After years of hard work, you finally got your first investment property. You’ve heard about property managers, but you’re not sure if you should hire a professional property manager to do the management for you. Here are the pros and cons of hiring a property manager or managing the rental yourself.
You don’t want managing real estate to be your new job
Hiring a professional property manager takes a large majority of the hassle of owning an investment property off your hands. Property managers screen potential tenants, collect rent, deal with nonpayment and eviction situations, and coordinates maintenance and repairs. This can be very time consuming if you have no experience in these aspects. A good property manager usually also has a maintenance crew handy to provide quick and efficient repairs at a reasonable price but in a more timely manner than you might be able to get on your own.
It might not be hard to find someone that is willing to rent your property from you but the monetary and timely cost of finding out later the tenant you chose does not have a stable income and does not do basic care of the property can cost you more than you’ve collected in rent. The same thing can happen with finding qualified and trusted contractors for repairs. Every time something isn’t done right the first time it is money that you are leaving on the table.
Moreover, professional property managers bring industry knowledge and best practices to your investment. Property managers raise rent on your behalf if the market calls for it, they also have an eye peeled for the multitude of legal requirements in managing an investment property – protecting you the investor from any potential legal trouble.
Hiring a property manager turns your properties from active investments to passive investments. Since tenant issues usually require immediate attention, having a property manager keeps you from getting distracted by a tenant call and saves you precious time to do the things you truly love during the day. As for the cost, management companies usually have reasonable rates and the fee works as a tax write off when doing your taxes.
DIY to save yourself some money
If you choose to do it yourself and be the owner manager, the main benefit would be saving on the management fee and learning more about how your investment works for you with hands-on experience.
If you only have one investment property or decide to only stick to a few, managing your own properties can be a joy. You will be able to learn a lot from the process and save the money to put towards other things. If you already have a slim profit margin as it is you might consider doing the management yourself so your investment produces some cash flow for you while waiting for property value appreciation.
If you are a hands-on person by nature, managing your own investment property might not be a bad idea. Learning how to manage the moving parts of an investment can give you a deeper understanding of how and why it works, giving you the knowhow to find better investment properties down the road and if you eventually need to, find a property management company that’s providing a good service .
And lastly, while most property management companies do a good job in being good custodians of their client’s investment properties and monies, you might find the management company you hired providing substandard services leaving you with the hassle of managing your own property while paying them a monthly fee. At that point I suggest shopping for another manager or taking on the management yourself.
More time or more money?
In conclusion, to hire a property management company or not boils down to the age old question of time vs money. If you have the free time and/or the efficiency to manage your investment, by all means take it on yourself and save yourself the middleman. But if you would rather have that time to do something else or you’re in a situation where you need help, we are happy to connect with you and answer any questions you may have.
