Landlording & Rental Properties

6 Advantages to Hiring a Property Manager (& Why I Wish I Did Sooner)

Expertise: Business Management, Mortgages & Creative Financing, Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate Deal Analysis & Advice, Commercial Real Estate, Personal Development, Real Estate News & Commentary
228 Articles Written
Screening-tenants

The hardest job to hire for is something you used to do. For me, as a real estate investor, there were two jobs that were hardest to give up.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

One job that was hard to hire out was painting, as I had been a painter myself for 13 years before becoming a contractor for another 10 years. Of course, there's nothing wrong with working in a trade, but after hurting my back and then entering the world of real estate and note investing, it no longer made sense for me.

The second job I was slow to hire out was property management. In the end, however, I didn't have much of a choice. I had been a property manager at a ReMax, and we merged with another real estate office that already had a rental department. As a result, they no longer allowed their regular agents to do property management.

After these rules changed in my real estate office, I had to find a property management company for my clients, who were typically investors with multiple properties. I also had to find a property manager for my own rentals, since at this point, I no longer had enough time to do it myself (especially after entering the note business).

Luckily, I knew a couple who had gone into the property management space several years before, and they were managing a lot of units at this point. Plus, I knew the wife from when I first started in the business, and she had a very good reputation. On top of being a real estate broker, she was also a district justice, which is someone who oversees landlord/tenant complaints at the local court level.

RELATED: What Does a Property Manager Do? Here’s the Job Description

Besides the long track record and the fact she was politically connected, there were many other benefits I quickly enjoyed upon hiring them.

6 Advantages of Hiring a Property Manager

1. They are affordable.

In fact, they’re much more affordable than I originally thought. When I factor in all the things they do and the time they save me, it’s well worth outsourcing.

refinance

Related: How to Spot a Great (Not Just Good) Property Manager

2. They offer great on-call service.

They have a 24-hour emergency service that covers things like heating, plumbing, or electrical issues. Today, I travel a lot, and this service is invaluable to me. I can still use my contractors if I want to, but sometimes it’s easier just to let them handle most of the little repairs.

Plus, they maintain great records. The beauty of using their service is that they track everything from the rents to the repairs, and they even write the checks to cover expenses like utilities and contractors. It’s great to get a nice year-end package that I can just hand over to my accountant.

3. They represent me in court.

Today, I’m a really busy guy. I can focus my time on running my business or doing the things I’m best at, and they can fill in for me on those unfortunate cases that require a court appearance.

4. They’re compliant.

I especially appreciate their emphasis on compliance when it comes to drawing up leases and screening tenants. I love that they screen for things like credit history, criminal background, evictions, and even Meghan’s Law (history of sex offenses). They also stay up to date on licensing requirements, local ordinances, and state laws and regulations.

professional young asian female architect wearing casual shirt sitting in cozy office and making architectural sketches. Profession concept. beautiful young girl interior designer drawing blueprint.

5. They handle my showings.

Not only do they show properties to prospective tenants until they’re rented, but they also meet various HUD and township inspectors for yearly rental licenses. This is another area where the property manager saves me a lot of time and aggravation.

Plus, if you own multiple properties, see if you can leverage your total book of business to negotiate a better set of terms with the property manager.

Of course, you should consider any disadvantages, too, before outsourcing property management.

Disadvantages of Hiring a Property Manager

When it comes to disadvantages of hiring a property manager, I can really only think of two: cost and control.

  1. For many real estate investors, the biggest deterrent from hiring a property manager is probably the cost, which definitely cuts into your monthly cash flow. So if you have the time and the skills, and it’s more lucrative for you than other tasks, it may make sense to manage your own units.
  2. Another disadvantage could be that once you hire a property manager, you're not in control of everything anymore. Maybe you're not as dialed-in when it comes to the maintenance and condition of your properties or the choosing of your tenants, especially as you start to rely more and more on the management company. Whether you can accept that is a personal decision, as well as a business decision.

Related: 10 Tasks a Property Manager Will Take Off Your Plate (to Free Up Precious Time!)

Starting Over, What Would I Do?

Considering both the advantages I experienced and the potential disadvantages of hiring a property manager, would I make the decision to hire a property manager again?

My answer is a resounding yes.

If you don’t outsource the job, in a sense, you’re just hiring yourself. Looking back, I think it was a valuable experience doing it myself at first, as it actually taught me how to manage a property manager, as well as what to look for when hiring one.

Knowing how much time and effort is required to effectively manage my units today, the only thing I would have done differently is turn my units over to a management company sooner.

My biggest reasons for outsourcing property management are that it allows focus on what I do best (raising private equity and running a company) and that it gives me peace of mind. The focus thing is a really big deal, especially since I love what I do, I'm good at it, and it's lucrative.

So, if you make your money finding deals, flipping deals, or fixing deals, then go do that. Unless property management is your core business, focus on the stuff you do best, and stop trying to save money in the wrong (time-consuming) areas.

Peace of mind has also been more and more important to me and my family as we approach retirement. When I was young (and not so smart), I tried to do everything. But guess what—you can’t take it all with you, right? Heaven forbid something were to happen to me unexpectedly, I don’t want my family having to deal with the property management and maintenance issues.

Having this all set up in advance with good people, systems, and processes helps me sleep better knowing I did the best I could for them.

