The Pros and Cons of Property Managers
Should You Hire A Property Manager?
Owning rental properties can be an excellent way to establish several income streams while expanding your portfolio! But should you start interviewing property managers, or just do it yourself? Consider your options carefully when purchasing real estate.
Do your research and ask lots of questions. Where is the property located and what does that area have to offer? What is the competition? How much work will be it for you? Is it renter-friendly? Evaluate the potential returns and your own personal risk tolerance.
If the property checks out to be a worthwhile venture, great! But there’s still one important thing left to decide, and the answer will depend on your unique circumstances.
Hiring a property manager depends on a number of personal conditions and the choice is different for everyone. Some property owners have a large portfolio or full-time job and would benefit from hiring a property manager. For others, the benefits of hiring a property manager won’t offset the expense. Carefully evaluate your individual circumstances before weighing the pros and cons.
- How many properties do you have?
- A property manager can save you the stress of maintaining a large portfolio.
- Where are your properties located?
- Hiring a manager might be a good option to consider if your properties require you to commute or are located in another state.
- What kind of time investment do you want to make?
- Do you have the time and desire to directly manage your properties in order to save money and see a higher return? Would you prefer to be more laissez-faire about your investments?
- What’s your personality like?
- Do you enjoy handling service aspects, such as tenant complaints and service requests? Are you extremely detail-oriented and particular? Do you prefer steady communication or periodic updates?
- What are your business goals?
- Do you need a certain amount of income from your properties? How will the necessary mortgages get paid? Why are you purchasing this particular property?
After evaluating your personality and needs, it’s time to consider the advantages and disadvantages of property managers.
- Reduce your daily responsibilities.
- Efficient methods for sourcing, screening, and placing potential tenants.
- Informed and compliant with current state and federal laws.
- Well-developed marketing strategies to keep your properties filled.
- Networks of vendors/service providers and can offer savings to their clients.
- Schedule any necessary repairs or services to your property.
- Responsible for collecting rents and making deposits.
- It will cost you! Property managers typically collect the first month’s rent to cover any leasing expenses and take 7-10% of the monthly rent after that.
- You are legally liable for your management company’s actions and reactions, so choose VERY carefully.
- Subpar management will lose you money, good tenants, and result in poorly maintained properties.
- Contracting a management company still requires frequent communication and check-ins to ensure your tenants are satisfied.
Weigh both sets of options carefully against your needs, and take your time making this decision. It’s an important one!
While researching your new purchase, did you discover a property in your portfolio that’s losing you money? Dealing with an eviction? If your current tenants are giving you a headache, you could consider selling to a company like Whitestone Acquisitions. Call us today to discuss your options.