Rental investments are an excellent way to build wealth. If you’ve recently purchased a rental property, you might be wondering what to do next. Rental properties won’t make money on their own but how, exactly, should you go about managing your property? Who should you leave the demands and responsibilities of property management to?
Landlords either manage their property by themselves or hire a property manager. Self-management might be more affordable, but hiring a property manager can save you time and energy, and ultimately get things done more efficiently. We’ve come up with a helpful guide to help you make an informed decision.
What Does Self-Management Mean?
When you decide to self-manage your property, this means that you, as the landlord, handle the day-to-day operations in ensuring that everything goes smoothly. You will be responsible for rent collection, coordinating with vendors, scheduling property inspections, preparing financial reports, and much more. You not only own the property but you also have to take care of it.
What Does a Property Manager Do?
A property manager is someone you hire to manage your property for you. They are responsible for all aspects of property management, from tenant screening to evictions, and are tasked to make your property as profitable as possible. By hiring a property manager, you can be completely hands-off. Most states require property managers to also be licensed real estate agents.
Self Management VS. Property Management
Should you hire a property manager instead of doing it yourself? As with anything, there are pros and cons to both. You might be a seasoned property investor with extensive knowledge of fair housing laws, or you might be a first-time landlord who just wants help in renting out your home. Whichever side you belong to, one thing is for sure: rental property management requires a lot of work. Below, we’ll take a look at the biggest advantages and disadvantages of hiring a property manager.
Pros of Hiring a Property Manager
Saves Time and Energy
Not all property investors are willing to give up their jobs to become full-time landlords. Property management can be very demanding since it requires your undivided attention even in the wee hours of the night. The biggest advantage of hiring a property manager is the amount of time and energy you can save. By leaving the headaches to the experts, you will have time for other activities such as finding new properties, working at your day job, or even going on vacation.
Extensive Screening Process
Unless you’re one-hundred percent confident that you can accurately judge someone’s character, you’re better off letting the pros find responsible tenants for your property. Property managers follow a strict process for screening potential tenants, looking into each applicant’s criminal background, rental history, employment status, etc. They’ll make sure to choose the most qualified tenants — ones who will pay rent on time, respect your property, and follow the terms of their lease.
Accurate Rental Rates
Most property managers begin the process by conducting a thorough property analysis to determine its true value. If you try figuring out your property’s rental rate by yourself, it might take you ages before you settle on a number. Rental property managers can handle this complex task for you and make sure that you get the best return for your investment.
Preferred Vendor Network
It can take ages to find a trustworthy vendor, especially if you are unfamiliar with the area. Property managers have their network of preferred vendors, from electricians, plumbers, handymen, landscapers, contractors, and other home service providers. You won’t have to worry about being unfairly priced since property managers have built strong, collaborative relationships with local vendors. Your property manager will also ensure that the work is completed with high standards.
Avoid getting caught in sticky situations. There are several laws that you need to keep in mind when managing a rental property. What makes it more complicated is that these laws vary from state to state and city to city. A property manager understands these regulations and makes sure that your property is compliant every step of the way.
Everything is Taken Care Of
You won’t have to answer angry calls from your tenant in the middle of the night, or drive from property to property just to collect rent. Property managers handle all rental property management operations so that you don’t have to. You can be completely hands-off — your only responsibility is to pay your property managers. Aside from that, you can sit back and enjoy a steady flow of passive income.
Cons of Hiring a Property Manager
Property managers are paid a small percentage of your gross rental income. Usually, this can go from 4% to 10% depending on the market. On top of that, there are also management fees which you will have to pay even though your property is unoccupied. If you’re on a significantly low budget, you might want to consider managing your property by yourself. However, hiring a property manager is still worth the cost if you want your investment to consistently perform well.
No Relationships with Tenants
Since your property manager will become your tenants’ point person, this means they will be interacting with them daily — not you. If you’re interested in making friends with your tenants, you may want to consider taking the DIY route instead. However, it’s important to note that landlord-tenant relationships can often turn sour. You will be wishing that you had a professional team to handle tenant disputes.
No Personal Experience Gained
The best way to learn is by being hands-on. If you’re planning on becoming a property manager, you won’t be getting much experience if you hire a professional property manager. You won’t be involved with the day-to-day operations because your property manager will address every issue for you.
Deciding whether or not to hire a property manager ultimately depends on the amount of time and energy you are willing to dedicate to landlord responsibilities. Unless you have a full grasp of landlord-tenant laws or have plenty of free time, it’s best to hire a professional property manager. Although there are costs involved with hiring a property manager, they can take care of your property using the expertise that someone can get only if they’ve been in the industry for years.
At Luxury Property Care, our team of licensed property managers will make sure that your property is managed as if it were our own. From listing your property to maintaining high tenant retention rates, we consider it our duty to guarantee impressive returns for your property in the long-run. Please give us a call at (561) 944-2992 so we can initiate the process right away.