Some tenants are feeling misled by landlords who are trying to maximise their profit by hiring a real estate agent only to advertise their property, preferring to self manage from there on.
As a landlord, there’s nothing wrong with trying to maximise your profit depending of course on how you do it. You may feel that you can manage the property yourself and some landlords are very good at this.
However, there can be drawbacks that are overlooked when thinking of saving money this way.
Being a landlord myself, I find myself asking questions such as;
How can I save money on real estate agent fees?
Do I just pay agent to advertise and sign up the tenant myself?
I know enough about property management to collect the rent and manage my tenants, should I do it myself?
Do I want to deal with the hassle or is the agent worth it?
What is my goal, what do I want to achieve here?
These are great questions to ask yourself as an investor and everybody responds differently based on individual goals and what we are willing to learn and do.
Let’s start to think like a tenant
I came across a conversation on an online forum the other day which sparked me to write this article about a tenant feeling misled by the agent and the landlord.
This particular tenant wanted a property with pets allowed for which they had been searching for some time. They found a property advertised by a real estate agent, and applied for the property thinking that their prayers had been answered.
They went through a lengthy process of negotiating with the agent to get their medium-sized dogs approved and informed their current landlord that they were moving.
Then there dream started to fall apart
They then discovered that the landlord just used the agent to advertise, after which the landlord preferred to manage the property herself.
Well, this did not go down well, as the tenants had an unfortunate experience dealing directly with their previous landlord. This got the tenant worried, thinking that the pets clause was going to be abused.Tenants feeling misled by rental agent or landlord
The tenant continued on to say that if they had known that the landlord was self-managing the property, they would have never applied for the property.
The agent explained that once all was finalised that they no longer had a relationship with the landlord.
On hearing this from the agent, the tenant became extremely apprehensive and scrutinised the contract line by line for more clauses and issues. They found one stating that they are to “maintain and service all appliances”.
The tenants said in the forum “We have 7 days to ensure everything is working after that we maintain them, pay for service and repairs and they will only be covered by landlord if an act of god damages them. So what happens if one fails? It can’t be repaired? I ain’t paying for a brand new Smeg dishwasher.”
“Kind of feel like I’m strapped to a barrel and forgot the lube.” the tenant said.
In reality, there is no such clause that exists, but the point I’m making is that once a tenant gets emotional, and starts to misinterpret clauses, they can jump to conclusions and this can make it almost impossible to sign a tenant up to a lease.
So what’s the problem for us landlords?
As a general consensus we have noticed that tenants are very wary dealing with a landlord and can feel like they need to tiptoe around the landlord.
Although, this can be a good thing for us landlords as we are able to keep a close eye on our investment, it can have the reverse effect on tenants as they can feel uneasy in their home.
This can lead to high tenant turnover, which over the life of the investment can blow out the savings you hope to achieve.
Here are some examples of why you will get high tenant turnover;
Some tenants want to avoid conflict and feel as though they cannot request repairs and maintenance. Sometimes they would rather show their frustration to an agent (third party) than risk the relationship of the landlord and a hard time at home.
Tenants can feel like they won’t get a fair deal.
They don’t want to feel stalked by the owner waiting for them to slip up.
They think they’re going to be harassed about every little thing.
They can feel like there is nobody to complain to and regulations wont be followed.
The Tenant roundabout
You are probably well aware of the daily cost of an unleased property. Finding tenants and signing them up into a lease agreement can be your biggest cost when it comes to your investment property. As a landlord, you have to take into account that:
High tenant turnover are some landlords’ biggest hidden costs. Tenant roundabout, lead to high tenant turnover
This is one of the major reasons why landlords hire agents. You can just imagine what it can cost you if you had to release your property 3 times a year.
For some it can be $3000 worth of potential savings over the entire year. That could be your profits for the whole year. Let’s not forget about what your precious time is worth if you’re doing this yourself.
