Should You Hire A Property Manager?

Deciding to manage your own property or turning it over to a professional is a personal and business decision. Either choice has its own advantages and disadvantages. So before you take the leap in hiring someone or managing it yourself, here's a few questions you should ask yourself.

Can I Afford A Property Manager?

Property management fees can either be a fixed fee or a percentage of the gross monthly rent.  Other charges may accrue for services outside the scope of management. For example, some companies charge additional fees for bill payment or conducting annual inspections. Typically, you should have set aside 10 percent of the gross monthly rent to cover these fees whether you hire a manager or manage it yourself; This way, if you decide to hire a manager later, you will have already budgeted for it. You can save money managing it yourself, but only if you treat it like a profession and not a hobby. Doing so will help prevent you from making mistakes that can cost you time and money. 

How Well Can I Manage People?

Property management mainly involves the management of people. Whether you are explaining the lease terms to a tenant who wonders why he is getting billed a late fee or negotiating a bid price with a contractor, dealing with people is 90 percent of the job. The advantage of hiring a property manager is the tenant and contractor must go through a third party before they can speak to you. Of course, this can be a disadvantage if your property manager is unresponsive to a tenant who fails to pay rent on time or neglects to inform you of needed repairs. If you don't mind or actually enjoy dealing with a variety of personality types and putting on different hats (maintenance manager, rent collector, psychologist, etc) then it can be a rewarding and never boring experience.

How Valuable Is My Time?

Time is a limited commodity for real estate investors - particularly if you also hold down a full-time job and have a family. If you decide not to hire a manager, there will be moments when you will have to meet with vendors, do walk through inspections with tenants, or appear in court during an eviction process. These things are typically handled by a property manager. If your job affords flexibility and you have an understanding spouse who can help divide up these tasks, then consider doing it yourself.  There are ways you can save time by putting systems in place - for example, using a program where tenants can pay rent online - or having a reliable vendor in place to handle maintenance issues that arise. This can free you up to work on your primary goal of real estate investing, not fixing a leaky toilet.

Anyone who is willing to learn can be  successful at managing their own property. The real question is, do you want to spend the time managing your property or would you rather spend that time acquiring other properties to manage?

If you have any comments on this topic, or other considerations on why you should or shouldn't hire a property manager, share them!