policies prohibit self-management.

Professional property manager

Pros

• They can handle all aspects of property management on your behalf, saving you time and potentially money.
• They can help you stay compliant with the Tenancy Act.
• Can be a huge advantage if your rental property is not close to where you live.
• They often have a good network of reliable contractors.

Cons

• You’ll have to pay property management fees, which can range from approximately 6 per cent up to 11 per cent (or more) of the rent received, depending on the property and type of tenancy (although this is tax deductible as an expense).
• You may have less control over your properties, unless you are clear with your property manager about how much control you need/want in certain situations eg you might want to attend at least one of the property inspections each year.
• Property management is not a regulated industry, so finding a good property manager can feel a bit like “trial and error” unless you can find a good recommendation from other property investors.

In summary

Only you can decide what is best for you and your tenant, but property management might not be as easy as you think. I recommend that you either become an excellent property manager yourself and ensure that you thoroughly understand your legal requirements (a good place to start is the NZPIF RentSkills programme, which is free for full members of any local property investors’ association) or pay a professional to do it for you.

Property Apprentice is the market leader in property investment advice. It is run by experienced coaches and financial advisers to give you the best support possible, to help you realise your goal of financial freedom. Visit propertyapprentice.co.nz, email info@propertyapprentice.co.nz or call 09 575 7736.