Sometimes new investors make the decision to manage their own investment property. After all, it seems obvious – why pay an agent to do something so simple as collecting rent?
Once they start doing it on a day-to-day basis, most investors realize they don’t have the level of experience required to maximize income and minimize expenses. They realize that they cannot do the work cost-effectively, and that tenancy legislation is best left to the experts. Most novices need to spend a disproportionate amount of time making sure they get it right. Even then they worry that they haven’t thought of everything. Most find it an enormous relief to hand over to an expert who has the up-to-date legal knowledge to prevent problems developing. Most thus report an increase in their net income as well as in their leisure time.
Happily, most people hand over to an agent before things go wrong. They realize that staying up-to-date with week to week fluctuations in the rental market is difficult for those not in the business. It takes a lot longer for trends to become apparent to people who are looking after just one or two properties. Do-it-yourself investors do all the work themselves and it may still cost them money in higher vacancies. It’s also very hard to keep a distance from demanding tenants when there is no third party to liaise.
Communication and arbitration is also an area where the objectivity of a third party is essential. Dialogue via a disinterested third party minimizes income reducing anger and personality conflicts. Even negotiating rent is difficult for a landlord, due to emotional involvement and lack of experience.
It is also difficult to know what rent to ask for the property and what is regarded as fair and reasonable repairs. But the lease is the bottom line, if it is not completed correctly the tenants could end being squatters rather than tenants, which thus has horrifying legal implications.