Pros and Cons of Hiring a Property Management Company
Can you imagine a world without renter protections or standards? The invention of a property management company didn’t happen until the 1950s. But let’s go back a little further so we understand how property management was born.
The first iteration of the property manager didn’t come until 1933. Many apartment owners defaulted during the depression, leaving banks with the properties. Bankers weren’t sure how to properly manage the properties. They needed help from people who did. That’s when the first property caretaker was born. They collected rent, looked after the daily needs of tenants, and performed maintenance.
As a landlord, you need to make the best business decision for yourself and everyone involved. You get to decide what works best for your situation. You understand the effort it takes to manage single homes and apartment complexes. Whether you hire property management is up to you. We’ll explore the pros and cons of rental property management companies to help.
What Exactly is a Property Manager?
The advantages and disadvantages of using a property management company are broad. Before we dive into what those are, we have to understand what a property manager is. A property manager is a person hired as a third party to handle the daily operations. They handle everything from single-family homes to large apartment complexes and subdivisions.
Most property managers handle turn-key operations for you. This entails collecting rent and marketing your rental. Some property managers even handle day-to-day tasks. The benefit is that as the landlord, you decide what you take on and what they assist with.
Common Responsibilities for a Property Manager
- Screen and interview your potential tenants
- Advertise and marketing of the property
- Manage maintenance and repairs
- Handle lease agreements
Common Questions Surrounding Property Management
When deciding on whether you need a property manager you want all the information. Before we talk about the pros and cons let’s discuss the important questions to consider. These questions provide insight into all the responsibilities that property management entails. You will have a clearer picture of what fits your situation best after you read them over.
- Do you handle stress well?
The ups and downs of property management are endless. You want to collect rent each month, but unpredictable problems will arise. Understanding how you manage stress is extremely important in times of uncertainty. It is important to realize that you will handle uncomfortable situations. From tenants getting into fights to someone trashing the property, you will manage it all. Think about how you will treat those issues before they happen.
- How many properties or units do you currently own?
More properties point to higher management responsibilities. Are you currently able to handle it on your own? Having a clear view of your workload makes it easier to decide on what you need. If your current properties are too much for some person you will consider enlisting help. Are you able to reach out to the right contact to ensure that gets done?
- Do you have experience with maintenance and repairs?
This is a big question to consider. Are you extremely handy and able to fix a variety of issues? Maintenance and repairs are a large part of being a landlord. If you aren’t able to do the job, do you know someone reliable and trustworthy who can? Time is also something to consider. Some maintenance issues need tending to immediately.
- Are you savvy at accounting and record-keeping?
Profit loss and profit management are important. How to handle your taxes is another point you’ll come to. If you have a background in finance this is great news. If numbers aren’t your thing, consider hiring an accountant. This will save you from the headache later.
- Are you available at all hours of the day?
Being a landlord and property manager is a tough job. Managing property on your own becomes a full-time job. Are you willing to be on call at all hours of the day? Are you willing to take a call in the middle of the night? You may miss out on important meetings. In times of emergency, this means leaving family holidays early or not coming at all. Consider this before taking on more than what you are capable of.
- Will you confront your tenants?
Being the bad guy is never something you want. Handling late payments and evictions is part of the job. If you aren’t able to confront your tenants it will be difficult. If you enjoy enforcing rules this could be a breeze for you. But handling these issues that tact and interpersonal skill. Do you have them?
- Do you understand the housing laws?
Part of being a professional in the industry means understanding the laws. Keeping up on current housing laws and local laws will assist greatly in your job. Knowing the law shields you from any potential threat. It also assists in preventing any unnecessary lawsuits. Know the laws before you go into the property management business.
- Will your unit be quickly rented if someone moves out?
Advertising is a large part of the job. If you have an empty unit you’ll want to have someone in it quickly. Do you have the skills and the time to ensure this happens? You don’t want to lose on any profit. Will it be alright if that unit is vacant for a few months in-between tenants?
The Pros of Hiring a Property Management Company
The benefits of hiring a property management company are vast. This is especially true for a landlord looking for passive income. If you cringe at the thought of dealing with a tenant issue or complaint, a property management company is for you. The right property manager has experience in the industry. They have an outline process to show you the minute you meet with them. They understand the housing laws and handle everything with ease.
Your property manager knows the local laws that affect you and your tenants. They assist when issues arise and know how to resolve them. They serve as the go-to for any disputes that come up, lease breaks, and evictions. If you don’t like dealing with face-to-face operations, property management is for you.
Having your own management company means you have free time. You won’t have to leave a family function to resolve an issue. You are able to move out of the area where you own the property if you want. The leaking pipes your tenant contacted you about? Leave it for your property manager. It is their job to handle that for you.
The Cons of Having Property Management
The disadvantages of hiring a property manager depend on your involvement. As the landlord, you decide how the relationship will work. Issues involving that relationship will arise if you can’t trust one another. Deciding who takes on which responsibilities is tough. Property management is difficult for those who need to be involved in every decision. If you are that person, property management is not ideal.
The rental management company fees are costly. This expense will deter you if you’re on the fence about hiring a property management company. The most common fees are monthly, but you could have more. Some management companies charge a leasing fee. You could also get charged with cancellation fees, renewal fees, and maintenance fees. It is important to look closely into a contract before you commit.
Another disadvantage is hiring the right property management team in the first place. Once you hire them you expect a high standard because they handle everything for you. The truth is that you might go through multiple before you find the right fit. Having to go through multiple managers is bad for your reputation. You want to provide the best for your tenants. If you don’t have a property management team that works well it causes problems for your bottom line.
Final Thoughts on Property Management
You know what you need and how large your property is. If you have the assets and want to hire a property management company you can dive in. However, if you like handling issues yourself and don’t want to pay the fees you don’t have to.
The right property management company finds a balance with you that works. They are flexible to your needs and understand when they need to step back and step up. The rest is up to you.
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