So, personally, my only regret is that I didn’t hire a property manager sooner. But I realize this isn’t the case for everyone.

Do you still manage your own units and do your own maintenance, or do you outsource one or both? What are your reasons?

Leave your thoughts below!

Since 2007, Dave Van Horn has served as president and CEO of PPR Note Co., a $150MM+ company managing funds that buy, sell, and hold residential mortgages nat...
Read more
    Jennifer H. Investor from San Antonio, TX
    Replied almost 3 years ago
    Since to were a property manager before, what traits do you look for when hiring out the service?
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied almost 3 years ago
    Hi Jennifer, Good question! There were a couple reasons I picked the manager that I use today. For one thing, my manager is and was not only a property manager but also a broker and district justice. All three of these hats obviously can come in handy when dealing with tenants. It also expressed how well rounded and dynamic they could be as a manager. The other thing that stuck out to me was longevity. My manager is in it for the long haul. And I also know from personal experience that she’s been a reputable business person for years prior. In fact we had done deals together in the past in another capacity, so there was a long term relationship there- so that plays into trust, which is key with a property manager. Lastly, and this plays into that reputable quality as well, is that I had other recommendations to use her company for property management. I actually had what might be the best recommendation. Around the same time I was thinking about getting out of the business of managing tenants a very successful investor I knew was also unloading his holdings. When it came to Real Estate, this was a guy that knew what he was doing. So I saw what he did and that was the final straw, i was sold! Anyway, hope this wasn’t too long of an answer and it helped give you some clarity on what to look for. Best of luck, Dave
    Sheryll Muhammad
    Replied almost 3 years ago
    Great article Dave! Thanks for sharing.
    Arthur DeMarco
    Replied almost 3 years ago
    I like what you said about hiring a property manager bringing an increased peace of mind. Not having to worry about your property while you’re away is worth a lot. Not to mention, they have more time to screen tenants, provide maintenance, and do all sorts of things to keep your property profitable and running smoothly. It sounds like a great idea to me, thanks for the article!
    Chris L. Investor from Fort Wayne, Indiana
    Replied over 2 years ago
    Dave, another great article. I have tremendous respect for all that you have accomplished and more importantly the way you continue to give back. In my experience as rental property owner of 93 homes I found good property management actually paid for itself in the following ways: 1. They rented my properties much quicker and I had less vacancy time. 2. They screened the tenants better than I did resulting in longer tenant stays and fewer evictions. (Notice I said fewer and not no evictions) 3. They were able to collect increased security deposits. 4. Their proper screenings resulted in less tenant damage and when it did happen the increased security deposit mitigated some of those costs. 5. They saved money on repairs because they had bulk contract pricing for replacing mechanicals, roofs, etc. 6. The value of never having to deal with a tenant: Priceless!! Thanks again Dave for all that you do. Chris
    Account Closed from Clovis, California
    Replied over 2 years ago
    Finding the right one is not easy but I bet it will be worth it. This applies most especially to those who own a property but lives far from it. The advantage of having a property manager is to have someone look after your property while you’re unable to. This person will make sure everything is fine and it can make your life easier dealing with your renters. Just make sure you hire someone you can trust.
    Joe Lutterbie from Bloomington, Illinois
    Replied over 2 years ago
    Hi, what are the questions I should ask when shopping around for a good PM? What are things you look for that will lead you to either choose a PM or things that may make you avoid other ones? Want to start shopping around but not sure what questions I should ask. Thanks.
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 2 years ago
    Hi Joe, Thanks for reading. Some questions off the top of my head you should consider: – “How many units do you manage?” Are there too many that they’re too busy to handle mine or is it too few – “How long have you been doing it? – “What are you fees?” – “What’s your screening process?” – “Do you go to court for your tenants?” Hope this helps! Best, Dave
    David Calhoun Investor from Princeton, NJ
    Replied almost 2 years ago
    Dave, I certainly look forward to your articles. I have a small rental property in the NE section of Philadelphia. Is there a property management company, you can recommend? Based on your recommendation, does this company do simple bookkeeping for the rental? Thank you. David J
    Allen Morris Property Manager from Commerce Township
    Replied over 1 year ago
    Thank you for writing an amazing blog on Advantages to Hiring a Property Manager. The advantages you have provided for hiring a property manager is the best but I would like to suggest you can also hire North Bloomfield Properties. North Bloomfield Properties is also one of the great options get best rental and property management services. We are one of the largest single-family home property management companies in Michigan. Kindly contact us on.
    Yu Liu New to Real Estate from Tallahassee
    Replied about 1 year ago
    Thank you for the informative article, glad everything is working well for you. How do you recommend new investors find good property managers besides just asking around? Also, how do you interview the property managers so that you ensure that they are the best? Do you recommend a team of property managers that already have 10s and 20s of properties or someone that recently started and maybe has less than 10? Thanks in advance
    Don Elias Property Manager from Fridley, Minnesota
    Replied about 1 year ago
    I was my own manager for many years but I needed help when I had to be the full-time care-taker for my wife with Alzheimer's. After a few years of that she passed and I am now too old and too worn out at 85 to do much of anything.
    Jonathan Rivas
    Replied 12 months ago
    thanks for sharing
    Patricia Smith Investor from Portland, OR
    Replied 9 days ago
    Great article. Thank you so much for it. I was asking myself if I should hire a PM company and this resolved my guessing around it!