Should You Use a Property Management Company for Your Rental Property?
This article over on the QuickenLoans site has some great items to consider when deciding whether to use a Property Management Company or self-managing your rental property. The key is to remember that having a rental property is like having a business. You wouldn’t buy a business and expect it to preform well unless you were either spending time working on the business or you had a manager run the business for you. The same goes for a rental property. Many landlords self-manage, but there are a number of matters to consider in order to make it a success. Read more below:
Investing in rental property is time-consuming and can be extremely stressful, but it also has the potential to be rewarding and profitable. With most investment properties, you’ll be responsible for repairs, tenant complaints, collecting rent and much more. If you have more than one property, the amount of work can be significant. Not everyone who ventures into the real estate industry wants to deal with the day-to-day headaches of real estate management.
Hiring a property management company can be a good idea if you’re financially prepared. This option may not be the right fit for every investor, but here are a few questions you may want to consider before hiring one for your investment properties.
How Much Involvement Would You Like to Have with Your Properties?
If you want to take a less involved approach and not be wrapped up with day-to-day responsibilities, hiring a property management company might be the route for you.
Becoming a landlord is a huge responsibility, and you want to make sure you’re prepared to manage your investments well.
How Many Properties Do You Own?
If you’ve just begun purchasing rental units, it may not be cost-effective to hire a property management company. Be sure you’re making money and able to pay your mortgage and expenses for your investments. You don’t want to overextend yourself.
“If you only have, say, a single-family home, or one four-plex, and you live in and/or near the property, then it may be better for you to manage it yourself. You will save about 10% in costs, but all the headaches are yours,” says Spike Spencer from Fair Winds Investment Group.
How Close Do You Live to Your Properties?
If there’s an emergency, how fast can you travel to your properties? If you live far away, you may want someone to be able to assist your tenants at all hours of the day. You want to make sure your renters feel safe and that you’re available to assist them when needed.
Do You Consider Yourself Detail-Oriented?
Keeping good financial records is extremely important to the success of managing your properties. If you aren’t organized, you may need someone else to handle this important task.
Are You a Knowledgeable Landlord?
Becoming a landlord will involve some trial and error. You need to be well versed in the laws and regulations of your state.
“The laws and requirements in each state are ever changing, from property code requirements to rental registrations and inspections, and these items can present significant liabilities for landlords who are not versed on them. One of the most important benefits of a qualified property manager is their knowledge on current and changing laws and regulations, as well as their ability to handle them on your behalf in the most cost-effective manner to mitigate your liability and ensure compliance,” says Leah Slaughter, owner of OmniKey Realty.
Do You Have Other Time-Consuming Responsibilities?
If you have a full-time job or a family, owning a rental property can be challenging because of its time-consuming nature.
You want to make sure you have adequate time to manage and maintain your rental property responsibilities. If you’re too busy, it may be a good idea to outsource these responsibilities so you’re not stretching yourself thin or missing important commitments in other aspects of your life.
Do You Struggle to Fill Your Properties with Tenants?
A property management company has experience with a variety of rental opportunities and knows how to fill the availabilities quickly.
Instead of continuing to struggle and hitting the same wall, hiring a management company could save the day.
Are Your Properties a Part of an Affordable Housing Program?
The rules and regulations of these programs can be complicated. If you own rental properties that are part of an affordable housing program, it’s a smart idea to align yourself with a lawyer who’s familiar with these programs or a management company that understands all of the rules and regulations of this type of housing.
Affordable housing programs can offer financial assistance, grants, tax credits and more for the landlord. If you want to make sure you stay within these guidelines, a property management company could help.
How to Select the Right Property Management Company for Your Needs
If any of these situations apply to you, you should consider hiring a property management company to manage your rental properties.
Not all companies are the same. Before you begin your search for the right fit, create a list of the things that are important to you.
Next, you will want to research each company before you hire one. Talk to your friends and family for referrals. Once you have references from people you trust, interview each company. Make sure to ask detailed questions to ensure they can help with your needs. You want to walk away feeling confident in your choice.
“Beware of ‘reputable’ management companies. I used a very reputable company on a 30-unit once. They were used to 100+ units. You cannot use the same process on a 30-unit re-position as you would on a stable 100+ unit complex,” explains Spencer. “That mistake cost me tens of thousands in hidden management fees, lost rents, and construction down time.”
Hiring a property management company might not be for everyone. Make sure this will fit into your budget and you are still making a profit after you pay for their services.