Many landlords in the past (back in the good old days) used to self manage their own investment properties. Before all the legislation (Residential tenancy act was introduced 1997), back before when people stood by a hand shake and back before when people signed a contract, if something was owed (like rent) it was paid without fuss!
Nowadays, self management is no longer the norm. Most Real Estate agents take property management seriously (at least hiring a qualified property manager rather than having the receptionist look after rental properties in between taking sales leads) and, there is a good reason for this.
Managing a property is hard! Not only as a landlord do you have to abide by the legislation (so that’s not just the Residential Tenancy Act, you also have to be aware of the Privacy Act, Fair Traiding, VCAT Act…) Breaching any one of these can get you into trouble. But that’s not the biggest risk. The biggest risk is not managing a property properly, resulting in more damage / debt than when you started!
One example can be found in the recent article from the Courier Mail – Landlord’s nightmare: Maggots, faeces and garbage. This landlord thought she would go West to earn more money, renting out her home in the mean time. She responded to an add on gumtree (every time a PM hears this we shudder) and rented her house to a large family.
“AS FLIES swarm and a pungent stench fills the air, a tearful Amanda Rehbein wonders where she went wrong.”
The gist of the tale is she felt sorry for them, went over west for a year, when she returned, she found that the house had been so poorly kept, that they couldn’t even unload their furniture. I’m talking poop, maggots, filth and rubbish. They’ve estimated 6 weeks before the house will be liveable, brand new carpets need removing (but they can’t afford it so they’re just going to have to clean the best they can) and they have to pay for accommodation in the mean time as well!
If there’s such damage, wouldn’t insurance cover this you would think? The short answer is No. And so is the long answer. I am yet to find an insurance company that covers cleaning and rubbish removal, they just don’t do it (And it can be expensive). Aside from this, she was self managing, from interstate? How on earth could she keep tabs on her property? By not using a local agent, she would not have been covered even if it had been malicious damage as she had not taken preventative measures to ensure the property was rented as it should have been. Such rubbish and filth does not build up overnight! A routine inspection carried out at 3 months (which is what you can do in Victoria, note all states are different), would have picked up the way the family was looking after the property and steps could have been taken then to minimise the damage including;
- breach notices
- follow up inspections
- potential notice to vacate if breach is not remedied
- compliance orders from VCAT
- warrant of possession to be executed once possession is granted due to multiple breaches
If you’re not familiar with the residential tenancy act, how to make an application to VCAT or breach tenants, or even how often you can inspect the property, then don’t even think about self managing your property, it’s just not worth the risk, and certainly not worth the heart ache! Thinking of renting to a friend… then read this article from the Age- The truth about renting to friends.
Need any advice about your investment? Get in touch with me, I’m happy to have a chat.