Good, bad and the ugly of managing property

Interest rates are down, property prices are still low - it seems an ideal time to invest. But should you look after the property yourself or pay a manager?
New Zealand Property Investors Federation president Martin Evans said a lot of new people were coming into the investment market - as tends to happen at the bottom of the cycle.
"It's an opportunity to buy property and generate an income in the least amount of time."
Mr Evans said the management decision depended how much time an investor had to put into checking potential tenants, chasing up overdue rent and organising repairs and maintenance on top of other commitments.
"Property is not hard to manage if you have good tenants but when things go wrong you need to put a lot of time into it. It is a small business and you need to treat it as such."
Rotorua Property Association president Maree Mortimer started out managing her own properties, but now uses a manager.
"I quickly learned that I did not enjoy it and I was terrible at it."
Ms Mortimer said investors needed to look at where their skills and interests lay and make their decision accordingly.
Real Estate Institute of New Zealand's 2009 landlord of the year was Rotorua's Debbie Van Den Broek. She works full-time managing properties.
Her key tips are to keep on top of repairs and maintenance and screen tenants carefully.
"If [a property] is in an excellent condition when they arrive, people are more likely to look after the house."
Mrs Van Den Broek said private landlords had to filter out prospective tenants whose previous records would not pass agency checks, so her screening process includes an application form, credit checks and speaking to at least two previous landlords.
"If you pick your tenants carefully, this job is extremely easy. If you have a ratbag, it becomes a full-time job."
At first Mrs Van Den Broek felt uncomfortable about conducting regular property inspections, but finding an 18-month-old house smashed to pieces after the occupant moved out changed that.
Experience and fellow investors have been valuable teachers.
REINZ Property Management Group chairman Richard Evans said professional managers dealt with large portfolios and quickly gained experience and knowledge in the job.
"Bad tenants with a poor history will generally not come to property managers - they know they will usually be found out."
That experience also gives them a good overview of the local rental market and he recommends inexperienced investors talk to local managers before buying to find out what types of property are in demand and get a realistic estimate of potential income.
The cost of using a property manager will vary and Mr Evans warned investors to ask what the commission rate included.
"Some agencies will only charge 7 per cent, but will add on inspection fees, repair and maintenance fees, advertising fees and credit check costs. Others might charge 9 per cent or more, but that includes everything."