Hiring a Property Manager vs. Self-Managing: What’s Better?
When you invest in a rental property, one very important question you must ask yourself is this: who should manage it? You or a property management company?
Haas Properties points out that if you want your rental property to be profitable, you have to ensure that it is managed properly. You have two choices: either you manage the property on your own, or you hire a property management company. Both options have their pros and cons.
Pros of Hiring a Property Management Company
- Free time
Since the property management company will be taking care of the business, you will have ample time to do other things. The property management company will take care of advertising, screening tenants, maintaining the property, inspecting the property before and after a tenant moves in, carrying out background checks and ensuring that the monthly rent is paid.
All this requires a lot of time and effort, and if you have a regular job or other businesses, it will be almost impossible for you to manage your rental business. You can set up a schedule with the company so that they keep you updated on a weekly or monthly basis. You may even be able to log on to the computer and see for yourself how things are progressing.
- Mutual interest
The property management company is fully aware that if you make money, they also make money. Therefore, they will work hard to ensure that the vacancy rates are low and that they screen reliable tenants who will pay the rent on time and also manage the property with care.
Most property management companies have solid experience in marketing and understand the importance of ensuring that the property remains in good condition and that the place enjoys a good reputation.
- Local laws
Many new landlords are not aware of the legal issues that surround the rental business. This is one area where the property management company has a big advantage.
These professionals are usually aware of the local laws regarding residential rental business and know how to build a landlord-tenant relationship. Because some tenants can be difficult and litigious, having someone who knows how to deal with such tenants is important.
Cons of Hiring a Property Management Company
- Not all property management companies are created equal. There are both good and bad ones out there. It is up to you to find a good company. This means checking references, speaking to people in the rental industry, and interviewing the people concerned.
- There is a cost to hiring a property management company which cuts into your profits.
Pros of Self-Managing the Rental Property
- All the profits are yours. If you manage your own rental property, all your rental income is yours, and there are no additional fees that you have to make to a property manager/property management company
- Since this is your property, you will always take extra steps to make sure that things are running smoothly, that maintenance is always done, tenant complaints are answered promptly, and the rent is collected on time.
- You will also market your own properties the way you like it. In addition, you can develop a more friendly relationship with your tenants, and that may help maintain long-term tenants
The Cons of Self-Managing a Rental Property
- Need experience
- Local laws
You will need to learn the local by-laws regarding residential rentals, know how to make a comprehensive lease or a rental agreement. For example, if your place is non-smoking, you need to state it in the contract. If you have a no pet policy, it also needs to be in the lease.
Also, you need to have details about the timing of payments, late payments, penalties for late payments, and reasons for eviction. The rental agreement has to be assessed by a lawyer to ensure that you are not violating any local laws (e.g., discrimination against handicapped people).
All this requires time, effort, and the right knowledge. If you don’t have a property management company, you will have to do all these things yourself. This may take up not just your time, but there is always the possibility that you might miss something or make an error.
Managing a rental property requires some experience because there are many issues involved. Some tenants can be very difficult; others are late with payments; some may be litigious, and others may not take care of your property.
If you lack the experience, you may not be able to screen the right tenant for your property, which can turn out to be a disaster.
Overall, the choice between managing your own property or hiring a property management company depends on your availability, your budget, and your experience. If you have no experience, it is better to let a property management company manage your rental property. As you acquire experience and have extra time, you can then think about managing the property on your own.