People end up owning rental and investment properties for a variety of different reasons. Once property ownership becomes a significant portion of income though, they must confront the reality of the costs vs. benefits of managing their property or properties for optimal yield, i.e., revenue and profit. This is certainly a place where an owner/investor takes on the issue of how to effectively manage assets for the best return.
Here are a few things to consider when deciding whether to manage your own property vs. hiring a property manager:
Managing Property by Yourself
Managing properties yourself means doing it your way. You make the decisions and are personally involved in every aspect from marketing to rental decisions, and repair/maintenance.
Saving management fees. It is a certainty that paying a property manager is an ‘off the top’ expense in property ownership.
Building community. Managing your property personally gives you broad sway in making rental and tenant decisions (within federal, state and local laws).
Keeping tabs. You are able to monitor and manage what happens with and on your property.
The Hassles. Keeping up with occupancy, tracking and collecting rents, dealing with delinquencies and legal issues, inspecting and maintaining the properties, and so on, can be exhausting.
Data and Information. There is an abundance of legal liability involved in property management, along with key strategic data that assists you in making good business decisions. Do you have the time and resources at hand to manage these aspects of the business to your advantage?
Hiring a Property Manager
The Relief. Engaging a property manager to handle the minutia of effectively managing and optimizing your investment relieves you of a ton of work.
Objectivity. Property managers are in business to keep their clients happy. They effectively manage your property according to the standards you have agreed to in your management contract, without bias or prejudice.
Efficiency. Property management companies have a large network of industry contacts, from marketing to maintenance. Because of their networks, they can get business results quickly and efficiently for managing the huge number of tasks necessary to keep your property operating at peak.
If You Want It Done Right... If you’re a micro-manager, a property management agreement may not be for you since every detail will probably not be handled exactly as you would do it.
The Contract. The agreement you enter into with a property management company is crucial to your relationships, both with your property manager and the tenants of your property. Choosing the right property management company will have a major impact on your business. Know your agreement and make sure it contains the details of every aspect of management that is important to you.
The Expense. Property management is a critical aspect of optimizing your property investment, and it doesn't come cheaply, right? As in, you get what you pay for. So although management fees are a significant overhead expense in operating your business, weigh the personal cost of every detail of managing properties on your own.
When it comes to managing your own property or hiring a property manager, which one is right for you? Well, that’s for you to decide. In considering the decision, make sure you account for all of the aspects of running your properties for your objectives. Once you have those priorities straight, the choice will be clear.