Introduction
Investing in rental properties can be a lucrative venture, but it comes with a host of tasks that demand attention for long-term success. From advertising and handling inquiries to property showings and maintenance, a landlord faces a myriad of responsibilities. However, not every landlord must undertake these tasks personally. Property management companies offer to take care of these duties, but is hiring them the best solution? In this article, we explore the key issues real estate investors should consider when deciding between self-management and hiring external assistance.
The Cost of Property Management
Property management fees vary based on location, typically ranging from 8% to 12% of the monthly rent for a single-family house or small multifamily property. Additionally, there might be a large one-time placement fee each time the unit is rented, which can be as much as 50% of the first month’s rent. Some property managers may also charge annual renewal fees and mark up maintenance costs.
For property owners with limited upfront cash, property management expenses can quickly turn a decent investment into a negatively cash-flowing one. However, the saved time by outsourcing management tasks can allow investors to focus on higher-value activities like finding more rental properties. In some cases, the potential for additional investments and increased cash flow might outweigh the management fees.
The Willingness to Learn Landlording Skills
Successful landlording doesn’t come naturally; it requires learning and honing specific skills. The decision to self-manage or hire external help boils down to whether an investor is willing to invest the time needed to become a proficient landlord.
Reading landlord books, listening to real estate podcasts, seeking advice from local landlords, and engaging in landlording forums can lead to success as a landlord. However, if one prefers to solely own properties without diving into the intricacies of landlording, hiring property manager Las Vegas might be the better choice. It allows investors to avoid potential losses resulting from mismanagement.
Property Management Doesn’t Guarantee 100% Passive Investment
Engaging property management doesn’t make an investment entirely hands-off. While some managers excel at their job, others may be inept and inexperienced. The market is saturated with managers who lack the necessary expertise, leading to problems like difficulty in finding tenants, poor communication with owners, delays in repairs, and property neglect.
Even with a competent manager, the property owner still needs to oversee the management company’s work. Many property owners complain that management companies don’t care enough about their properties. With numerous properties under their management, owners’ properties may not stand out, leading to delayed rentals. Professional property management companies have broader tenant reach through effective marketing strategies, resulting in quicker tenant placement.
Moreover, property owners must ensure that the management company operates efficiently, delivering what was promised. This involvement means the investment is not entirely passive, as owners need to monitor the management process closely.
Hiring Property Management – Dos and Don’ts
For those who choose to hire property management, conducting thorough due diligence is vital to finding the best manager in their area. Seek referrals from other local landlords, interview several companies, ask pertinent questions, talk to current clients of the management company, and be willing to replace a manager if necessary.
Ultimately, the decision to manage properties oneself or hire property management hinges on the investor’s willingness to learn the trade, their time availability, and their financial situation. While self-management can offer greater control and cost savings, hiring professional management can free up time for more strategic endeavors. Whichever option an investor chooses, managing effectively is key to maximizing returns on their rental property investments.
Comments