In a previous blog post, Lucia described her experience of managing her own investment properties, and how she ran into an issue with a tenant who took her to tribunal over a rotting pumpkin. You can read about it here: Don’t be a landlord
She learned the hard way that sometimes the ‘cheaper’ way to do something is more costly than paying for a service to have an issue managed by someone else.
Property management is like insurance
Insurance is one of those things that (to me at least) for the most part feels like a wasted expense, thousands of dollars spent every year on something that you almost never use. I often wonder, how much could I save if I didn’t have these expenses or more importantly as I’ve learned, how much could I borrow towards another property? However, I quickly remind myself that insurance is one of those things that is a life saver (literally in some cases with health insurance) if something does go wrong.
My own experience with house insurance (which is a must for anyone with a mortgage now) is when I was 16 and living at home, one night we had a house fire that caused hundreds of thousands of dollars worth of damage and we could have lost our lives. No amount of ‘saving’ would have been enough to cover that devastation. Thankfully, insurance covered the cost to repair and we were back living in the family home after 12 months, having had the rent covered for our temporary accommodation during that time too.
Even if you have investment properties that you could tap into the equity or sell to cover something like that of a house fire, it’s a major disruption and cost. It’s a reminder that insurance in this case covers you for more than just a one off ‘fix’ for something like damage from a burst pipe.
Health or risk insurance can feel like a major expense with little benefit, particularly if you’ve got exclusions, but again, if you were to have a diagnosis for something that would be a major expense, how grateful you’ll be that you’ve been paying for this protection. Just like my experience with the house fire, something that seemed so unlikely did happen and could happen to anyone.
Having a trusted and experienced property manager looking after your investment properties is just like having insurance. You protect yourself from issues you’re not prepared for, especially when it comes to tenancy law. There’s a reason they’re paid well and are employed full time to do it. It’s a career that requires unique skills beyond being the one who picks up the call from a tenant in the middle of the night or handles paperwork.
You could ‘save’ money, but are you really saving?
It may seem more affordable/cheaper to go down the route of managing your own properties, or utilise services that make self managing easier, to save $30 per week on your property, but are you really saving money when you’re spending time trying to understand tenancy law, screening new tenants, dealing with missed payments or trying to find someone to fix a plumbing issue in the middle of the night?
By trying to save the cost of a meal, you’re choosing to take on a part time job whilst paying yourself next to nothing. You’re basically employing yourself to be a free servant to your tenants.
Some tenants are savvy with their rights, and can take advantage of owners self managing their properties, like with Lucia’s pumpkin experience, it can cost you thousands of dollars if you’re not super careful and prepared.
To me it’s a no brainer, property management is worth the expense, as I’d rather spend my spare energy on things that matter to me and pay for the convenience to not have to worry about my investment property.
If you’d like to find out more about what property managers do and why they are worth their weight in gold, register now for the webinar with Rick Chen from Anemax FIND OUT MORE