How to get off the tenant roundabout
[sam id=37 codes=’true’]To make tenants comfortable with dealing directly with a landlord they need to feel like they have been treated fairly and that they can bring up any of their concerns without persecution.
They want to deal with somebody that is professional, although not necessarily an agent but this is sometimes why they are more comfortable with an agent.
An example of this professionalism could be supplying tenants a CTTTT fact sheet when they sign up their lease. This can put you in good standing, showing them that you follow rules and processes.
Tenants feel more comfortable with systems and processes. This makes them feel that you are objective/fair when it comes to running a property rather than emotional and unfair.
Know your stuff
It is very important to know the residential tenancies act of 2010 and to run your property dealings according to this or you could end up paying the tenant back your hard earned cash.
A common example;
We have landlords making the tenants pay for their water usage. This is a great strategy to help increase the yield on your property but this has to be done properly.
However, on the flipside, we have seen many landlords having to pay back the tenants their water usage. There was a case in which a landlord had a granny flat she was renting out and had split the water bill with them.
That seems fair right? This owner did not have the water separately metered, there was no water-saving devices fitted, no water efficiency Certificate and charged the tenant exactly half the bill along with the service charges.Saving money and losing money somewhere else – pick pocketed –
This went on for years until the tenant and the landlord had a falling out. The tenant found out that he had been illegally charged the water and took the landlord to the CTTT.
The landlord then had to pay back the tenant over $2000. This could easily have been avoided if the landlord was aware of the regulations in this matter.
Did you know
That the ATO will accept your statements when it comes to rental income for investment property classification, however some lenders wont.
This can be a key issue if you are looking to buy more investment property because if they do not see cash flow statements from a registered real estate agent, some lenders will not accept your property as an investment property.
This can have a significant impact on your borrowing capacity because they do not class it as an investment but as a liability when it comes to borrowing.
*These are averages taken from 5 property managers including scenarios of bad and well managed properties/tenants (includes drive time).
I am not trying to just sell our services, as everybody’s situation is different. I just want to assist you in making a better and more educated decision on whether or not to self-manage your property.
If you are willing to gain the knowledge, negotiate, and spend the hours, then I wish you all the best and we hope to have helped you in some way.
What we find is some landlords spend dollars to save cents and don’t account for what their time is worth in wages, not to mention the space it takes up in your head to manage your property.
If you would like us to advertise your property, negotiate, filter out the bad tenants, and sign up your tenants with contracts then give us a call for a no obligation free chat.
If nothing else you’ll come away with more knowledge on how to better manage your property.

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'The true costs of self managing landlords' have 9 comments
August 19, 2014 Erin Marr
I’m a property manager in NSW and have no issues with self managing landlords. However they need to have 3 essential areas covered: 1. Do they have the time to self manage a property (it’s not always a set and forget situation), 2. Do they really want to self manage a property or are they only looking for $ savings. 3. Do they have the knowledge to correctly manage a property themselves. If you can honestly say yes to these 3 questions you will do well self managing.
I have a couple of situations with managements where an owner has reduced fees because they do all the hands on management but we look after the collection of rent and payment of invoices (council rates, water rates, maintenance invoices). This saves them time when dealing with their tax return but also solves the problem with not have a licensed real estate statement at the end of the month to prove rental income.
I’ve seen some terrific landlord/tenant relationships, but i’ve also seen a fair few negative ones. The negative ones generally come down to the landlord lacking one of the 3 essential self managing landlord qualities listed above.
August 19, 2014 Michael Yardney
Thanks for your comment Erin
June 30, 2014 Danny
I disagree with most of the above. I have 4 rental properties and have been self managing since 1986. My tenants are generally relieved they are dealing with the landlord and not the agent because they feel they in touch with the owner of the property, not a third person. Many have had bad experiences with agents. I do not have a high turnover of tenants because I make sure that they are happy. You cannot generalize that they feel “stalked by the owner waiting for them to slip up”. Any smart landlord would not stalk his / her tenants. My tenants know I am approachable and I encourage them to tell me about repairs. They are not “avoiding conflict”, they are doing me a service when they advise me of necessary repairs. Yes this does take time and effort but that personal touch is one of the reasons I hold onto my tenants. While I understand you may be wanting to drum up business you need to be more balanced in your article.
