Owning a rental property can offer several complicated matters that may arise. If you are new to being a landlord, you should seek out some of the expert guidance to make sure you treat this role as diligently as you would treat the responsibility of running any business. You may, at least in the beginning, look into using a property manager (PM) to take on some of the responsibilities for you.
There are some pros and cons involved with this just like anything else. You will want to do your research to decide if hiring property managers is ideal for your situation.
The Benefits Of Using A Property Manager
When it comes to owning property, you may look at it just as an investment and not want much to do with managing things on a daily basis. A property management company or individual can be your intermediary to locate tenants, maintain the property, collect rent, and do various other things that you would rather avoid.
This of course allows you more time to devote to your other business and personal life. You’ll obviously spend a lot less time dealing with your properties when you aren’t handling daily tasks that may be necessary. Hiring a PM may be a good choice if you want to expand on your property investments and rent out to more people over time.
Of course this is oversimplified as you’ll need to have basic legal and financial knowledge to navigate property ownership without a headache. However, a property manager can shoulder the burden of eviction issues and liabilities that can pop up.
No one wants the landlord-tenant relationship to go awry, since this is your income and potential liability, so you should put tenant screening high on your list of things to do well. Selecting tenants is a potential minefield in terms of illegal discrimination. It calls for awareness of federal and state laws as well as possible ADA requirements or pitfalls.
If you're not confident in any of these areas, let a PM do it. And an established management company should have better lines of outreach to advertize vacancies than you might on your own.
A property management company will have significant liability insurance, and will use licensed contractors who are equally well covered or are held under their own coverage. It's your property, inhabited by a stranger, and maintained by strangers - make sure to inspect the insurance coverage of everyone involved with that property.
The Costs Of A Property Manager
You’ll need to take your time to research the property management companies in your area. It does save some time if you know people who have worked with property management before and can give you personal reviews, but otherwise you’ll need to read online testimonials or reach out to community groups to get this information.
Be sure to read reviews from both property owners and tenants - don't hire someone who seems to return a sound bottom line, but who also antagonizes tenants. You want happy tenants. Happy tenants are the security of your income.
Typically you should expect to pay 10% of your rental gross to a PM, so if this breaks your investment plan, then you should be prepared to learn how to be an effective landlord yourself. Using a good PM in the beginning is one way to start to learn how to do this. But the only way to know if your people are good is to know what they're doing, and if they're doing things well. This means you have to learn the business of renting.
Just as investing is a business that requires serious application, so too is the rental side of the investment - precisely how property managers can offer the service they do. Investing in property, whether to fix and flip or to hold and lease, requires diligence. Any startup can easily in this day and age create an LLC and go into business, but the ones that survive are the ones that are good at what they do.
So it’s important to note that even if you have a PM you won’t be able to sit back and relax when it comes to your properties. You’ll need to continue to learn the game, and be vigilant in case there are any problems with the property management company.
Physical maintenance of the property is your cost of course, whether handled through the PM or using your own resources. Stay in touch as often as possible and keep the lines of communication open with your tenants. Tenants like to hear from the owner - this gives them a sense of appeal from their dealings with the everyday management. Since it’s your investment you have the most to lose if things go sideways.
If you’re well aware of the legal side of owning and managing rental property, including how to screen tenants while keeping discrimination policies in mind, and if you've studied some of the abundant advice offered online in articles and from service companies, then you’re in a good position to take care of your property and tenants yourself.
Property Management Pluses
Overall, there are a lot of pros and cons to think about in terms of property managers. If you do choose to go this route, make sure that you know what you’re getting into and have expectations and responsibilities in writing.
