The Simple Equation That Will Tell You If You Should Self-Manage

We briefly mentioned in last week’s post whether people should be getting a property manager or go down the self-management route. It’s a question that stumps a lot of people, but it is relatively easy to figure out the answer.

In this short post we’re going to tell you the one situation where we think self-management is a good option, and then tell you how to figure out what route is best for you personally.

So why are people choosing self-management, and what’s that one situation?

People choose self-management options for one reason: to save money. And in some cases opting for self management will save you hundreds of dollars in property management fees. If your only investment property is next door, or down the street, and you’re renting to close family then we say:  go for it. You’ll absolutely save a little money, and we don’t believe you’ll find much value in a property manager.

Of course that’s not a frequent situation people find themselves in, usually you’ll be renting to people you barely know and your investment property won’t necessarily be in your neighbourhood. In these more common cases the value of self management plummets.

So if you’re renting out a property nearby, to close family then go for it. If not keep reading.

The value of property management.

Unless you’re renting out the house next door to your kids it’s better to have a property manager. There are a multitude of reasons why but it comes down to a simple equation:

Money/(Time Spent*No. Of Properties) = Value

We call this the MT=V equation, and it goes like this:

If you spend more time managing your property than what you would spend money on a property manager you’re losing out.

We’ve seen plenty of people lose out simply because they spent more time than money working on their properties. Time is money, and you’re better off spending time looking for new opportunities and spending a little bit of money taking care of your new investment.

And by “taking care” we mean more than just maintenance jobs. Managing a property is all about increasing that V - the value. A proper property manager is going to be looking at how your investment is performing, and telling you exactly how you can maximise the return you are getting.

The hundreds of dollars you pay in management fees can turn into tens of thousands of dollars in value.

So have a think, is the MT=V equation working in your favour right now? Could you be making that V much bigger with an expert on your side? You almost certainly can, and here’s one more reason why: Property management is tax deductible.

Get in contact with us, and together we’ll do the math.