June 30, 2014 Michael Yardney
Thanks for the response to Jhai’s article Danny
Well done – you are the exception – I have also found that self managing landlords cost themselves much much more than they save.
July 1, 2014 Anne Kelly
I also agree that this was a poor article. As a self mangling landlord I was very keen to read and learn and was disappointed with the article. It was not an objective article at all. The scenario depicted was not a good one to illustrate valid points. To be objective just about anyone, with a sound knowledge of the legislation, correct processes and a professional manner could manage their own when all is going well but when there are difficult tenants and things start to go horrible wrong it is much easier for agents. So the gamble is -do I take the risk that this tenancy will go well or do I go with an agent “just in case”, I personally have had some bad experiences but when I crunched the numbers weighing up what I would have spent on fees versus my losses, for me I was still in front. It would not necessarily be so for everyone. The other side to the argument not mentioned in the article is that many landlords have paid their fees and not received regular inspections, or reports. The sheer number of properties being managed by many, mostly young females, with little knowledge of maintenance issues , in itself negates a good service. At the end of the day it is a personal decision based on personal goals and the service being provided in the area. An article such as the one above did not address real issues or present both sides.
July 1, 2014 Michael Yardney
Anne
Thanks for your comments. I chose to publish this article because I’ve found that most self managing landlords get themselves into lots of troubles. I have heard so many horror stories.
Well done for being such an educated landlord
July 1, 2014 Jhai Mitchell
Anne Kelly said “anyone, with a sound knowledge of the legislation, correct processes and a professional manner could manage their own when all is going well” yes, when all is going well.
What I have observed is that even when all is going well the average landlord does not have “sound knowledge of the legislation, correct processes and a professional manner”. I have seen many times landlords make small things a big issue that costs them lots of time, money, and tenant turnover.
“The gamble”
This is what I wanted to get across…. Do you take “The gamble” with your most valuable asset? Do you spent the time creating the “sound knowledge of the legislation, correct processes and a professional manner”? Well it’s up to you and I wanted to make that a bit clearer. It’s not as easy as most people think, they devalue us agents until there is an issue.
Not many landlords crunch the numbers and weigh it up what they would have spent on fees versus the losses. Many do not calculate their time and stress until there in too deep.
“Many landlords have paid their fees and not received regular inspections, or reports”. Agreed we pick up many properties from bad agents, it only makes it harder to fix these issues. It makes us sad to see some people in our industry not do their job right, this breeds more distrust in an already untrusted profession.
I’ll end with your comment Anne Kelly “At the end of the day it is a personal decision based on personal goals and the service”
July 1, 2014 Danny
Well said Anne. More balance please, less I know better than you.
July 1, 2014 Jhai Mitchell
What sparked this article was a forum conversation that was not included in this article. It was based on uneducated landlords not willing to learn how manage a property correctly. I’m so glad both Danny and Anne Kelly are the exception.
In my experience most landlord don’t have the same philosophy about making tenants happy
“Any smart landlord would not stalk his / her tenants” Danny said, the sad thing is this what some landlords do (yes, I did dramatise it a bit).
I have some landlords drive past their property every day on their way to work. They call us on a regular basis to make tenants cut the grass, stop parking on the lawn, get rid of that dog or the mother-in-law (not kidding), and the list goes on.
One of the biggest time eaters is repairs, you just don’t realise how much time this can take when there is an issue. The majority of landlords don’t want to spend money on their property even though there tax deductible, I think this is crazy!
Danny is it sounds like you are doing all the right things, keep it up and hold on tight to those tenants as the rental market is down.