Should I Use a Property Management Company to Manage My Rental Properties?
While owning rental property is considered a means to generate “passive income,” that does not necessarily mean no work is involved. Managing your properties can take up lots of time, regardless of what kind of rental property you own. At some point, your tenants and renters will likely need your assistance in dealing with common property issues and concerns.
These concerns will usually relate to basic maintenance: leaks in the ceiling, dysfunctional heaters or air conditioning units, plumbing issues, lawn maintenance, broken locks, etc., but they can also include things like safety and privacy concerns, pest control, questions about the lease, and other financial and legal matters. While some rental property owners have the time and ability to manage these problems, others can become quickly overwhelmed and will improperly handle certain issues, which only leads to more issues and stress.
As of 2016, 51% of rental property owners have opted to hire a property manager to help them manage their properties instead of doing it themselves. While this does cost money, these owners have decided that the freedom and peace of mind it affords them is worth it. If you are a rental property owner wondering whether or not using a property management company will benefit you, read on. Here, we have addressed the top five questions you should explore to decide how to manage your properties best.
- Do I have the time to manage my rental properties myself?
First and foremost, you must ask yourself how much time you have and are willing to give to managing your properties yourself. Of course, the amount of time you might spend doing so will vary depending on how much rental property you own, how many tenants and renters you have, the condition of your properties, and on the tenants themselves. Some people and properties will require more attention than others.
Think of your average week. How many hours per week, on average, do you have to spare? If you have a job, hobbies, and a family like most people, chances are you will potentially have a few hours or less per week of “spare time” to manage properties. If something happens with a tenant or property, can you take the time necessary to address it and resolve it efficiently? If the answer is no, you should probably explore using a property manager.
- Am I well-equipped to handle interpersonal concerns or disputes with my tenants?
Everyone wants to think they are good at “dealing with people.” But we all know this isn’t the case. Ask yourself if you are up for the human interactions and communications necessary to manage property and tenants. Simple maintenance requests are one thing, but imagine how you would feel if you had to handle an unhappy tenant who wants to dispute the lease terms. It’s okay if you don’t want to deal with that. Who does? The great thing about professional property managers is that they have been trained to handle all types of situations, from basic to conflict-laden.
- How involved do I want to be with my properties?
This question is closely related to the previous one. Are you interested in developing relationships with your tenants and renters, or do you prefer to remain on the sidelines? Do you see yourself regularly checking up on your property, or would you rather sit back, relax, and leave it to the professionals? If you are a hands-off person, a property management company could help you tremendously.
- How much do I really know about property law and management practices?
As mentioned above, property management requires a certain degree of knowledge about various subjects, ranging from real estate law to common maintenance issues. If a tenant were to call you and complain about mold in the bathroom, for example, would you know who to call? Would you know which steps to take next to protect yourself as an owner and do right by your tenants? Real estate laws vary by state, so laws that affect your Washington property will not be the same as what you experience in California for example.
Property managers not only know what steps to take, but they also usually already have established relationships with maintenance workers or other services that they can quickly dial up for assistance, especially if they are a local business. Moreover, they possess extensive knowledge of proper legal procedures in the real estate world, which can improve matters for you and your tenants.
- Can I afford a property manager?
Lastly, can you afford a property manager? On average, property managers will collect as a fee for their services 8-12% of the rent you collect for each property. Answering this question will require a detailed consideration of your expenses and income. If you want to be sure about whether or not you can afford a property manager, you can always enlist the help of a financial advisor or accountant.
Ultimately, deciding if you want to use a property management company depends on a combination of both real financial considerations and more abstract considerations of how much time and energy you want to put into your properties. We hope this guide has been helpful to you as you consider your options.