Deniz Yusuf says one of the biggest mistakes property investors can make is going it alone without the help of a property manager.
Deniz is an internationally recognised property management trainer, coach and consultant and has spent many years in the property industry helping property management teams and investors.
He joined KnowHow founder Bushy Martin on the Get Invested podcast to discuss the importance of investors seeking professional property managers, rather than attempting a DIY job.
One reason for this is because investors can run the risk of becoming too emotionally involved with the tenant.
“I bought a smaller property once and I put a friend in the property and I self-managed the property. But the mistake I made there was when they rang me up and said, ‘Deniz I can’t pay the rent”, I knew the personal situation they were going through and I said, ‘ok don’t worry about it’,” Deniz explained.
“But you’ve really got to separate yourself, regardless of who the tenant is, because you’ve got to treat it like a business. And I wasn’t experienced, I wasn’t a property manager at the time, so I did self manage it and it cost me $13,500. The bank almost was going to repossess that one – they were going to take my big one. So I was going through panic for about three months. I managed to move the tenant on and sell the property before it went any further, but that could have gone backwards by 10 – 15 years.
“So the biggest mistake I see is people not going in prepared understanding that tenants don’t always pay the rent. It’s really important to pick the right agency. Don’t go to the cheapest agency either, make sure that you’ve got one that’s continually trained and up to date on systems.”
Deniz futher explained that professional property managers can bring crucial insights to the table and ultimately save investors money.
“So self managing is another one of the biggest mistakes I see. And look, there are some successful ones – we successfully did manage our own properties for a long period of time … until we got burned,” he said.
“We realised it’s not about the fee that you’re paying. It’s about how much a property manager, whether it’s commercial or residential, can save you in money, because they consistently put the rent increases up, they understand the importance of smoke alarms or whatever the case is to protect you. We had a fire and we were covered, thankfully, because we had the commercial smoke alarm system, which we wouldn’t have done by ourselves.”
Bushy also talked about how a property manager can help landlords dodge certain legal issues, especially in Australia.
“A lot of investors, when they try to do it themselves, don’t even know the risks that they’re running. And it’s such a legal area now. The legislation now is so much orientated towards protecting the tenant that the landlord can be stepping on land mines without even knowing they’re doing it, that is if they don’t have a professional like an experienced property manager doing it for them,” he said.
With these major downfalls in mind, Deniz went on to reveal the keys to successful property management and how investors can find a suitable property manager. In particular, he said it requires looking out for the right characteristics.
“You need a property manager that is willing to adapt and do continual training – that is of the utmost important. It’s an interesting thing that the characteristics of a property manager are the same as a policeman or policewoman. A good property manager is capable of dealing with somebody that’s new to the industry, who’s got the patience to help people, and is adaptable to change as technology changes. And They can also deal with a business person because anyone that owns an investment property is a business person,” Deniz said.
“So always make sure that if you’re going to look at using a property manager, don’t just look to the brands. Just because the door is a particular colour, doesn’t mean they are the best. They’ve got great branding, but it doesn’t mean they’ve got the right systems. So I’d be interviewing them and making sure that they’ve got procedures in place.”
Bushy added: “It’s the quality of the people that are going to win you over. What’s their experience, what’s their understanding that’s going to make or break how good they manage your property?”
Listen to the full interview here.
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