Should You Manage Your Rental Properties Yourself Or Outsource The Work To A Property Management Company?

Being a good real estate investor and landlord takes hard, consistent work and not everyone is cut out to be the super hands-on type. As a landlord, one of the biggest decisions you’ll make is whether you should hire a property management company or do it yourself. There’s no right or wrong way, just the way that is best suited for your personality,work habits and lifestyle. Some landlords manage properties on their own entirely, while others might enlist the help of an assistant, or resident manager type employee. Other times, landlords might decide that it makes better sense to outsource the work to a property management company so that he or she can focus on growing and scaling other areas of the business rather than focus on the menial day to day tasks.  Like we said, there’s no right or wrong way. Choosing to hire a property management company doesn’t necessarily make you a worse or better landlord, however, when done right, these resourceful property management companies can be a huge asset to a growing business, but they don’t come cheap. Property management fees vary by location and quality of service,but for a property owners who doesn’t yet have a lot of cash, property management services can quickly turn a decent investment into a negative cash-fllowing investment. There are obviously the perks of more freedom when you allow a management company to take care of a property. It can free up a great deal of your time to do higher value tasks, like strategic networking and locating more prime rental properties to add to your portfolio, but if the management fees are eating up most of your profits, then it might not be so worth it. 

People are not naturally gifted with property management skills, which is why these property management companies are so lucrative. They have the proper systems and manpower in place to make everything run seamlessly, but at a cost. Would you rather invest the time to learn how to manage the properties yourself or outsource the work to a third party who’s sole job is to manage other people’s properties with excellence? There are legitimate reasons to choose both options, and it really depends on what your goals and strategies are as a real estate investor. Maybe learning how to manage properties simply isn’t your thing and there’s nothing wrong with that as long as you are prepared to pay the fees to keep your hands clean.Being a landlord and managing properties isn’t everyone’s cup of tea. Most big investors would rather focus on expanding their expire as opposed to dealing with day to day menial tasks that can be outsourced. Managing properties yourself can also have its downsides, and if not managed effectively, you can risk losing a lot of time and money. 

Let’s dive in to thereasons why you might want or need to outsource the work to property managementcompanies to help you determine if hiring one is the right move for yourbusiness. 

What Is A Property management Company And What Services Will They Provide For Landlords?

Property management is the operation, control, and oversight of real estate. Management companies’ job is to deal directly with prospects and tenants on your properties, saving you time and headache over doing the more menial tasks such as:

    •       Marketing and listingyour properties

    •       Collecting rent

    •       Handling maintenanceand repair issues

    •       Responding to tenantcomplaints

    •       Dealing with evictions

A good property management company who knows what they are doing can be a huge bonus, by bringing its know-how and experience to management your property efficiently. 

There is an inaccurate notion that by investing in property management services, it means that the investment is entirely passive. Hiring property management is not going to make you free of all workload, as a matter of fact, there are a ton of property management companies out there who do not give you what you pay for. Some of the services that these property management companies provide can be downright appalling. The market is saturated with companies that either have no clue what they are doing, or are too green too provide real value-add. Just because you hire an employee doesn’t mean that the person will 100% satisfy your work standards and help the company thrive. There are good hires and there are bad hires, it’s just a part of the business. Some property management companies and managers do such a horrible job that it actually ends up destroying the investor’s investment, property portfolio and reputation. 

Even if you do hire a great manager, your job as the property owner is not completely hands-free. A good business leader needs to know how to delegate tasks. One of the biggest complaints from owners about property management companies is that not enough care is given to the property. Property management companies will never care about your property as much as you do, and that’s just the reality of it. These companies often have many other properties to oversee, and there’s not always enough incentive for management companies to put your properties first. 

Hiringa property management company can be a huge asset for your business, or not. It ultimately comes down to how well you as the  owner can management the people and companies you hire too.

How Do I Know When Is The Right Time To Hire A Property Management Company?

Consider some of the factors below to determine if hiring a property management company would be a good decision for you. Here are some of the most common and legitimate reasons for hiring a property management company:

These Are Some Of The Most Common Reasons That Prompt Landlords To Consider Hiring A Property Management Company:

    •       You have lots of properties to manage orYou have a growing portfolio of properties and/or rental units.. The more properties you own, the more work you will have. When you have a sizable property portfolio, it makes sense to hire a management company to oversee day to day operations. You are more likely to benefit from the services of a management company when you have a larger number of properties to take care of.It’s possible for most people to handle one or two properties by themselves, but as soon as that numbers starts growing, the work involved can quickly scale. 

    •       You don’t live near your rental properties.If your rental property is located far from where you live, it can be beneficial to hire a property management company. Its services can be invaluable in dealing with the many spontaneous issues that you may not be able to handle from a distance. Some tenant concerns can wait, but others call for more urgency. If it’s a life or death situation, you may not be able to get there in time to help your tenant. There is the possibility that you have properties in various different locations around the world. It’s not physically possible for you to be everywhere at once, and in such cases, hiring a property management company is the logical step to take.

