The biggest mistake I made as a new investor was not hiring a property management company. When I purchased my first single-family home, I had no idea the amount of work that came with it.
As you may have heard, tenants can be a headache. They aren’t all troublesome, but most of them can be. Yes, a management company charges a fee from the gross rent, but the peace of mind it gives you is worth the money and time. You can always make more money — but not more time.
I once told a tenant to feel free to call me. That was a very bad idea. Every little thing that happened, I got a call. Most of the calls were outside the realm of my management of the property. In fact, they were usually personal matters. I do not have time to be a shrink for tenants. This is why it’s good to have a property management company.
Being an investor, an owner, and a property manager generally proves too many hats to wear. Now that I have a management company, I can just oversee them and delegate tasks to them. That way, I can focus less on micromanaging the properties I already own and more time purchasing new properties. Focusing on higher value activities is what drives business.
Other People’s Problems
Some people actually enjoy being involved in other people’s crises, and often those people make good property managers. They actually want to hear about their tenants’ problems. To them, it’s like watching a talk show. I am not one of those people. I love investing, but that does not include hearing about why your cousin’s dog destroyed the carpet in your guest room. Or how your nephew doesn’t have a job. Or how your sister is dating the wrong guy again.
Investors invest. Property managers manage properties. That requires solving the everyday issues that occur on a property, which necessitates having the time to listen to tenants’ problems.
[Editor’s Note: We are republishing this article to help out our newer readers.]
Investors: Do you hire out management for your properties? Why or why not?
Let me know with a comment!