Should You Hire A Professional Property Management ?
Hiring a property manager makes sense for real estate investors who don’t have the time for hands-on management of their multi-family rental units. Property managers can do everything from setting rent rates and finding good tenants to handling maintenance, repairs, and evictions. If you are new to real estate investing or if you live far away from your rental properties, hiring a property manager can be a good idea. If you are a passive investor partnering with a real estate investment company, chances are the company will hire a property manager to take care of the property for you.
Here are some questions you can ask to figure out if professional property management is right for your real estate investment business.
1. Can you afford a property manager?
Property managers do a lot, but they don’t come cheap. They can market your apartments, collect the rent, manage the financial aspects of your property, take care of routine maintenance and make necessary emergency repairs. A good property manager will typically charge between 4% and 10% of the rental income. Your rate depends on a number of factors including building & tenant type, number of units, etc. If your cash flow from the property is sufficient, you may be able to cover the cost of a property manager easily.
2. Do you own multiple units?
If you are handy with DYI projects and you own fewer than 10 rental units, you may be able to take care of the properties on your own. However, as your real estate investment business grows, you can find yourself with multiple apartments that require your time and your attention. A professional property manager can handle dozens of tenants in multiple buildings.
3. Are your apartments local?
Landlords who live more than 50 miles away from their rental properties generally have a hard time managing their own properties. If you are a long distance landlord, you need to have a team of local contractors and handymen who can step in at a moment’s notice should an emergency arise. An on-premise property manager may be a better idea if you building size justifies it.
4. Can you work with contractors?
Finding an honest, affordable and skilled local contractor can be a challenge. You need to do your homework to research the best contractors and go over the contract carefully before you sign on and hire them. You will also have to be available to check their work upon completion to make sure the job is done right. Property managers are likely to have contractors they work with on a regular basis.
5. Are you prepared to service your tenants?
As a landlord, you can rest assured that your tenants will approach you with all sorts of issues, from disturbances from noisy neighbors to a malfunctioning toilet or a breakdown in the heating system in the middle of winter. You will need to be on call to address problems like these in a timely fashion. If this sounds like something you would rather not do, you might want to consider a property manager to take care of tenant concerns.
Tips for Making your Decision to Hire a Property Manager
A professional property manager can take a great deal of the burden of owning a multi-unit investment property off your shoulders. Think long and hard about whether you have the skills to manage the property and the time to do it right. Even if you do, you may find that your time it is better spent pursuing other investment opportunities and growing your investment portfolio. Your long-term real estate goals play an important role in your decision on obtaining property management.