With a housing boom in full swing, more people are looking for a long term rental rather than buying a house. Initially this seems positive news for landlords, after all, who wouldn’t want long term tenants? However, managing your own rental property isn’t as simple as finding tenants, sitting back and collecting the rent. Many underestimate the time cost of being a landlord.
What is the value of your time?
The best way to illustrate this is by an example. Say you have a three bedroom investment property in Hamilton. Managing it yourself is going to save you about $145 a month, and if you spend on average about five hours a month working on property management related tasks, you are essentially working an additional job at $29 per hour. It all comes down to how you're able to best leverage your time. Could this time be spent on higher value activities, whether that's quality time with your family or time spent moving your career forward.Stretch yourself too thin and the cracks will show
How are you going to juggle calls from tenants, or arrange maintenance repairs while you are work? If you're trying to attract tenants and conducting open homes, will other commitments cause you to have to delay the showings? Hot water, power and gas problems can present themselves on any day of the week, weekend and on holidays - day or night. As a landlord you are expected to take remedial action immediately, no ifs or buts. Stretch yourself too thin and you could end up creating more problems for yourself.
Think again about taking that three week holiday
A major reason people invest in properties is for the eventual passive income and lifestyle. What use is managing a number of properties if its pulling you away from the freedom you were trying to achieve by investing in property in the first place? Law changes in 2010 now require landlords who plan to be out of the country for more than 21 consecutive days to appoint an agent to take care of the property. Landlords who fail to do this can face fines of up to $1,000.
Read more: Tips on how to choose a property manager for you rental
You could ask a friend to answer your phone and keep an eye on your properties while you’re away, but will they know everything you know about managing property? You risk alienating tenants and damaging your properties by entrusting them to someone who doesn’t know what they’re doing. Likewise it might be a hassle to hire a professional property manager last minute, especially considering that many have specific contract agreements and early cancellation fees that make it unviable.
Your time and your health
If you manage your own properties you have to deal with everything from the upkeep of the property to keeping your tenants happy. This can cause a lot of stress especially if you are managing a property and also have a demanding full time job. Being overworked and overstressed can cause serious health problems, increasing your chances of a stroke or heart attack by as much as 50%.
Property management may seem simple enough from the outset, but beneath the surface is a lot of work and legalities that certainly aren’t for the faint hearted. Health and Safety laws, legal action, what goes into finding tenants and managing properties should give you pause for thought.
Worried about letting your home to untrustworthy tenants? Our free guide can help:
