You buy investment property to grow wealth. So, it may then feel a little counterintuitive to pay someone to manage the property for you. Surely, you’re better off doing it yourself and saving some dosh. How hard could it be?
You buy investment property to grow wealth. So, it may then feel a little counterintuitive to pay someone to manage the property for you. After all, they charge anywhere between 7.5-10.5% of the rental income which can add up to a fair chunk of change.
Surely, you’re better off doing it yourself and saving some dosh. How hard could it be?
Well, we’d argue that a good property manager is well worth the money they charge. They will save you time and stress and the hassle of managing the property yourself – because there’s a lot more to being a good property manager than you might think.
So, we look at why a good property manager is a must for any property investor:
Tap leaking? Lightbulb needs to be replaced? Rather than having to deal with every little request from your tenants, your property manager looks after it all for you – fielding calls from the tenants and organising any tradies required to make any fixes.
They’ll often have a value above which they’ll contact you for permission to go ahead and incur the cost (this is often around the $500 mark) but often, they’ll just take care of it and send you to the bill.
There’s other little stuff they’ll take of for you as well. If you live in Auckland, for example, they’ll handle the payment of the water bill, so the tenants get charged the correct amount.
Setting your rent rate isn’t as simple as charging your tenant the amount you’ll need to cover your mortgage and any other costs associated with holding that property. That’s just not how this works.
Market rate is as variable as house pricing and driven more by demand and location rather than the quality of the property. A good property manager will have an understanding of what other properties in the area have been rented for, and where yours falls on the spectrum.
They’re also more likely to drop the rental price if they’re noticing they’re not getting traction with tenants and the property is standing empty a little too long. Getting $10 less per week in rent will have much less of a hit than a few weeks without tenants.
On the flip side, they’ll also raise the rent when appropriate, and many will have a pretty strict policy around rental arrears so you can rely that the rent will come in on time to help cover the mortgage.
Attracting good tenants can take a lot of work. We’re not just talking about taking pretty pics of the property and listing it on all the right sites with the type of copy that would make a ramshackle bungalow sound like a mansion.
It’s also the open homes, vetting of tenants, background, and general ‘vibe’ checks – this can take time, and experience in knowing what questions to ask and what to look for in a suitable tenant.
Part of a property manager’s job is ensuring that the home they’re managing complies with the current legislation – like ensuring it’s in line with healthy homes standards, has enough fire alarms, and is generally in a condition that’s suitable to rent.
They’ll also understand legislation relating to what you can and can’t do when it comes to the tenants – like how often you can do a house inspection or when you can/can’t evict them. They also know what a tenant can and can’t do and will handle any tenancy tribunal issues in the event they arise.
All in all, a good property manager will ensure you don’t fall foul of the law and can keep your ‘good landlord’ status.
If you’re self-managing the property, you’ll likely be stuck buying a property relatively close to where you live. After all, you don’t want to be flying down to Invercargill from Auckland every three months just to do a property check.
But buying close to home isn’t necessarily the right approach to ensure you’ll get the returns you need.
Deciding to use a property manager from the outset will give you more freedom to buy a property that fits your criteria – regardless of where in New Zealand it happens to be.
To experience all the benefits of having a property manager looking after your investment, it is important that you get the right one. When you purchase an investment property through Momentum Realty, we can introduce you to some of the top property managers in the area you’ve bought.
While property investment may seem simple from the outside, there’s a lot that goes into buying the right property and making sure you can hold it through the fluctuations of a property cycle. In this guide, you’ll find everything that you need to know about what makes property such a powerful investment option, and how to make sure you buy the right investment property to meet your financial goals.
Click here to download the New Zealand Property Investor Handbook by Momentum Realty.