Should I Hire a Property Manager? Self-Managing vs Property Manager
Posted by Gary Ashton on Monday, April 3rd, 2023 at 1:12pm.
When investing in rental properties, the question of whether or not you should hire a property manager is important. There are pros and cons associated with hiring a professional property manager and self-managing your investment property, but which option will ultimately be best for you? We'll also look into what a property manager does so that you can make an informed decision about whether or not they're the right fit for your investment properties.
What is a Property Manager?
A property manager is a professional who oversees the day-to-day operations of rental properties. This includes collecting rent, handling maintenance and repairs, and dealing with tenant issues. Landlords or investors often employ property managers to manage their rental properties to maximize profits while minimizing costs.
Property managers can be hired for single-family homes, multi-family dwellings such as apartment complexes or condominiums, commercial buildings, vacation rentals, and more. They typically have experience in real estate management and may also hold certifications from organizations like the Institute of Real Estate Management (IREM).
The primary role of a property manager is to ensure that tenants pay their rent on time each month and abide by all terms of the lease agreement. This involves setting up an effective system for collecting tenant payments and enforcing late fees when necessary. In addition to this task, they must also keep track of any damage done to the property during a tenant's stay so that it can be repaired before another tenant moves in.
Another important responsibility for property managers is managing maintenance requests from tenants. When something needs repair or replacement within a unit or building owned by an investor or landlord, it's usually up to the property manager to coordinate with contractors and vendors to complete these tasks quickly and efficiently. Additionally, they must inspect units regularly for safety concerns such as mold growth or structural damage caused by water leaks which could lead to costly repairs if not addressed promptly enough.
Pros of Hiring a Property Manager
Hiring a property manager can be a great way to save time and energy when managing an investment property. Property managers have the experience and knowledge necessary to handle all the tasks associated with rental properties, from tenant screening and legal compliance to maintenance issues.
Property managers are well-versed in local laws and regulations regarding rental properties, so they can help landlords avoid potential liabilities. They also know how to screen tenants properly, essential for protecting your investment. Property managers will conduct background checks on prospective tenants, verify their income levels, review credit reports, check references, and more. This helps ensure that only qualified renters occupy your property while minimizing the risk of any legal or financial issues down the road.
As mentioned above, another benefit of hiring a property manager is that they can handle all day-to-day operations related to running a rental business. From collecting rent payments on time each month to dealing with maintenance requests or responding quickly if there's an emergency at the property—having someone else manage these tasks allows you as the landlord more freedom from being tied down by daily responsibilities.
Property managers often have access to resources such as contractors who specialize in repairs for rental units at discounted rates, which is something that most individual landlords do not typically have. This can be beneficial when it comes time for repairs or renovations at their investment properties, potentially saving them money in the long run.
Finally, many people find peace of mind knowing that their investment is being taken care of by professionals who understand what needs to be done when renting out residential real estate. Hiring a reliable, knowledgeable, and trustworthy professional gives landlords confidence that their investments are safe and secure.
Cons of Hiring a Property Manager
Property managers typically charge a percentage of the monthly rent collected from tenants, ranging from 5–15%. This cost is often too much for small landlords and may not even be worth it, depending on how many units they have.
Another con of hiring a property manager is that they may not always provide the same level of service as an owner would. Property managers usually juggle multiple clients at once and don't always have time to respond quickly to tenant requests or complaints.
Finally, having someone else manage your investment property means giving up control over certain aspects such as setting rents or choosing tenants—something most owners prefer doing themselves, so they know exactly what kind of people will be living in their building. It also removes some potential tax deductions since you won't necessarily qualify for all expenses related to managing your own rentals, like advertising the property or travel expenses. All these factors should be considered before making any decisions regarding whether hiring a professional is worth it.
Pros of Self-Managing an Investment Property
Self-managing an investment property can be a great way to maintain control over your rental properties and keep costs low. By avoiding management fees, you can maximize the return on your investment. Additionally, self-managing allows owners to build relationships with tenants directly and respond quickly to any issues.
One of the main advantages of self-managing is that it gives you more control over how your rental property is managed. You have direct access to all aspects of managing the property, from collecting rent payments and handling maintenance requests to dealing with tenant disputes or evictions if necessary. This also means you can decide what type of tenant screening process should be used for potential renters and set rules for acceptable behavior in the building or neighborhood.
Another benefit of self-management is cost savings due to not having to pay a management fee or commission when renting out units in your building or complex. This money saved can then be reinvested into other areas, such as repairs and upgrades, which will help increase the value of your rental property over time.
By managing the day-to-day operations yourself, you can build strong relationships with tenants that may become long-term renters in the future. Furthermore, being present when tenancy agreements are signed or renewed ensures that everything runs smoothly between both parties involved.
Cons of Self-Managing an Investment Property
While it may seem like a cost-effective way to manage rental properties, several cons should be considered before taking on this responsibility.
Time Commitment:
Self-managing an investment property requires more time and effort than hiring a professional property manager does. Owners must handle all aspects of the rental, from finding tenants to collecting rent payments and addressing maintenance issues. This can take up considerable time each month, leaving less time for other activities or obligations.
Lack of Experience:
Without prior experience in real estate management, owners may lack the knowledge to screen tenants properly or comply with legal requirements when renting out their properties. Additionally, they may not have access to the same resources as professional managers when dealing with difficult tenant situations or evictions. Different real estate types come with different demands—there are drastically different considerations for new commercial real estate investors than those managing a small apartment building.
Financial Responsibility:
As self-managers are responsible for all costs associated with running their rentals (such as advertising fees and repairs), they must ensure that they have enough money set aside in case unexpected expenses arise throughout the year. They also need to ensure that their finances are organized so that taxes can be paid on time each year without penalty fees being incurred by them or their tenants.
Informed Decisions on Property Management
There are pros and cons to both hiring a professional and self-managing your investment property. Ultimately, the answer to "should I hire a property manager" depends on your needs and situation. The common types of real estate investments come with different demands, so be sure to factor that in. Consider all factors before making this vital decision to ensure you maximize your rental investment.
Gary Ashton
The Ashton Real Estate Group of RE/MAX Advantage
The #1 RE/MAX team in the World!