When becoming a landlord, choosing which investment property to purchase may seem like the biggest decision to make. In actuality, the most important decision is who will handle the day-to-day operations of the property as this will determine the overall success of your rental.
Some may wonder if it would be more beneficial to take responsibility for owning, running, and managing an investment property, rather than rely on a management company instead.
This is not an easy decision to make. With the many benefits of using a property management company, there are some disadvantages to be aware of as well. Learning more about the advantages and disadvantages of property management can help determine which option is the best fit for you.
Pros of Hiring a Property Manager
Saves Time and Effort: Property management can be a time-consuming and labor-intensive task, especially if you are not familiar with the local rental market and the various laws and regulations that apply to rental properties. A professional property manager can handle all aspects of property management, freeing up your time to focus on other aspects of your life or business.
Maximizes Return on Investment: A professional property manager has the experience and expertise to maximize the return on your investment. They are familiar with the local rental market and can help you set competitive rent rates, as well as negotiate leases and renewals with tenants. They can also help you make any necessary repairs or renovations in a cost-effective manner, which can help increase the value of your property.
Experience with Local, State, and National Rental Laws: There are several local, state, and national laws that must be followed when becoming a landlord. Landlords need to make sure they are acting within the specific guidelines and parameters outlined by these laws. Unfortunately, because there are so many laws – some of which are very specific in how they need to be followed – it can be easy to break them unknowingly. Property managers with rental management companies study everything from fair housing laws to local and state landlord/tenant laws and ordinances. These companies also make sure that their managers stay up-to-date on changes that occur to the laws by offering continuing education courses and lectures.
Access to Entire Network of Contractors and Vendors: Property management companies have access to an entire network of contractors and vendors who can help with routine or emergency maintenance requests. These companies have taken the time to verify that not only are the contractors and vendors licensed and insured but that they can complete quality work in a timely and affordable manner. Maintenance requests with a property management company are resolved quicker than an individual request because all contractors and vendors in the company’s network have already been verified as licensed and insured. If an individual were to self-manage their own investment property, every maintenance request – whether routine or emergency – would have to be treated almost like a single “Do-It-Yourself” project. They would have to research contractors and vendors, verify they are licensed and insured, and then get a quote for that single project. With a rental management company, when a routine or emergency maintenance request is submitted, the property manager will rely upon their extensive network of contractors and vendors to find someone who can complete the task.
Provides Peace of Mind: A property manager can provide you with peace of mind, knowing that your property is being managed by a professional who is looking out for your best interests. This can be especially important if you do not live in the area and are unable to manage the property yourself.
Other Pros of Hiring a Property Management Company
Other benefits of hiring a property management company include:
All day-to-day operations are handled by a third party – rent collection, tenant disputes, and fulfilling any maintenance requests
More time for the individual
Avoid having to personally complete any unpleasant tasks such as evicting tenants, cleaning vacant units, and addressing issues on the property
Cons of Hiring a Property Manager
Yes, It Costs Money: The main disadvantage of hiring a property manager is the cost. Property managers typically charge a percentage of the monthly rent as their fee, which can range from 5% to 10% depending on the specific property and management services provided.
Less Control: Another potential downside to hiring a property manager is that you may lose some control over the management of your property. While property managers are responsible for the day-to-day operations of the property, they typically work on behalf of the property owner and are bound by the terms of the property management agreement. This can be a disadvantage if you are used to managing your property yourself and want to have more control over the decision-making process.
Pros of Self-Managing Your Rental Property
No Management Fees: The main advantage of self-managing your rental property is that you will not have to pay any management fees. This can save you a significant amount of money, especially if you have multiple rental properties.
More Control: Another advantage of self-managing your rental property is that you will have more control over the management of the property. You can make your own decisions about how to handle repairs and maintenance, as well as how to deal with tenants and any legal issues that may arise.
Cons of Self-Managing Your Rental Property
Time-Consuming: One of the main disadvantages of self-managing your rental property is that it can be time-consuming. You will need to handle all aspects of property management yourself, including finding and screening tenants, collecting rent, handling repairs and maintenance, and dealing with any legal issues that may arise. This can take up a significant amount of your time and energy, especially if you are not familiar with the local rental market and the various laws and regulations that apply to rental properties in your state.
Lack of Expertise: Another potential disadvantage of self-managing your rental property is that you may lack the expertise and experience of a professional property manager. A property manager has the knowledge and resources to effectively manage your property and maximize its value, whereas you may not have the same level of expertise. This can lead to lower rent rates, longer vacancy periods, and potentially more legal issues.
Risk of Legal Issues: If you are not familiar with the various laws and regulations that apply to rental properties, you may be at risk of running afoul of them and facing legal issues. A professional property manager is knowledgeable about these laws and can help you avoid any potential legal issues.
So, should you hire a property manager or self-manage your single family rental property? The answer depends on your specific situation and goals. If you have the time and expertise to effectively manage your property and want to save money on management fees, self-management may be a good option for you. On the other hand, if you are looking to maximize the return on your investment, have a busy schedule, or want the peace of mind that comes with a professional managing your property, hiring a property manager may be the better choice.
Ultimately, the decision to hire a property manager or self-manage your rental property will depend on your specific needs and circumstances. Carefully weigh the pros and cons of each option and consider seeking the advice of a real estate professional or attorney before making a final decision.
If you are looking to maximize the return on your investment, limit your liability, and set yourself up for success, contact Overland Management today! You won’t regret it.