How to manage an investment property

Find the most convenient and stress-free way to manage your investment property.

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Unlike some investments that you can ‘set and forget’, an investment property requires ongoing attention to ensure that it generates the rental income you desire. You can choose to manage your investment property yourself, or you can hire a professional property manager (usually a real estate agent) to manage it for you.

Hiring a property manager

Before looking at the pros and cons of this approach, let’s find out what a property manager does exactly. A good property manager will generally:

  • Appraise the rental value of your property.
  • Advertise the property to renters, interview prospective tenants and check their suitability.
  • Inspect the property and provide condition reports.
  • Ensure that rent is paid on time and in full.
  • Ensure the rental bond is paid on time and in full.
  • Resolve any tenant issues and complaints that may arise.
  • Organise tradesmen to perform necessary repairs and maintenance when required.
  • Deal with difficult tenants and attend rental tribunal hearings.

Pros and cons of using a property manager

Pros

  • Time: Free up more time for yourself.
  • Stress-free: Less stress than managing it yourself.
  • Leverage expertise: Take advantage of a property manager’s knowledge and experience.

Hiring a property manager to take care of your investment can save you a whole lot of time and stress. From finding suitable tenants to staying on top of maintenance tasks, there are plenty of time-consuming duties associated with managing a property. When you have an agent to take care of them for you, your investment doesn’t have to be a day-to-day worry.

Property managers also bring specialist knowledge and expertise. For example, they will have contacts with trusted local tradies when a maintenance task needs to be performed, and they understand all the ins and outs of tasks related to managing your property, such as setting the rent and sorting out problem tenants. In other words, they have all the necessary tools to help you get the most out of your investment.

This approach also eliminates the risk of emotional involvement on your behalf, such as giving problem tenants another chance when you’d be better off giving them the boot.

Cons

  • Costs: Hiring a property manager may be expensive and time-intensive.
  • Management risk: You’ll have to relinquish control to someone who may not manage the property to your standards

The major downside of hiring a property manager is the fees involved. You’ll have to factor the agent’s ongoing fee into your investment plans and cash flow, and you’ll need to be satisfied you’re getting your money’s worth. Fees vary from state to state, but they are generally calculated as a percentage of the rent on the property. The fees for managing an investment property are usually tax deductible.

Another disadvantage for some property owners is that you need to be willing to take a back seat or ‘hands-off’ approach to managing your asset. There’s every chance an agent won’t manage your property the same way you would, so handing over control to someone else can be a difficult proposition.

If you choose to hire a property manager, meet a few different agents and find one you like before handing over any money. Check for references and get details on the level of service you will receive for peace of mind.

Pros and cons of DIY property management

Pros

  • Save money
  • Greater control
  • You can give your investment all the attention it needs

Some investors prefer to take on the task of property management themselves and save on agent fees in the process. The cost of maintaining an investment is always a crucial factor in the measure of its success, so saving yourself the expense of an agent’s fees is a win in anyone’s book.

If the investment property is located close by to your own home, and you know and trust the tenants, a DIY property management arrangement can work well. Rather than being one of many properties an agent has to manage, your investment is your top priority and gets your full attention. Because you have emotional stake in the property, you’ll ensure that every aspect of its management is looked after just the way you like it.

Cons

  • Time-consuming
  • Can be stressful
  • You may not have specialist property management knowledge
  • Emotional involvement can be a risk

If you choose the DIY approach, you’ll need to be willing to take on many of the duties a property manager would take care of. This includes providing a residential tenancy agreement and a condition report, chasing up rent payments, and responding to any repair or maintenance requests as quickly as possible.

Another important part of being a landlord is maintaining a good relationship with your tenants, which is not always an easy thing to do. The property management process can be a breeze if you have good tenants, but it can quickly turn into a nightmare if your tenants start missing rent payments or even damage your property.

Finally, remember that you probably won’t have the specialist industry knowledge a property manager has, such as details on current rental market performance or a tenant’s rental history. So make sure you’re aware of all the duties required before overcommitting yourself.

Choosing a property manager

A couple meeting a property manager.There’s a lot more to property management than just chasing up rent payments, so it’s important that you hunt around for the right property manager for your investment. The majority of property managers are licensed real estate agents. You may be able to get in touch with one via the agent who handles the sale of the property you purchase, or you may prefer to do your own research to track down reputable property managers in your area.
Once you’ve found a few property managers, ask for more details about the services they offer to see how they stack up against each other.