    •       You are just not interested in hands-on management. Some people get in to the real estate business because they enjoy the challenges of being hands-on. For others, their interests go only as far as investment opportunities but want nothing to do with day-to-day management of properties. If you are the latter, then consider hiring help to manage your property. 

    •       You have limited time in your schedule.Maybe you don’t have much time to devote to your business, especially if being a landlord is not your primary job. Maybe you prefer to spend more time growing your business, searching for new leads and properties to invest in, networking, or other aspects of real estate. If this is you, then a management company may be a good way to spend your money. For some people, the opportunity cost from being hands-on is not worth it. If spending a solid chunk of money in to property management can free up your time and help you grown your business and generate even more income, then it makes sense to invest your money on outside help.

    •       You can afford the costs.Hiring a property management company is a very attraction option if you can afford the fees. Different companies have different quotes and policies, so make sure to interview all of them thoroughly before you make a decision. 

    •       You don’t want to deal with the tasks of being an employer.If you hire a resident manager or other employees to help with your property,you become an employer. This means that as an employer, you will have to handle payroll and deal with many other legal requirements and considerations.However, because a property management company is an independent contract or rather than an employee, you can avoid the hassles of being an employer even if you choose to go with the decision to work with a property management company.

What Are The Benefits Of Hiring A Property Management Company?

     •       Higher quality tenants-Tenant screening is one of the most crucial and challenging thins that you have to deal with as a property owner. Without thorough screening process, you maybe left with unreliable tenants that don’t pay rent on time, cause property damage and disturbances, and other hosts of headache-inducing problems.Experienced property management companies see hundreds and thousands of applications all the time and have the know-how to quickly dig up facts and back ground information about prospective candidates and analyze the information for any red flags. By allowing a management company to handle this process, you can save yourself from rental scams directed at property owners, and nightmare tenants. Because this kind of experience takes time, it makes sense to hire a property management company to save us time, money and energy by avoiding bad tenants and lawsuits. It’s one of the most significant benefits that a property management company can provide.

    •       Fewer costly and time consuming legal problems -Experienced landlords know that all it takes is one bad seed (bad tenant) to ruin your property and cause significant legal and financial headaches. The reason why a good property management company is valuable is because they are already armed with the knowledge of how to handle such cases. They are well versed and updated in everything real estate related, from landlord-tenant laws to services such as: tenant screening, safety and property conditions of the property, evictions, inspections, lease addndums, lease terminations, handling security deposits and rent collection. 

    •       Shorter vacancy cycles- A good property manager can help you fill out your vacancies faster by handling the following tasks: improving and preparing the properties for rent,determining the best rental rate for the local market, and effectively market your property in an otherwise over-saturated pool of competing properties.Property management companies are familiar with sales, advertisements and can help you negotiate better and cheaper deals both online and offline.

    •       Better tenant retention -No property owners wants to have high tenant turnover rate because it affects cash flow. Every time that a tenant leaves, you are expected to clean and repair the property to its prime condition, market the listing, screen and show the property to new tenants. All of this is extremely time-consuming. A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays at your properties. 

    •       More efficient rent collection system - This is another important task that requires a consistent, and systemic approach, which is where a good property management company will come in handy. They way you handle rent collection and late rent payments can be the difference between success and failure as a property owner.Collecting rent on time each month is the only way to maintain consistent cash flow and tenants must understand that this is not negotiable. Many landlords find themselves stuck in situations where they don’t know how to be firm with their tenants and end up chasing them in circles and still unable to collect money. By hiring a property manager, you allow that task to be handled by professionals without getting caught up in the emotions of it all. It’s easy to get soft if a tenant gives you a sob sorry about why he cannot make rent, but if you let them, tenants will see your weakness and walk all over you. It happens all the time. 

    •       You can get assistance with taxes -A property management company can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Typically speaking, the property management fees are also tax deductible.

    •       Lower maintenance and repair costs -Keeping tenants happy have a lot to do with good maintenance and repairs on the property and a very important part of being a good property owner. By hiring a property management company, you gain access to their maintenance staff which can translate in to significant dollars saved by searching for handymen yourself. Hiring independent repairmen is not always the most reliable and you never know when and if they can fit you in to their schedule. It helps to have maintenance staff on hand whose sole job is to keep your properties in mint condition. 

    •       Less Stress -The bliss in not having to deal with things like rent collection, tenant evictions, middle of the night repair emergencies, paperwork and more. Need we say more?

    •       MoreFreedom -You can live and invest anywhere you want in the world without the physicalconstraint of needed to be present at your properties at all times. It willfree up more of your time to focus on your personal life and expand on yourbusiness. Some landlords have properties in countries that they don’t even live in andsimply collect their check every month without ever stepping foot on theproperty. This is the kind of freedom that many strive for and propertymanagement companies can help a lot!

How Do I Go About Finding A Good Property Management Company?

    •       Get recommendations by referrals, and from any local networking contacts.

    •       Interview each company to get all of your answers answered before you make a decision.

Everything we talked about are the results that you can expect from a reputable, competent and trustworthy property management company. It’s all about making the right choice and choosing the right fit for your business. A poor choice could end up producing even more headaches of its own. Do me careful before giving full reins to a third party company!