Landlords face many decisions. One of which concerns the choice between self-managing and hiring a property manager to oversee their investment rental property.
This decision shapes your journey as a rental property investor. Both approaches have unique benefits and disadvantages.
To make the best choice for your unique property, you need to analyze your situation and decide whether you have what it takes to self-manage successfully or not.
That’s why there isn’t a universal answer to this question. It’s not one size fits all, every situation is different.
In the following paragraphs, we’ll go over the main aspects of both approaches to help guide you in making a better, more informed decision.
What does property management involve?
Before looking into the pros and cons, let’s look over a property manager’s typical duties and tasks:
- Advertising and marketing
- Complaint responses
- Dealing with contractors
- Legal paperwork and actions
- Listing the property online and offline
- Move-ins and move-outs
- Organizing showings
- Rent collection
- Tenant screening
- Vacancy management
The list isn’t complete. There are more responsibilities that could be added to the demanding role of a property manager, but it depends on who you are doing business with.
In this sense, there’s no difference between the duties of a professional property manager and a self-managing landlord. The same chores need to be completed in both roles.
Advantages of property managers
#1: Saves you time
Self-managing takes up a lot of time.
For some landlords, this is the main advantage of hiring a property manager. They can use the freed-up time for furthering their business and spending time with their family.
#2: Legal support
Property management requires you to know the laws. From creating a solid lease agreement to evicting a tenant, you need to be aware of the many laws and regulations.
A good property manager knows their way around legal questions and will have legal experts working closely with them.
#3: Fill the vacancies
Vacancies are bad for your rental property investment. Effective property managers conduct all the marketing efforts required to fill your vacant units.
They have knowledge about real estate marketing channels, strategies, and targeting principles. You can be sure everything is done to keep the properties from staying empty.
#4: Existing infrastructure
To have efficient management, you need all the proper documents and contracts. You have to create a whole intellectual ecosystem from scratch.
Experienced property managers already have this sorted out. This includes screening protocols, lease agreements, application forms, entry notices, and subcontractor networks.
#5: Stress relief
Managing your rental property often comes with stress. Unexpected repairs, legal troubles, and vacant units are only a few examples. In a way, opting for a property management company allows you to outsource many of the tasks of a property manager.
Advantages of self-managing
#1: More control
When self-managing, everything is under your own control. You don’t have to about whether or not the property manager completed something important.
#2: Gain experience
Practical experience helps you to check the management decisions and practices of others.
#3: Save money
Self-managing allows you to save money on the management fees.
The rate is calculated from a percentage of the monthly rent. Keep in mind that this usually includes time-consuming aspects. For example, tenant screening, marketing, and legal concerns.
#4: Avoid fraud
In rare cases, property managers engage in questionable or outright illegal activities. Self-managing protects you from this danger.
What do I need to know about self-managing?
Make sure you have a complete understanding of laws governing the landlord-tenant relationship. Additionally, you need to know your way around fair housing principles.
You need to create all the necessary documents. For example, you need a lease agreement along with rental application forms. Consult with a professional attorney to stay on the right side of the law.
Success in property management rests on experience. Ensure you have the knowledge to make it work. If you don’t have the necessary experience, then at least be certain you have enough time to learn.
What do I need to know about hiring a property manager?
Hiring a property management company takes doing some research and asking the right questions. Consider the important points in the following list:
- Amount of refunded security deposits
- Average eviction rate
- Average length of occupancy
- Guaranteed occupancy or not?
- Maintenance policy
- Marketing strategy
- Lease renewal rate
- Property manager’s workload
Ensure that you have the means to pay for the property management company. Consider all the possible fees as part of your contract with the property manager.
The bottom line: should I hire or self-manage?
Self-managing your rental property allows you to keep all of the control and save money on fees. You’ll also avoid potentially unethical property managers.
Hiring a property manager gives you more free time and peace of mind knowing that your investment is professionally being taken care of. You are able to avoid high-stress situations that tend to emerge without any prior warning signs.
There’s no golden rule. In the end, it’s a personal choice depending on your experience, time, money, and preferences. Making the decision requires you to be aware of your abilities as a landlord and consider your personal circumstances.