More importantly, does having more involvement add value to your investment and, if so, how much time are we talking about?
A hands-off investor allocates less than one hour a week to property investing. They are happy to leave the day-to-day managing of their properties to an agent and the financial details to their accountant. They will only step in when really required, such as when a significant repair is needed or when selecting a new tenant.
If you don’t remember your tenants’ first names and haven’t had an email from your property manager in a few months, then you’re a hands-off investor. This approach suits busy landlords who are happy to allow their investment to tick along without a lot of effort.
To succeed as a hands-off investor:
Your choice of property manager is paramount, as they are your eyes and ears. Be sure to do plenty of research before deciding if an agent is right for you. You could also benefit from engaging an experienced, qualified property adviser to help keep your portfolio on track.
An active investor dedicates three to five hours each week to their portfolio. While this investor still engages the services of a property manager, they are more involved in everyday decisions and are more likely to serve on strata committees.
They are also more proactive when it comes to increasing the rent and making improvements, as they have a better grasp of the current state of the market than the hands-off investor.
To succeed as an active investor:
You need to be crystal clear about your portfolio goals. Are you aiming to eventually develop, or to renovate? Do you want to create a positive cash flow to live off? Your strategy should guide your next steps.
A passionate investor spends upwards of five hours per week managing their empire, which is likely to consist of multiple properties.
Do you check the real estate section of your local paper religiously, subscribe to multiple email updates from property experts and slow down in busy traffic to check out ‘For Sale’ boards? If this sounds like you then you’re a passionate property investor, the type who is constantly monitoring the market for new opportunities, knows the scoop on the latest RBA decision before the TV newsreaders announce it, and sees investing as a major income source rather than something to supplement your day job.
To succeed as a passionate investor:
You should regularly review your portfolio’s performance. There are many ways to make money from property, and passionate investors are often so up to date on the latest trends they can be tempted to try everything and do too many things at once.
No matter what type of investor you are, a willingness to be an active contributor to the growth of your investments is crucial. Your style of management will depend on your personality and the time you have available. Most people are hands-off investors, making their investment as passive as possible apart from keeping up to date with current trends — as would any investor with shares or bonds. The key is obviously having the right people managing your investment on your behalf.