5 compelling reasons to use a property manager

At JG Real Estate (www.jg-realestate.com), we often hear  “Why should I use a professional property manager? I’ve been doing OK on my own until this time”. Of course, the answer to that question largely depends on the client’s unique position, however here are a list of reasons why property management makes sense for many property owners, and the majority of my brokerage’s clients.

1. You’re not a professional property manager, you have a job which you’re good at just like we do: What’s your profession? Painter, photographer, architect, lawyer, doctor? You are good and effective at your job. Sure, I could learn to be any of the above professions, so that I could attend to my own legal, medical, or architectural needs – but is that efficient and sensible? Of course not. On the same note, if you own investment property wouldn’t you prefer to trust professionals to manage it? Dictionary.com defines efficiency as “accomplishment of or ability to accomplish a job with aminimum expenditure of time and effort”. I rest my case.
2. Overall increased profitability:  Sure, there are fees associated with having a 3rd party company manage your single family home, condo, or apartment building but let’s think about that fee in relation to not having effective management in place. Too often I see self managed properties go vacant for 1, 2, 3, or in extreme cases even 4 months between tenants. Every day which a property continues to sit vacant is lost revenue for the owner! My personal philosophy and business strategy is to start showing properties approximately 3 months before they go vacant, so that I have a new tenant lined up to go in the very first day possible! Let’s use a hypothetical scenario: Tenant’s lease ends 3/1/12, JG Real Estate starts showing the property 12/1/11 and has a tenant lined up to move in 3/5/12. This 4 day grace period gives our maintenance team enough time to take care of turnover issues such as touch up paint, caulking, new batteries in smoke detectors, etc. Let’s assume rent is $1,000 and that the property otherwise would have sat vacant for a couple months – you do the math!
3. In house maintenance with no mark-up: Going back to the scenario in #2, how much is the average property owner paying for turnover maintenance between tenants? $1000? $1500? Is that owner calling a general contractor who is going to add his 25% on top for coordinating? A good Philadelphia management company is going to have their own in-house maintenance staff , JG Real Estate certainly does, and we bill at cost. So, on a typical turnover a owner is only looking at a few hundred dollars or whatever it costs us! Again, you do the math on that one!
4. Elimination of tenant headaches: If all of the above wasn’t enough, especially the vast savings, you don’t have to deal with the mundane tasks of being a landlord. These include; fielding tenant phone calls at 2 AM, sending late notices, pay or quit notices, setting up security deposit escrow accounts, tracking expenses, keeping a rent ledger, and much more. Again, this isn’t your profession, so you’ll need to research exactly how to do all of the above, while complying with local laws and regulations.
5. Portfolio is at a point where it can’t grow anymore without a 3rd party manager: Finally, what if you’re a serious real estate investor? Maybe you have  10 units, and you also have a full time job? You’ve been self managing so far (maybe semi effectively since you can’t full concentrate) but you can’t possibly acquire more units without bringing on some help. You’re way to small to hire a full time staff member to work for you, because that would completely eat up your profits and probably even put you in the red. The  next logical step is to bring on a property management company so that you can continue acquiring and building your portfolio.

1. Are there more reasons to hire a manager which I’m missing on this list? Or maybe you don’t agree with one of my points? I would love to hear readers comments ! Visit www.jg-realestate.com/blog to read more blog posts and comment.