I have talked to some investors some time ago who have purchased properties near to where they live. Their reason was so they could manage the properties themselves, why would they want to do this you ask. Well to save money of course. They believed themselves to be very savvy in this decision. They had it in their heads that once they did a quick clean up, installed a few tenants and that was it, easy as pie. However it got me thinking, how much money did they save?
First off they have never managed a property by themselves before. Sure they owned properties before but actually the day to day management of a property was new to them. They soon realised that their expertise did not stretch to dealing with grumpy tenants. They found themselves on a steep learning curve and finding it difficult to maximise their income from the property while trying to minimise their expenses. They found themselves worrying about all the nitty gritty they had never had to face before, they found they spent too much time dealing with things they never even dreamed would be involved.
It is true that many investors begin by managing their own properties and then after a period of time hand it over to a professional service. Once they do this they find they suddenly have more income and more free time.
After about four months of dealing with the ins and outs of the daily running of an investment property, they found that it was starting to eat into not only their free time but their working day as well. They decided (quite happily) to had the properties over to a local property management company. The properties not earn them more money and they have the time to enjoy it.
Looking back they realised that it was difficult for them to keep up to date with the rental market as they were bogged down with just a few properties. They failed to see trends. As DIY investors/Managers they found that they had to do all the work and still they seemed to have longer vacancies. Direct dealing with tenants was also a problem for them, as tenants do not respect working days and rightly so as they are paying for a service, however it is far easier to have the tenant deal with a 3rd party whose job it is to deal with these problems.
In hindsight and in the future they believe they have found a good agency to work with and it suits them. This is not to say that you cannot manage your own properties, but sometimes it pays to spend a little to gain a lot. Find a agency that you feel represent you best, do your research. You may be surprise how much you actually save.
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