10:54 AM, 11th July 2024, About 4 months ago
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Self-management of your property business is as cheap or expensive as you want it to be. In loose financial terms, it is down to the level of your knowledge and the systems you want to use to manage your properties. As we’ll learn in this post though, the costs of self-management go beyond money.
Here we’ll look at the financial costs, emotional costs and time commitment needed to self-manage.
Property Management Programmes and Software for Landlords
If you use property management software to manage your property business, there will usually be costs involved. Not all software is created equal, so it makes sense to shop around and find the one that works best for you. Price may factor into your decision, but you can’t put a price on efficiency.
Software like Landlord Vision allows you to manage everything in one place for a price that includes all features. Another common pricing model is to charge for modules so you can bolt on what you need and pay for what you use.
Free software is available to landlords, but not usually as comprehensive, which can make it unusable for larger portfolios. If you start out with free landlord software, you may end up having to use more than one software programme as you grow.
If you manage your properties via a spreadsheet, Excel may spring to mind. It does have a cost to it, but most Windows computers and laptops will come with it pre-installed.
If you want to collaborate or work across different devices, Google may be the better option. Google offers free spreadsheets, word documents and other office tools. Google’s tools sync across devices and make collaboration a lot easier. However, often what Google makes up for in collaboration, it lacks in functionality.
If you don’t want to pay for property management software, consider free software or spreadsheets. However, if these methods get too confusing or don’t work well for your expanding property portfolio, it’s well worth considering property management software. There are lots to choose from, like Landlord Vision, who offer plans for every landlord’s needs and budget.
Professional Costs Incurred When Running a Property Business
Depending on your capability you may end up having to pay some professional costs. Professionals you may need to use could include a bookkeeper or accountant. Most bookkeepers will charge between £10 and £20 an hour. The costs will differ depending on their qualifications and how much you want them to do.
Accountants usually charge more as they’re qualified to deal with tax legislation. You can often get a tax return done for around £35 an hour, whereas in depth tax planning can run to over £100 an hour. This is where it pays to also educate yourself to reduce these costs. A book about taxes is cheaper than an hour with an accountant and plenty of landlords are able to keep on top of everything without a bookkeeper or accountant.
Legal advice is another common professional cost. The costs of this vary depending on the lawyer you hire. The average cost for a junior solicitor is £180 an hour, but if you hire someone less experienced you will pay less. If you’re reluctant to deal with evictions, for example, you may want legal help. The costs of this will vary depending on what you want the legal professional to do and how qualified they are. It is possible to go through eviction proceedings without legal help. This is why it pays to know yourself and consider what you will need help with if you do self-manage.
You will also need to budget for necessary professionals, like:
While you would also have to pay for these via an agent, the key difference when self-managing is one of choice. A letting agent will appoint someone on your behalf and send you the bill. If you’re in charge you can shop around for the person or service that provides the best value for money.
To re-cap, the professional costs you pay will depend on the level of help you need. The types of help we’ve covered here are the most common ones, but they are by no means exhaustive. If dealing with finances and evictions isn’t for you, your professional costs will be higher. Factor this into your decision to self-manage. If you love searching for the cheapest suppliers and can manage finances, you’ll save money self-managing.
Self Managing a Property Business Costs Time
Managing your own properties will cost you time. There is admin involved and unless you get someone else to manage on your behalf there is no way around this. The good news is there are plenty of ways you can streamline your processes. If you’re organised, you can reduce the time you spend on admin.
The amount of time you spend managing your properties will depend on:
The least amount of work would be for a standard buy to let that doesn’t need much maintenance and has reliable tenants in it. If you have a large portfolio and a mix of tenants and tenant types, it’s likely to need a lot more work. Remember when self-managing you will have to deal with:
To name just a few.
Before deciding to self-manage, think about how much time it will take and how much time you have to give. If you’re already working full time and struggling, self-management probably isn’t for you. If you have spare time and fewer commitments, you’re more likely to do well managing by yourself.
Mental Health Costs of Property Management
Managing your own properties can have an emotional toll. It’s worth mentioning here because it may not have crossed your mind if you’re new to self-management.
Some people just aren’t built to deal with the stresses of property management. This is not an indictment; we are all different and how we deal with stress is different too. Being a landlord can be stressful from time to time, and we’re not just talking about one stressful day. Sometimes property related problems can go on for a long time.
If you want to self-manage your property, think about how you’d deal with stressful situations. You may decide that you’ll hire a professional in an eviction scenario. If this is the case factor in the financial cost when deciding if self-management is for you. If you eat stress for breakfast and can divorce work and play, you may be fine without the extra support. Be honest with yourself about your reaction to stress and factor it into your self-management decision.
Another common mental health toll for landlords is burnout. Managing a property alongside your job is easier said than done. While you can be applauded for your sense of hustle, there are times when there’s just too much to do.
Imagine you’ve got several properties to fill and you’re doing viewings and moving new tenants in all while holding down a full-time job. You need to arrange viewings around the tenant’s schedule, there’s lots of paperwork to fill in. There’s a process to go through for new tenants, that if not followed properly, can come back to bite you later on. Will you have the time, energy and focus to deal with this if you’re also working or have other time commitments? If you’ve been at work all day are you going to want to come home and deal with tenants and application forms and right to rent checks? Etc. It’s not too hard in the short term. If it’s just a few busy days or one or two busy weeks, then it goes quiet again you’ll be fine. If it’s like that all the time though, you’ll burn out fast. It’s easy to think you can do it, easy to think you’re immune to burnout, but no one is.
The cost of burnout can be overcome. Be organised, practice self-care and don’t ignore the signs or the advice of people around you.
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