Using a property manager Vs. Being A Landlord Yourself
Many small-asset landlords or homeowners with 1 or 2 rental properties may wonder “should I hire a property manager?”
While some think that hiring a property management company is a no-brainer, others may choose to do it themselves, foregoing the fee of a property manager.
However, sometimes landlords may need more assistance, and this is when a property manager can be a tremendous asset.
What do property managers do?
So what does a property manager do? In short, they do a lot.
Here is a sampling of some of the many tasks a property manager will typically handle (and something you would have to handle yourself without the aid of a professional property manager):
Typical tasks of property managers
- Advertising the property online and offline
- Getting a property ready for rent
- Establishing minimum requirements for tenants
- Doing the due diligence to screen the tenants
- Contacting previous landlords
- Doing background checks
- Pre-screening prospective tenants
- Verifying tenant’s income
- Approve or deny tenants
- Preparing forms
- Analyzing fair market rent
- Setting a security deposit amount
- Taking phone calls and setting meetings
- Setting appointments to show off the rental properties
- Meeting potential tenants
- Answering any questions the potential tenets may have about the properties
- Selling the potential tenants on the properties
- Giving out applications
- Creating and maintaining a database of tenant information
- Taking phone calls from current tenants
- Lease signings
- Inspecting the condition of the rentals before the tenant moves in
- Setting up a system to collect rent and payments
- Distributing copies of the lease
- Taking maintenance request
- Mediating any tenant disputes
- Accepting applications
- Staying compliant with fair housing laws
- Collecting deposits
- Many more
Though this seems like an exhaustive list, it can be a fraction of what a property manager does for you. To imagine doing all this yourself can be very daunting – what a headache!
Property management companies can save you a ton of time in various aspects of dealing with current and prospective tenants. Since there are so many time intensive tasks involved with renting a house, a property manager can help save you a lot of time and stress.
With a property manager, you no longer have to worry about finding tenants, evictions, handling maintenance requests, dealing with complaints, and all these other time-consuming tasks or renting a house.
Not only does a property management company take over all these tasks, but they also bring a plethora of valuable property management experience to the table.
Hiring a property manager can add a lot of value to the busy real estate investor because they know their precious assets are in good hands. Finding and managing tenants, after all, is the lifeblood of any successful portfolio of rental property investments.
Reasons to hire a Property Manager
Property management companies aren’t prohibitively expensive by any means, but they can add added extra expenses that you may not want to incur. You need to weigh the pros and cons to decide if the property management fee is worth it.
Are the added expense of hiring a property manager worth saving you the headache of all the tasks that go with renting a property? For many, this is a resounding yes. For others, it may not be so cut-and-dried.
Let’s take a look at some reasons a property management company may make sense for you:
1. You live a far from your rental properties
If you live far away from your rentals, this is probably a no-brainer for you to hire a property management company. This is especially true if you live in a different state; It can be a nightmare dealing with maintenance requests or tenant issues if you are thousands of miles away from the rental property.
2. You don’t have time
Obviously, if you don’t have time to carry out the duties needed to maintain your rental properties, a property management company would be a great fit.
Many real estate investors prefer a property management company over handling all the tedious property management tasks themselves. This way, they can focus their time on finding new properties, working on their business, or even just spending more time with family.
3. You don’t like landlording
In business, it’s always a good idea to delegate things you are not good at or things that you simply don’t like.
If you cringe at the thought of sending out an eviction, finding new tenants, handling maintenance requests, or any of the other multitude of rental property tasks, you may want to hire a property management company.
4. You have many rentals
If you have more than 1-2 rental properties, you will probably want to consult with a property management company to see if they are a good fit. Once you acquire more than 1-2 properties, it becomes very difficult to manage.
You typically will need to hire someone to handle all the tasks involved, or you need to create really good systems for managing your properties. And creating systems is not for everyone. Not to mention it can take months or years to perfect your systems so everything runs smoothly.
At the end of the day, systems are key to any business, especially in the area of property management and rental management. That’s what a property management company would offer you. They would use their expertise and systems to assist you in building out your rental investment portfolio, for a small fee.
5. You are able to afford it
If you have the funds to hire a property manager, you might as well do it. For many, their time is too valuable to waste on menial rental property tasks. Paying the property manager a minimal fee to perform all the day-to-day tasks with tenants, marketing your property, and all the other tasks associated with rentals may be worth it.
Usually, property management companies will charge between 5-10%, depending on your area and the current market, so it’s not a bad price considering all the time they will save you. But don’t make the mistake of shopping only by price. If you choose the cheapest property management company, you may find that they lack in some areas.
They may not manage the properties to your expectations, and as the saying goes, you get what you pay for. So make sure that, regardless of price, the property management company you are considering is of high quality and has the experience and systems in place that ensures their success.
Don’t be afraid to ask questions and get a feel for how they handle various tasks and situations.
6. Your rental investment business is growing
Investing in rental properties is a business, plain and simple. The number one reason most small businesses don’t reach their potential is that the owners try to wear many hats. We all see it, and many of us have probably made this mistake.
If you are growing your rental property portfolio, you should delegate the property management tasks to a professional property manager so you can focus your time on more valuable tasks.
It would be more valuable to spend your time growing the business, finding new deals, getting funding, and work on the business – not in it.
If you are growing and you find it challenging to handle all of the tasks of managing multiple properties, it makes sense to hire a property management company.
7. You don’t want to deal with hiring employees
If you hire an employee to help manage your property or if you hire a resident manager, for example, you will become an employer.
When you are an employer, you have to do payroll and make sure that you are staying compliant with the various employment laws. It can get pretty complex when becoming an employer.
This is a huge benefit of hiring a property management company, over hiring an employee. When hiring a property management company, they would be considered an independent contractor. This simplifies many things that would otherwise take up more of your time.
DIY VS. Hiring a Property Management Company
Finding and maintaining reliable tenants are the lifeblood to any good investment property. It makes sense then that this crucial question is often asked: should I hire a property management company? Or should I be the landlord myself?
The answer will depend on your own personal needs. If you are leaning towards being the landlord yourself, don’t forget to take into account the opportunity cost of all the time you are spending renting your house out, dealing with tenant issues, etc. That time could be spent looking for new investment properties, new business opportunities, more time with family, etc.
If you decide you wanted to hire a property management company, we are always here to answer any questions you may have. We are a full-service property management company located in Oakland, CA and Sacramento, CA. If you are local to greater Sacramento or Oakland & East Bay area, don’t hesitate to drop by or give us a call to see if we would be a good fit for your property management needs!
Hopefully, now you have a better idea on whether you should hire a property manager or just do the landlording tasks yourself!