For many investors, the idea of managing their own rental property seems crazy. Why would you bend over dealing with tenants when you can pay somebody else to do it for you? On the other hand, there are those investors who shun the idea of giving away 8-10% for someone else to process a monthly check and take a few phone calls throughout the year. Regardless of which side of the fence you are on, determining whether or not to manage your own investment properties is an important exercise.
There are many reasons why an investor might choose to use property management rather than self-manage. Making this decision takes careful consideration. Here are some points to deliberate when analyzing whether or not you should hire a property manager for your investment properties:
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1.) Do you have margin in your daily routine?
For many investors, the question of whether or not to use property management comes down to available time. While many people think of property management in terms of processing checks, it can involve much more. Property management often also involves dealing with bounced checks, phone calls about late payments, leaking toilets, angry neighbors, etc. When you decide to manage a property yourself, you are essentially deciding to set aside time to deal with any and all issues arising from that property. It’s important that an investor take an honest assessment of their available time before taking on this responsibility.
2.)Are you able to take emergency calls and coordinate repairs?
Along the same lines as having margin during your day to manage a property, are you comfortable taking calls at night and on weekends in the event of an emergency? One of the benefits to using a property manager is the comfort in knowing somebody else will deal with the flooded basement in the middle of the night. In addition, a property manager has the resources and connections to get repairs done quickly.
3.)What is your proximity to the property?
With many investors investing out-of-state or in other local markets, the idea of self-managing becomes even more impractical. While some investors are able to do it, I find it somewhat difficult to manage a property that you don’t have the ability to drive to quickly.
4.) Are you comfortable screening potential tenants?
Before you can even begin the management process, you have to screen potential tenants to live in the property. It’s important to have a method for screening tenants as well as a framework for what factors would disqualify a potential tenant from getting approved.
5.) Do you mind dealing directly with your tenants?
This may seem like a silly question, but I think it’s actually one of the most important questions to ask yourself. In my opinion, it takes a certain amount of thick skin to manage your tenants well. Many renters are well versed in the art of manipulation, truth bending and excuse making to pay rent outside of the agreed upon due date . I’ve seen many investors with bleeding hearts get taken advantage of by tenants who knew which strings to pull. One of the great things about using property management is that you don’t have to get personally involved. Sometimes it’s better to let a third party manager be the “bad guy” when things go south with your tenant.
Don’t get me wrong, I actually do believe in self managing investment properties. However, I know many investors who simply don’t have any business managing their own investment properties. 8-10% really isn’t that much to give up if it can free you up to pursue other ventures or investments.
Do you manage your own properties? Why or why not? Let me know in the comments below.