Here are a few useful questions you can ask a prospective property manager:

  • What services do you provide?
  • How much experience do you have?
  • Are there any other properties you manage in the local area? Can you provide any references?
  • How many properties do you manage at any one time?
  • Will there be one person in charge of managing my property or will it be managed by a team?
  • How will you determine the rental value?
  • How will you find and assess potential tenants?
  • If a matter concerning difficult tenants is taken to court, will you represent me?
  • How often will you contact me about my property? What sort of communication will you provide?
  • How much does your service cost?

When you find a property manager who provides satisfactory answers to your questions, it’s time to think about handing over the keys.

The choice is yours

The right way to manage an investment property is up to you. In the end, your decision could come down to something as simple as how close the property is located to your own home or how willing you are to pay an ongoing fee.

Weigh up the merits of each approach before making your final decision. This will ensure that your property is managed effectively and efficiently, giving you the best possible return on your investment.

Start comparing loans for property investment today

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Athena Variable Home Loan P&IInvestment≥ 40% Deposit

Athena Variable Home  Loan
2.39%
2.39%
  • App: $0
  • Ongoing: $0 p.a.
$586
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.

UBank UHomeLoan Fixed P&IInvestment 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.14%
2.54%
  • App: $0
  • Ongoing: $0 p.a.
$567
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

St.George Fixed Rate Home Loan with Advantage Package P&IInvestment 2Y Fixed≥ 20% Deposit

St.George Fixed Rate Home Loan with  Advantage Package
2.24%
3.89%
  • App: $0
  • Ongoing: $395 p.a.
$574
$3,000 refinance cashback.
Investors can lock in a competitive rate for two years with this package loan. You will need at least a 20% deposit. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Westpac Fixed Option Home Loan Premier Advantage Package P&IInvestment 2Y Fixed≥ 5% Deposit

Westpac Fixed Option Home Loan Premier Advantage Package
2.29%
3.97%
  • App: $0
  • Ongoing: $395 p.a.
$578
$3,000 refinance cashback
A competitive fixed rate loan for investors that allows you to make up to $30,000 in extra repayments. Principal and interest loans only. $3,000 cashback for eligible refinancers. Apply by 30 November 2021. Terms and conditions apply.
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Compare landlord insurance

Name Product Tenant Default and Damage Loss of Rent Accidental Damage Sum Insured Safeguard Cooling-off Period Cheapest way to pay
Budget Direct Landlord Insurance

Optional

10% of the sum insured amount of your property
Optional
Optional
21 days
Annually
Save 15% on your first year's premium when you purchase cover online. T&Cs apply.
ANZ Landlord Insurance

Optional

Up to $52,000
Optional
21 days
Monthly or Annually
Save up to 10% with two eligible insurance policies and 12.5% for three eligible insurance policies. T&Cs apply.
St. George Landlord Insurance
The lesser of: Up to 10% of your sum insured amount, or the amount of lost rent
21 days
Monthly or Annually
Save up to 25% when you purchase cover online. Promo code: COVER
Westpac Landlord Insurance
The lesser of: Up to 10% of your sum insured amount, or the amount of lost rent
21 days
Monthly or Annually
Get up to 25% off for your first year. Promo code: COVER
Virgin Landlord Insurance

Optional

10% of the sum insured amount of your property
Optional
Optional
21 days
Annually
Purchase a new eligible Virgin Home and Contents Insurance policy online and you'll also save 15% on your first year’s premium. T&C’s Apply.
Domain Landlord Insurance

Optional

Optional - Up to 12 months of your weekly rental amount
30 days
Annually
Domain Insure uses property data to help build your quote faster.
Qantas Landlord Insurance
10% of the sum insured amount of your property
Optional
Optional
21 days
Annually
Earn up to 20,000 Qantas Points when you apply. Points awarded will be based on your premium. T&Cs & exclusions apply.
QBE Landlord Insurance
The lesser of: Up to 24 months of lost rent, or 20% of your buildings sum insured amount
21 days
Annually
Save 10% on your first years’ premium with QBE Landlord Insurance.
Seniors Landlords  Insurance
The lesser of: 12 months rent, or 10% of your building sum insured, or the lost rent
14 days
Annually
Buy online and save up to 15% on landlord building and contents policies. T&Cs apply.
Youi Landlord Insurance

Optional

The reasonable rental amount for up to 12 months
20 days
Annually
Cover for investment property from fire, theft and numerous weather events.
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