Hiring a property manager can save time and hassle. But there are downsides. Here are the main advantages and disadvantages to hiring a property manager for your rental houses.
5 Advantages for Hiring a Property Manager
Advantage #1: Ownership is Less Stressful
Owning a rental property can be stressful, even when you work with a property manager. But when you have a team helping with tenant placement, rent collection, maintenance, and repairs, it will significantly reduce the amount of stress you experience. You won’t be bothered at 2:00 in the morning because a sink is dripping; you won’t have to rush to the property after work to mow the lawn or trim the trees; you won’t have to deal with time-consuming tenant screening, interviews, and placement.
All of these small tasks will be handled by the property manager, which means you have less worry and less stress.
Advantage #2: More Free Time
This is directly connected to #1. Because many of the tasks are handled by the property manager, you have more time for personal enjoyment. Instead of mowing lawns and trimming bushes, you can take your family to the beach. Instead of screening tenants, you can go out for a nice dinner with your spouse.
When you hire a property manager, your problem now becomes what to do with all that free time.
Advantage #3: Property Managers Are Experts; You Don’t Have to Be
There are numerous rules surrounding rental units and investment properties. These rules come from virtually all levels of government, including the federal, state, and local level. Most of these laws dictate what a landlord can and cannot do.
For example, according to Chase Pacific, a management team in San Diego, laws in our area say that you must consider Section 8 applicants (housing voucher recipients) and you have to consider the voucher as part of their income. This is one example of how San Diego laws may differ from other areas.
Staying within the law is critical, and property managers understand the details of these rules. When you hire a manager, you’ll have the complete advantage of their experience and expertise. They know what a landlord (and a management team) can and cannot do. For example, what are the laws regarding entering the home? Is a 24-hour notice required? 48? How many visits in a month are too many? What are the local laws regarding evictions?
Landlords understand these issues so you don’t have to be an expert.
Advantage #4: Makes Your Property Empire Scalable
For some people, a single rental property, maybe two, is quite enough. For these owners, it’s relatively easy to complete all the tasks required. But what if you own a dozen properties? What if you want to own 50 or 100? In that case, it’s almost impossible to grow your portfolio without hiring a property manager.
If you plan on scaling the business, you’ll want to give serious consideration to hiring a property manager, as they can be your ally while you grow a large collection of income-generating properties.
Advantage #5: Fill Vacancies FAST
When a vacancy is left unfilled, it means you’re not making money. In fact, it could mean you’re losing money, as taxes, mortgages, and utility bills pile up, all while the property is not earning a dime.
Filling vacancies takes time, but experienced property managers know how find the right tenants quickly, all without sacrificing a quality screening process.
4 Disadvantages for Hiring a Property Manager
Disadvantage #1: The Cost
Hiring a property manager isn’t free. Some are expensive, others are reasonable, but all of them expect (and deserve) some sort of compensation. With all the costs that are wrapped up in property ownership, adding another expense can seem outlandish.
Exactly how much you pay will depend on many different factors, especially the services you request. The more services (tenant placement, check collection, maintenance, etc.), the more you should expect to pay, so stating a specific number can be tough.
10% of rent collected is a typical rate. Others will charge per-service in more of an a la carte style. You might pay $300 to $400 for each lease signing, $50 to $150 for monthly property maintenance, and $100 for setting up a new account. Some organizations charge a month of rent for each tenant placement.
Regardless of the details, there will be a cost, which is why many landlords try to handle the property management on their own.
Disadvantage #2: Overseeing the Management Company
Instead of managing the property yourself, you’ll have to oversee the management team. Most companies deliver outstanding, consistent, reliable service, but you still need to make sure they are taking care of the property. You may want to drive by every month or so to make sure the property is cared for, to make sure the lawn is mowed and the bushes are trimmed.
Disadvantage # 3: A Little Loss of Control
You are not completely out of the loop and you still make some decisions on the property, but you will loose some control over how the property is managed. You won’t be involved in the upkeep, repairs, and day-to-day operations of being a landlord. If you are a control-oriented person, this could be tough. It’s especially tough when you have hundreds of thousands of dollars invested into the property.
Disadvantage #4: Your Property is Just Another Account
Again, we don’t want to give the impression that property managers won’t deliver a high level of service. Most certainly will; most earn their fees through hard work and reliable dedication. But there is a simple fact that your property will become yet another account under their client list, another yard, another unit, another property. The good ones, after all, have many properties to oversee.
They simply can’t deliver the high level of service that you would (likely) give if you managed the property yourself. They may not respond as quickly to issues (possibly because they can’t), and they may not prioritize small problems as you would.
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