Management vs Self-Management.

So you’ve bought your investment property and invested wisely. You’ve done endless research into whether you need an agent to manage it or not, and who the best around are. You’ve read some horror stories and come across some property management companies that look like they know what they’re doing. So which option is best?

This will entirely depend on your circumstances, and whether you have enough free time and experience to consider managing your new investment yourself. Below, we have set out some points to consider before you make your decision.

What is Self-Management?

Effectively, self-management means that you, the Landlord, not only own the property but take on the day-to-day operations of managing the property and tenancy. Your Tenants will look to you alone as the contact point to discuss issues such as rent, maintenance and neighbour disputes. Lets now look at some pros and cons for self-managing.

Pros:

Greater Control: Self-management gives you a greater degree of control over daily operations. You bought the property with your hard earned cash, so you'll be the one making all necessary decisions. If you have trouble delegating, then you may feel more comfortable being in control of every detail of how your properties are run.

Closer Relationships with Tenants: You can also expect closer relationship with tenants since you will be their point of contact. Of course, landlord-tenant relationships can turn sour at times, so in these cases, you may wish you didn't have to be the one to handle issues with tenants.

Gained Experience: You will also learn a lot about property management by doing it yourself, which some landlords may consider an advantage if they want to eventually focus more on management in their property career than on ownership. Expect to experience some hiccups along the way, though.

Financial Savings: Probably the reason you’re considering self-management in the first place, one other advantage that is the determining factor for some Landlords’ decision to self-manage is that it can save you money. With no management fees, you can pocket all your rental income (minus taxes and expenditure of course!)

If the considerations above doesn’t seem too daunting to you, then you will be extremely tempted to make the decision now. But hold on. Now we’ve looked at some of the benefits of self-management, lets look at the issues with it and perhaps why having a qualified professional may be more suitable to your circumstances.

Cons of Self-Management

Time Required: There is a very long list of considerations & responsibilities a property manager must be aware of. If you have multiple properties, then your duties will multiply. The time it takes to take care of all these responsibilities can be significant, and it could certainly keep you from pursuing other business ventures. Why do you think agencies hire so many staff?

Source of Stress: You may also cause yourself a lot of stress by taking on some of these responsibilities. If a tenant has a burst pipe at 2am, you'll be the one taking that call and figuring out how to get it taken care of as soon as possible. If a tenant is breaching their agreement or not paying rent, you'll be the one confronting them and taking any necessary follow-up actions, including eviction. So if you’re hoping for a stress-free investment and to make a quick buck, this may not be the way to go.

Lack of Expertise: Another issue is that, if you're just starting out as a landlord, you are sure to encounter issues that have to do with legal regulations or best practices that you are simply unaware of. It can take a long time to gain the experience and expertise necessary to manage a property well without running into problems. Having your property managed by experienced, qualified professionals takes away that uncertainty and ensures you remain compliant. You wouldn’t want a DIY surgeon undertaking some pretty major surgery on you now, would you?

Marketing & Rent: In order to advertise on the most popular online portals, you will need to use a Letting Agent as they do not allow Landlords to directly market with them. If you try and market elsewhere, you may find that you’re not reaching the right people and could land yourself with problematic Tenants, which will create more work, more stress, less time and less profit.

Additionally, local agents know and understand the local market. Therefore they can make sure that your advertising in the right place and at the right rent to maximise the return on your investment. Yes it costs a little more initially, but could save you a fortune in the long-run.

All Management fees are tax deductible: This means that, if you have a decent enough accountant, you should be able to offset the tax paid on agency fees, whilst being able to go about your life without the stress or responsibility of looking after a property portfolio.

Time to decide!

So, you’ve read this post and you’re torn again. On the one hand you want to try and keep as much of the rental income as possible. On the other, you’re concerned about your lack of expert knowledge and worried you may accidentally cause bigger problems for yourself than you initially thought.

Try this: start with a blank sheet of paper and write down how much free time you have, before managing this property during the week. Include such things like work, family time, socialising. Now consider your job. Is it flexible enough for you to leave at midday on Wednesday to address a problem at your rental property?

Now you’ve done that, write down as much as you know about property management and how to do that. Include the contacts you will need, the legislation you will need to know and adhere to, and other considerations such as what if your relationship with the Tenants turned sour and how to register and protect a deposit.

If you do the above and you have loads of free time, a flexible job, contacts within the trades industry, and a fantastic knowledge of Property Management, then you should be able to manage your property portfolio with no problem (although you may want to use an Agency to advertise your property – we offer a “Let Only” service for Landlords to ensure you find the right Tenants and that they’re meticulously referenced).

If you’re looking at the piece of paper and you’ve worried about the lack of time you have and have no real understanding of Landlord and Tenant legislation, then you may be better leaving it the professionals. You wouldn’t try and defend yourself in court in front of a judge, so why try and navigate through the complicated legislative midfield that is Property Management? Having a fully qualified, professional Managing Agent dealing with your property could be worth its weight in gold, giving you the peace of mind and the time to go about your life doing the things you actually want to do.

Regardless of which side of the fence you came down on, call us on 0161 511 5339 or complete our contact form to book in your FREE, NO OBLIGATION CONSULTATION with our experienced and fully qualified Managing Director, Rob Trollope to discuss your best options and how we can help you with your property investment journey!