My name is Jarrad Mahon. I am the Founder and Director of Investors Edge Real Estate. Before starting Investors Edge, I owned four investment properties and managed them myself as a private landlord.
Like a lot of investors, I thought it would be easy to manage my own properties. I had no idea of what property managers actually do, and I thought it would be easy to manage the properties myself. I knew I was going to save money, and thought there couldn’t possibly be much to managing four little properties.
For a while, things went great. It was harder work than I thought, but the money was coming in. It seemed like there was too much micromanaging required, but I was very happy that I was saving money by doing it myself.
One day, though, out of the blue, I ran into a nightmare situation that changed my mind about self-managing investment property forever.
I had a property in Huntingdale, and realised that the tenant was behind on rent. I wasn’t paying enough attention, and it turned out the tenant was three weeks behind in rent. Now three weeks doesn’t seem like a long time or very much money, but the properties weren’t earning much in the way of positive cash flow, making my margin for error small.
When I finally reached the tenants, they told me a heart-breaking story. They said their son was dying and that they were being “crippled” by doctor bills. Being a nice guy and putting charity before business, I decided to give them a break and I just asked them to pay whatever they were able to.
Two weeks later, the tenants called with bad news: Their son died and they were moving away in their grief. They gave me three weeks notice. When they left, they owed four weeks of rent. In addition, the house was dirty and I had to pay a lot of money to have it cleaned and to fix up the garden.
It took me three weeks of vacancy before I could find a tenant. I had four weeks bond but it didn’t cover everything. By the time all was said and done, I lost a total of $1850, plus the time, wear, tear, and strain–both mental and physical. I felt totally drained when it was over.
While I was cleaning the yard, I had talked to a neighbour. I told him how sorry I felt for the tenants losing their son. Two weeks later, I got a call from the neighbour. He told me that the tenants were collecting their mail and that their son, who was supposedly dead, was playing in the front yard–alive and happy.
As you can imagine, I was quite angry, but now I actually thank the tenant for stealing $1850 from me. Why? Because the lesson I learned that day didn’t only cost $1850–it came back to me multiple times over.
The lesson: You have to treat your investment properties like a business.
If you have investment property, have it managed by a professional property manager. First, they will get higher rent than you will on your own with far less vacancy between tenants. They take care of maintenance and make sure you keep great tenants.
Most importantly, they will remain objective and you won’t get fooled by a tenant.
Jarrad Mahon is the Director of Investors Edge Real Estate. They specialise in property management and investment properties in Perth and suburbs. For more information, call 1300 472 427 or (08) 9472 1606.