Investing in real estate is one of the best ways to earn passive income and one of the most stable investments. Real estate in the US is booming and is, in fact, worth a staggering $43.4 trillion.
If you’re a property owner, the decision of whether to hire a property manager or manage the property yourself can be a tough one. On the one hand, a property manager can ease the burden of managing property, on the other hand, managing property by yourself reduces property management costs.
There are pros and cons to both options, and it ultimately comes down to what works best for you. In today’s post, we’ll take a look at the pros and cons of hiring a property manager vs. self-managing your property.
Hiring a Property Manager/Property Management Company
Property management companies are companies that take charge of all property-related tasks on behalf of property owners. They essentially act as a buffer between you and your tenants.
Most property management companies will offer a full suite of services, including:
- Screening and selecting tenants
- Collecting rent
- Handling maintenance and repair requests
- Addressing tenant complaints
- Responding to emergencies
A property management company essentially takes on the day-to-day tasks of property management so that you don’t have to.
What Are the Pros of Hiring a Property Management Company?
It’s no surprise that real estate investors outsource property management to an external company. Doing so helps ease the burden of managing property, which is a lot harder than it seems. This is especially true for individuals with multiple properties.
That said, here are a few pros of hiring a property manager:
Handle Tenant Screening and Selection
The process of screening and selecting tenants includes conducting background checks, employment verification, and checking references.
A property management company will have a system in place to ensure that only the best tenants are selected. This, in turn, reduces the likelihood of property damage and late rent payments.
Helps Create the Lease Agreement
A lease agreement is a document that outlines the expectations and responsibilities of both the landlord and tenant.
A property management company will be up-to-date with the latest landlord-tenant laws and can help you create a watertight lease agreement. This leads us to our next point.
Handles Legal Matters
Legal matters that may arise during the property management process include preparing and filing eviction notices, handling security deposit disputes, etc.
A property management company will have a team of lawyers on retainer to handle any legal issues that may arise. This peace of mind makes hiring property management services worth it for many property owners.
Better Understanding of Property Management Software
The right property management software can automate many of the tasks that property managers do on a daily basis. Software solutions like Buildium are a hit with property owners countrywide.
However, most property owners don’t have the time or expertise to get the most out of their investment. A property management company will be able to use the software to its full potential, which leads to increased efficiency and cost savings.
Enhances Marketing for Lower Vacancy Rates
A property management company will help market your property to prospective tenants. They’ll take professional photos of the property and create compelling listing descriptions.
A property management company will also use its vast network of connections to find the right tenant for your property. This results in lower vacancy rates and increased rental income.
Cons of Hiring a Property Manager
Property managers are lifesavers for property owners. However, they’re not without their downsides. Here are a few downsides to hiring a property manager.
Property management companies typically charge a percentage of the monthly rent, which can eat into your profits.
In some cases, the management fee may be as high as 10%. This means that if you’re charging $1,000 in rent, you’ll only take home $900 after the property management company gets its cut.
No Direct Communication With Tenants
When you outsource property management, you’re essentially handing over the keys to your property. This means that you won’t have direct communication with your tenants.
While most property management companies do a great job, there will be times when you’ll want to talk to your tenants directly. This lack of communication can be frustrating for some property owners.
Managing Property By Yourself
If property managers aren’t your cup of tea, you can always manage the property by yourself. That way, you can be more in touch with tenants and with whatever goes on on your property.
What Are the Pros of Self-Managing Property?
Few property owners choose to manage their properties by themselves. Here are a few reasons why they do so.
Self-managing property means you don’t have to pay any property management fees. This also means you get to keep all the rental income to yourself. This can be a lot of money if you own multiple properties.
More Hands-on Property Management
When you self-manage property, you’re in control of every aspect of the property management process. This means you can be as hands-on or as hands-off as you want to be.
For example, if you’re the type of person who likes to meet and screen tenants yourself, self-managing your property will allow you to do just that.
What Are the Cons of Self-Managing Property?
Self-managing property comes with its own set of downsides. Some cons of property self-management include:
Too Much Work
Property management is a full-time job. If you’re not prepared to handle all the property management tasks, self-managing your property will be too much work.
You’ll have to deal with everything from marketing the property to screening new tenants to handling repairs and maintenance. If you’re not prepared to take on all this work, it’s best to hire a property manager.
No Professional Advice
When you hire a property management company, you’re not just paying for their services. You’re also paying for their expertise and experience.
A good property management company will be able to advise you on how to improve your rental property and maximize your profits. When you self-manage, you don’t have access to this professional advice.
Verdict: Property Manager vs. Self-Managing Property
When it comes to hiring a property manager vs. self-managing property, the best option depends on your specific situation. However, we highly recommend hiring a property manager for your properties. That’s because, by paying a small fee, you can forget about all the stress that comes with property management.
Contact us today and we’ll manage your property seamlessly for maximum returns on your real estate investment.