If you’re the owner of one or more rental properties, congratulations! Owning a rental property is one of the greatest ways to build wealth, create cash flow, and build a more stable future. One of the most common questions that property owners wonder about is: “Should I get a property management company or look after the property/tenant myself?” There are a lot of ways to consider this issue, and people come down on both sides with good reason. The choice you’ll make will depend on many personal factors.
2) How capable are you of the Realities of Land lording? Being a landlord is sometimes easy. You get a good tenant who keeps to themselves and pays rent on time every month for years. Then there are the not-so-easy times. You might get a very difficult tenant, one who may eventually need to be evicted. Eviction is a challenging and emotional process. If you can’t bring yourself to evict someone, you either should not be a landlord or you should get a management company to handle your property for you.
3) How Much “Personal Freedom” Do You Need? Some people find it easy enough to manage a property when they live in town and don’t have incredible levels of other commitments. Then there are those who live in another part of the country, or who have to spend lots of time and energy with a job, children, or some other pursuit. If you need time to yourself without the worry of managing tenants, for whatever reason, a property manager is probably for you.
4) Do You Own the Property Outright? You may be fortunate enough to own the property in question free and clear. In this case, you are netting 100% of the rental income each month. In a case like this, you might find it totally worthwhile to pay a property manager a small percentage of this sum every month, in exchange for totally passive income.
5) How Many Rental Properties Do You Own? You may well be able to manage one or two properties on your own. But if you own several and don’t have lots of managerial experience, things may get out of hand. Some property management services offer discounts when taking care of multiple properties for one client. What’s more, with multiple properties generating cash each month, you may have enough money to live on to warrant the help of an independent manager.
Property managers offer convenience and value, no one is denying that. The above questions will help you determine if these services are right for you.
Personally, I manage my own properties. However, I was previously employed as a property manager, both residential and commercial. I usually don't handle repairs in my buildings as I know my skill-set limitations and have the appropriate vendors set-up if ever needed. I can handle the annual bookkeeping skills while a CPA takes care of the annually reporting. At some point, I will pass the baton to a management company when the demands of property management creeps overwhelms too much of my day.
I've bought several properties owned by investors who should have used a property manager. Their properties would have retained their value better and their financials would have been in better order at the time of sale (possibly bringing them a better price). Those oversights allowed us to add-value and take advantage of their mistakes.