There are legitimate pros and cons to almost every action you take in business. If you talk to ten people, five will be staunchly in favor of your action and the other five will have a completely different opinion. Thus is the case with property management. There is no disputing the value of a dedicated property manager, the only issue is whether the cost supports it. Most property managers take 10% of the total monthly rent received. On properties with thin cash flow margins this can wipe out most, if not all, the residual cash flow. However, even if that is the case it may be all the more reason to have a professional handling the property. With such a thin margin for error you need all the help you can get. Self-managing can work in some situations but for the most part you are better off with a property manager. Here are five reasons to stop managing your own rentals.
- Time value of money. Time is the most precious commodity we have. There are only so many hours in a day to accomplish all the tasks you want. This is especially important in the world of real estate. Regardless of where you are in your business there is a good chance you wear many hats. One day you may focus on lead generation and marketing and the next you are running a rehab project. If you must get pulled from what you are doing to deal with a tenant, it not only sets you back but can get you off track. A property manager allows you to spend your day on the tasks that really matter without worrying about your rentals. It is simplistic to say that you can’t put a price on this, but in some cases is really is true.
- No more midnight phone calls. It is very rare that a landlord will knowingly rent to an annoying tenant. Anyone who has ever owned a rental property, even for a short period of time, knows that some tenants can be a real handful. There is a big difference in dealing with legitimate property issues and having a tenant call every time a lightbulb needs to be fixed. If you get the wrong tenant, you will quickly become frustrated and annoyed. The problem is that you can’t completely ignore every call that comes in. In the midst of requesting a lightbulb change they may tell you that the toilet won’t stop running. When you get the water bill you will have wished you listed a little better. A property manager handles all these petty and annoying calls often without you even knowing. It is good to be kept in the loop and know what is going on with your rental, but you don’t need to do so at midnight twice a week.
- Tenant retention. One of the keys of rental property ownership is keeping your property constantly filled. This sounds simple enough but, in some markets, can be a real challenge. The starting point for finding tenants should always be the current tenant. With a property manager there is a better chance they feel comfortable with the property and if everything else is equal would rather continue living there. Additionally, a good property manager also knows where, how and even when to start looking for new tenants. They will handle the time-consuming aspect of showings and answer and follow up phone calls a prospective tenant may have. You always want to give yourself plenty of time to find your new tenant without having to compromise your terms. With a good manager they will find your next tenant with months to spare.
- Simple maintenance. A good property manager has the ability to handle many tasks. For starters, they often have a rolodex of people they can reach out to in the event something is needed with the property. This saves you time in not having to call ten plumbers to see if they can fix your toilet. You also don’t have to change your day to meet the plumber at the house and hang out there while the work is being done. They also are typically able to handle simple property maintenance tasks. This can be invaluable to you and the property. It is more difficult than you think finding someone you can rely on and trust to change a lock or unclog the toilet. Having your property manager wear multiple hats saves you time, and money.
- Rent collection. Everything in a rental revolves around rent collection. Your property can be in great condition and offer top notch amenities, but if your tenants stop paying it won’t make a difference. A property manager gets paid based on the rent received. Because of this they have a vested interest in making sure your tenants not only pay but pay on time every month. They will set up methods of rent collection that may be easier for your tenants rather than simply sending a check. If they sense there may be an issue they will get out in front of it, so it doesn’t become a bigger problem.
Property managers don’t necessarily work for every property, but in the right situation is a no brainer. They may not work for every property but should at least be a consideration.