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.