If you own rental property, you know how important it is to stay on top of managing every aspect of it. If you own more than one property, the amount of detail to track can get out of hand fairly quickly if you aren’t skilled in handling legalities, communication, marketing, and maintenance all on your own. Many owners opt to hire a property management company to help assist with their properties instead of trying to manage them all on their own. How do you know if hiring a property manager is ideal for your situation? We’ve collected some considerations to help you decide.
If you decide to both own and manage your properties it’s important to realize that you will be on call 24/7 to deal with any issues that may arise. Responsiveness to tenants’ needs is the number one way to retain them for the long term. Time is money. Consider how much time you currently have and how much you’re willing and able to put towards your properties. If you work a 9 to 5 job, you may not be available to meet repair people and deal with emergencies. However, if you have flexibility, dealing with day-to-day management yourself can save you money and keep you in touch with your property on a personal level.
Distance to Properties
Consider how far you live from your properties. If you are very close, then it may not be a burden for you to handle the day-to-day concerns that arise. Seasoned investors say that attempting to manage a property alone from another city is virtually impossible and will only lead to headaches, additional costs, and unhappy tenants. However, living in the same city, particularly if the property is nearby your work or home, could make it viable to self-manage. You should factor gas money as an expense if you do plan on driving 30-plus miles to the property regularly.
General Responsibility and Stress
Owning and managing properties are two very different things. If you decide to do both, you are responsible for all tenant complaints, issues, emergencies, filling vacancies fast and effectively – the list goes on. Deciding to own and operate your own properties involves a huge amount of organization, time management, and managerial skills. Understanding the legal obligations of a landlord and being in tune with the needs of tenants are two areas that new property managers underestimate. Creating a valid and legal lease alone can be an intimidating task best left to a professional.
Since there is always a potential for complications or emergency services needed, hiring someone else to oversee the day-to-day services can significantly reduce your stress level as a property owner and allow you more freedom.
Are you someone who is skilled at fixing maintenance issues and making repairs? Do you have the tools necessary to solve common as well as more in-depth maintenance issues? If so, managing your own property may be a viable option. Real estate investors who possess the skills to renovate and maintain their properties can profit in these areas. However, if you’ll need to hire out basic and complex repairs, consider that the property management company will have relationships with local contractors, plumbers, electricians and be able to get better rates and faster service. Consider if it’s worth trying to manage all the repairs and maintenance issues yourself or if hiring a property management company to oversee everything makes more sense.
Typical property management fees are 8-10% of the rent. Though hiring a third party does significantly reduce your responsibilities and increase the amount of time you have, it may not be lucrative for every scenario. The property managers at Utopia Management say that an 8% rate is balanced by the savings in 3 areas: lower vacancy rate from tenant retention strategies, lower eviction rates from professional tenant screenings, and saved costs in maintenance from leveraging their relationships. One bad tenant and eviction can cost thousands of dollars.
Relationship with Tenants
How important is it for you to keep good relationships with your tenants? Do you have good communication skills? Appropriate communication is crucial for maintaining good relationships with your tenants. If this is something you struggle with, it may be easier to turn over those responsibilities to a property manager.
If you personally value keeping relationships with those renting your properties, then it’s crucial to know that hiring a property management company could reduce the personability of your business model. However, real estate investing is business. Having a personal relationship with a tenant makes it difficult to be firm about rent collection, late rent, and initiating an eviction. If you’d rather let a third party take control of managing, then hiring a property manager could be the better option.
If you are an owner and have decided that hiring a third party to assist you is the way to go, then the next step would be to contact a property management company for further assistance. Many companies, like Utopia Management, offer guidelines and resources on their website to help answer any questions or concerns you may have as you make your decision.
Real Estate Term of the Week
Occupancy Clause:: A part of a lease stating that only the tenants on the lease and their minor children may live in the property being rented. No one may be added to the lease without the landlord’s permission. An occupancy clause may limit the number of days a guest stays at the property.
This sponsored content is provided by Utopia Management.