If you’re a rental property owner, the thought of hiring a property manager has probably crossed your mind at least once.
Being a landlord is like owning a small business, and you really have to be prepared to treat it that way if you want to be successful. You’ll have income, expenses, customers in the form of tenants, accounting, and daily tasks required to keep everything running smoothly.
Property Management companies can provide tremendous benefits to owners, but they’re not for everyone. In fact, most data suggests that the majority of rental properties in the United States are self-managed.
In order to determine if hiring a property manager is the right move for you, you need to assess your specific situation and goals.
Why you may want to hire a property manager
First, let me begin by saying that every company is different, but there are some universal functions that most full-service property managers will perform.
The goal of most companies is to handle everything for you.
The first order of business after you sign a Property Management Agreement or contract of some sort will be for the PM to get your property leased. This will involve several things, including:
- Advertising the home
- Showing the home to prospective tenants
- Screening applicants
- Negotiating rent terms
- Getting the lease signed
- Collecting the deposit and all required pre-move-in rent
- Facilitating tenant move in
The second category of PM functions is the day to day management of your property and tenants. These tasks include:
- Collecting monthly rent and sending you the proceeds each month
- Providing monthly and year-end statements
- Managing all maintenance requests and paying vendors on your behalf
- Handling all tenant problems and disputes
- Renewing a lease or processing the move-out
- Handling the eviction process or any other legal issues if necessary
As you can see, there is a LOT to consider when you decide to become a landlord. If you have more than 1 or 2 properties, have another full-time job, or don’t live close to your property, hiring a property manager is probably a wise option for you.
Why you may NOT need to hire a property manager
There are 4 major factors that can help you determine if self-management is the route for you.
- If you have time – As mentioned before, if you’re going to own rental properties, you have to be prepared to treat it like a small business. As with any other business, it takes time to run it successfully.
If you’re positive that you can take the time to respond to leads, show the property on nights and weekends, respond to maintenance requests, and handle any other issues that arise in a timely manner, then you probably don’t need to pay for property management.
- If you are committed – Running a small business also takes commitment. You’ll need to go that extra mile to ensure that things are being done correctly and efficiently. For example, you can’t just accept the first applicant that comes along.
You need to be committed to finding the best possible tenant which means thorough tenant screening.
You also need to commit to hiring the right people for the job whether it be a plumber to fix a toilet or a lawyer to draft a strong lease.
- If you have knowledge – Often times being a rental property owner is portrayed as this happy-go-lucky, get rich quick venture to passively build income. While real estate investing can be a wonderful way to build wealth, it can also be a grind.
Where many landlords get into trouble is when they jump in head first without doing any real research or learning. If you want to be a successful Landlord, it’s imperative that you do your due diligence.
If you’re confident in your knowledge of your local market, fair housing laws, Landlord-Tenant Laws, tax processes, etc.(or have online resources that make it easier), then you’re probably fine without a property manager.
- If you want control – If you already know that you’re the type of person who will try to manage the property manager, then do everyone a favor and manage the property yourself.
The whole point of hiring one in the first place is so that you don’t have to be involved in the day to day issues. So, if you’re someone who likes to control situations, self-management is definitely for you.
The path to deciding whether you should, or shouldn’t hire a property manager is the same. It all starts with your specific situation and determining what kind of landlord you want to be.
If you feel the value that a property management company can provide is worth the added cost, then go for it. They can help make your rental property ownership experience as hands-off as you want.
If you’re on the fence, even a little bit, then you’re going to find something wrong with every company you look into and will make an excuse to keep full control, and that’s fine too.
Just know where you stand before moving forward one way or the other.
Originally published on Groundwork