If you own a property for rent you are already aware of all the responsibilities you have as a property owner. You need to make important decisions, act on urgent matters, and maintain a professional, yet friendly relationship with the tenants. Managing your rental property is not an easy task, especially if you have a regular job other daily errands to run, and responsibilities to fulfill. That is why lots of property owners decide to hire a property management company that will take over the control of running the rental property for you.
However, sometimes property owners are not convinced whether this is a good choice because they might feel they can do a better job themselves and still keep the money for them. If you, too, are in two minds, read the article below as it will help you to decide whether you need the help of a property manager or not. We’ll lay out the pros and cons of both – hiring a property manager and self-managing your rental properties.
Pros of Hiring a Property Manager
Property Management Companies Have Working Systems
One of the greatest advantages of hiring a property manager is that they already have a system that is working and makes the management process run smoothly. These systems include accounting and financial management as well as effective tenant screening and taking care of lease agreements. Plus, they take over the whole communication with tenants, so, in cases of urgent matters, it is them that respond to and resolve any problems at any time. The benefits that the systems offer save the property owner’s time, energy, and resources and help them avoid any mistakes.
Property Managers Know the Tenant Laws Inside and Out
Another great advantage of hiring a property manager is that they know the laws for tenants that are valid for the specific area where the property owner is renting the units. They make sure these laws are not violated by knowing the intricacies and shortcuts to abide by the law. If the property owners are managing on their own they might not be aware of some of these rules and regulations and violating them might result in serious legal issues, fines, and even lawsuits.
Property managers have expertise and experience in handling these legal matters which makes it easier for everyone to go on with their everyday lives. In addition, they keep learning and updating their knowledge of any new rules and regulations which ensures continuous compliance for their clients.
Cons of Hiring a Property Manager
Costs
If you as a property owner don’t have the budget to hire a property management company, you’ll have to self-manage it yourself. The truth is property management companies, especially those with already established reputations and working systems will not be cheap. Thus, costs can be considered as a con of hiring a property manager. The amount they charge is usually calculated by percentage of the rental income which can be from 8% to 12%. Other factors can impact the amount including location, services provided, and the type of the rental property. It is an ongoing expense that some property owners can’t afford especially if they don’t have another job and rely fully on the rental income.
Limited Control Over the Process of Running the Rental Property
Hiring a property manager means letting them take over control of how the rental property is operated. Some property owners will find this as a relief, especially if they have a different job or other responsibilities, but there are also property owners who want to be as involved as they can be.
Those who want to be included in the day-to-day operations might find it frustrating not being included. They need to accept that the property managers are hired to make the decisions for them including choosing tenants, scheduling property inspections and maintenance, and handling misunderstandings with tenants. If you are a property owner who thinks you’ll feel this way, then probably hiring a property management company is not the best idea for you at the moment.
Pros of Self-Managing the Property
Flexibility and Better Communication with Tenants
As a property owner, you are aware that the relationship you build with your tenants will be crucial for the ongoing success of your business. That is why being flexible and communicative are qualities that you must have. And, knowing that these two particular qualities depend on the future of your business, you will do everything you can to keep them at the highest level. Of course, you might think that no one will be able to do it better than you. And, you might be right. You can tailor your management approach to suit both you and the tenants, plus you will have the ability to make quick decisions and implement changes on the spot.
Better Profit Margins
Of course, an advantage of self-managing your rental property will let you keep all the profit to yourself. So, no percentage of the income will go to property management companies and you will be able to reinvest in property improvements, pay down any mortgage rates sooner, or even extend your investment portfolio.
Cons of Self-managing Your Rental Property
Time, Resources, and Energy Expenses
One of the biggest cons of self-managing a property for rent is that you need to commit to this 24/7, at least to be available to the tenants and be responsive for urgent matters. It is safe to say that this is very time-consuming and it requires a significant dedication of time, energy, and effort. If you already have a busy schedule, there is no chance that you will be able to run everything so smoothly.
Limited Expertise and Legal Liability
You can always learn and expand your expertise but if you are not a certified property manager yourself there is no way you can know everything about tenant laws, maintenance, accounting, and marketing. You will struggle to efficiently run the rental property business and in the meantime, you risk losing money daily. Plus, a lack of knowledge of the rules and regulations might result in costly fines, lawsuits, and damage to reputation.
A Few Final Words
If you put everything on a scale and decide what works best for you, you will be clear about whether you need or not to hire a property management company. The pros and cons are all there, but you need to decide what will work for you individually, depending on your schedule, daily life, and other responsibilities. Either way, making the right decision should help you make more money from your rental business.
We hope you found this blog post Should You Hire a Property Manager or Self-Manage Your Properties? useful. Be sure to check out our post Do You Really Need a Property Manager? for more great tips!
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