Landlords who self-manage their properties and portfolios wouldn’t ever claim to have expected a hands-off experience.
Properties need maintaining. Tenants need looking after. Tenancies begin and end, and when they do there’s a greater amount of work involved in the administration of that. That’s not to mention the letting itself – even if an agent is brought into the picture on a ‘let only’ basis. Plus boilers, plus electrics, plus emergency leaks… and there will always be paperwork somewhere in the equation.
Nevertheless, when does self-managing stop feeling like an investment activity and start feeling like a second job?
Some interesting research published recently suggests that, for a significant number of portfolio landlords, that point may already have been reached.
Research commissioned by Rushbrook found that 74% of self-managing landlords believe looking after their portfolios has become more difficult in recent years.
This research was commissioned through Find out Now, the market research panel, and surveyed 525 self-managing landlords – so whilst not a full sweep of the market, it is a significant enough number to offer a good temperature check.
Strikingly, 68% of those interviewed said they now spend at least 31 hours every month managing their rental properties. A further 17% spend between 21 and 30 hours.
Put another way, for a large proportion of those landlords, self-management is consuming the equivalent of almost a full working week every month.
And that raises an interesting question.
What is self-management actually costing landlords?
The management fee isn’t the only number that matters.
It is understandable why some landlords choose to manage their properties themselves.
For an experienced landlord who knows their portfolio and their tenants, paying somebody else to carry out work they feel capable of doing can appear an unnecessary expense.
Looked at purely through that prism, self-management can seem like the cheaper option.
But that calculation changes once you start attaching a value to everything else that is involved.
How much is your time worth? How about 21 to 30 hours of it?
What else could you be doing with that time?
More importantly, how much value do you place on knowing that tenancy administration, maintenance, inspections, changes in legislation, and the day-to-day demands of tenants are being handled properly and professionally without requiring your constant attention?
This has all become increasingly relevant as the role of a landlord has changed.
Owning rental property has never been entirely passive, but neither is modern property management a matter of simply collecting rent and arranging the occasional repair.
Landlords operate within an ever more detailed regulatory environment. Keeping up with what is required, understanding when obligations change and ensuring the correct processes are followed have become important parts of managing a successful portfolio.
That is reflected in the research. Compliance and legislation were identified as the greatest source of stress among the landlords surveyed.
Interestingly, however, these were not necessarily the things that consumed most of their time.
It is often the ordinary things that take the hours
Maintenance and repairs were identified by 52% of respondents as the most time-consuming part of managing their portfolio.
That may not sound surprising. Yet it illustrates something that can easily be overlooked when considering the workload involved in self-management.
A repair is not just a repair.
There is the initial conversation with the tenant. Establishing what has happened. Finding somebody suitable to attend. Arranging access. Obtaining a quote. Approving the work. Following up. Checking the issue has genuinely been resolved. Dealing with an invoice.
Some landlords will be multiplying this across several properties, and if they do then what may sound like a collection of relatively small jobs can become a considerable administrative burden.
The same research found that 77% of landlords regularly postpone non-urgent maintenance because they simply do not have enough time to organise it.
That statistic should give landlords more pause for thought than almost any other.
It is not truly the case that landlords do not care about their properties. It does, however, demonstrate what happens when capable people simply have too many competing demands on their time.
The dripping tap that can wait does wait. Minor repairs get pushed into next week. Then into the week after, when something else takes precedence.
These issues may never escalate, and might be contained in isolation. Nevertheless, good property management is often about preventing small issues from becoming larger, more expensive ones.
Regulation has changed the calculation
It feels like this crops up in too many of my articles, but if I don’t mention it, it is just an elephant in the room. Because the reality is, there are now greater consequences for getting the administrative side of property management wrong.
The Renters’ Rights Act has added another substantial layer of change for landlords to understand, coming on top of the regulations and responsibilities that already existed.
For professional managing agents, responding to legislative change is part of the job.
Systems can be updated. Documents changed. Staff trained. Processes reviewed across an entire managed portfolio.
For somebody managing their own properties, the same changes must still be understood and implemented – except they are doing so alongside their own career, business, family and everything else competing for their time.
It is a distinction that matters, because it helps explain why 57% of the self-managing landlords surveyed said they were reconsidering whether they wanted to continue doing everything themselves.
Property management is not an admission of defeat
There can be a perception amongst experienced landlords that appointing a managing agent means giving something up.
I would argue the opposite, however. The best landlord-agent relationships are akin to partnerships.
A good managing agent should not take control of your investment away from you. They should, however, remove much of the operational burden surrounding it.
You remain the property owner. You still make the important decisions. You still determine your longer-term strategy.
But somebody else is monitoring the detail, communicating with tenants, coordinating maintenance, keeping records and ensuring that the management of the tenancy keeps pace with regulatory change.
For portfolio landlords in particular, this can become more valuable as the number of rented properties grows.
Perhaps the question has changed
The traditional question for a self-managing landlord considering professional management has often been:
“Why should I pay somebody to do something I can do myself?”
Perhaps that is no longer the most useful question to ask.
A better question might be:
How much of my time is this now taking?
What is that time worth?
Am I confident I am keeping pace with every change affecting my portfolio?
Is managing these properties personally the best use of my time?
There is an important distinction to make between being able to manage your portfolio yourself and deciding that doing so remains the best use of your time.
If your property portfolio is consuming 21 hours or more of your time every month, professional management stops looking quite so much like an additional cost.
It may simply be buying back something valuable.
Your time.