Don’t be a landlord
Property Investment doesn’t mean you need to be a landlord.
No, I don’t mean hold your property and keep it vacant, I mean landlording is a skill you don’t need to be a successful property investor. Don’t take on the stress and responsibility of being a landlord.
Leave it to the professionals
I learned the hard way when I started property investing, I believed I could save myself some money by managing my properties myself. One of the lessons I talk about in my book, was when due to my limited knowledge on tenancy law, I wound up in court over a rotting pumpkin left by a previous tenant, in a cupboard in one of my properties…
I had a house in Glen Innes that I was managing myself, when the tenant I had taken on had failed to pay rent, and left without paying the debt, so I rushed to find another tenant. I took on a single mum with a teenager who I trusted would be good tenant. However, after taking care of the pumpkin incident mentioned above, by crediting the new tenant and cleaning the property, she demanded further compensation. We couldn’t come to an agreement and we ended up at tenancy tribunal. The judge didn’t care how I had tried to rectify the situation, I lost the case and the tenant was awarded three weeks rent.
After that experience, I wanted to avoid anything like that happening again. I found a property manager who also owned her own investment properties, I described my experience to her and she told me that the tenant clearly knew her rights and that often these types of tenants would target private landlords like myself who are either new to the industry or inexperienced. It was an eye opener.
A quality property manager is experienced in all the challenges of being a landlord and owning a property like paying rates and water bills, looking for quality tenants, credit and reference checks, maintaining the relationship and handling the calls at all hours. They’re up to date on tenancy law and have a network of professionals to help look after your property, so you don’t have to deal with the call at 11pm that there’s a plumbing issue.
Your time is valuable
Property managers charge a small percentage of the rental income to look after your investment for you. Their skills are unique, so earn them a large salary, it’s not a part time job anyone can do. I learned a big lesson, in an attempt to save the cost of a meal out per week, my cost was a lot higher, not just financially but mentally and physically with the time and energy I could have used to grow my portfolio.
I realised that I was missing out on opportunities to grow my portfolio by chasing ‘small money’.
Every now and then I will have the clients telling me that they are selling their investment properties, I ask why, they say that they have difficult tenants.
“Why would you sell it because of the difficult tenants? Why not just replace the tenants instead?” Usually the response is “it’s too hard being a landlord.” If you don’t know how to manage tenants, don’t be a landlord, call a professional, a good property manager.
Your property investment is nothing to do with the tenants, it is your long-term investment plan which allows you to have future financial freedom.
Trying to do everything yourself will hinder your portfolio growth and limit you from fulfilling your financial potential.
Leave it to the professionals, hire a quality property manager and focus on doing what you love, as there’s no wealth without health.
Want to know more about my property investment journey from living in a state house to building a $17m+ portfolio in five years? Check out my book: CLICK HERE
Lucia Xiao | support@luciaxiao.co.nz