Self-Management versus Hiring a Property Management Company
Taking a Closer Look at the Benefits of Both Property Management & Self-Management
Most property owners get into the rental property business to boost their retirement savings, replace their nine to five job, or even just earn a little extra cash. And, to say that most property owners want to do this passively is an understatement.
The less work you have to do, and the more money you can earn on such little effort the better!
However, some investors getting into the business of leasing their properties are unaware of the day-to-day details that come with managing rentals.
When you invest in rental properties, the key is to make sure every aspect of leasing the property is handled efficiently. This is why deciding early on whether to manage the properties yourself or employ a property management company is so important.
However, this decision can sometimes prove to be difficult.
That is why today we will compare the benefits of self-managing your income property versus the benefits of hiring a professional property management company. This way, when it comes time for you to decide, you will have a clear idea whether to take on the task yourself or let an expert handle your properties for you.
Benefits of Self-Managing an Income Property
If you choose to manage your rental properties yourself, keep in mind there is a lot of work to be done. However, that does not mean there is not a whole host of benefits to gain while managing your own rentals.
Here are some of the benefits of self-managing your investment properties that may help convince you this is the right option for you:
- Save on Management Fees. All property management companies charge a fee for their services. Sometimes this fee is up to 10% of the collected monthly rent. If you self-manage your properties, you can avoid this additional cost and keep 100% of the profits your properties net for you.
Something to consider: If you choose to forgo a property management company, you are left to handle all expenses related to leasing your home. This includes advertisement fees, tenant-screening services, maintenance and upkeep of the property, and any legal matters you run into including attorney, filing, and court fees.
In the end, despite saving on a monthly management fee, you may be expending more by managing the property yourself.
- Direct Involvement in Day-to-Day Activities and Decisions. When you manage your own income property, you are directly involved in everything related to your property. You also get to be in charge and make all of the important decisions without having to consult with someone else, such as property management company. You will have total control over things like where to advertise your vacant rentals, which contractors to hire for maintenance issues, and how to collect the rent from each of your tenants.
Something to consider: When you have complete control over your own rental properties and do not rely on the help of an experienced property manager, you must have the proper legal knowledge regarding landlord/tenant laws, evicting problem tenants, and conducting background checks.
Plus, it is a good idea to have experience working with reputable contractors and collecting payments from customers.
And don’t forget you must have the desire and resources to answer tenant calls day and night whenever something goes wrong.
- Avoid Victimizing Yourself. While there are plenty of ethically sound property management companies out there dedicated to caring for your rental property as though it was their own, the truth is many investors run into fraudulent property managers that can negatively affect your entire rental property business. Taking on the role of manager yourself helps you avoid property management companies that receive kickbacks from certain contractors, bonuses for vacant properties, and even those who simply do not follow the housing laws set in place to protect both you and your tenants.
Something to consider: Though falling victim to an unsavory property management company is not something any property owner wants to do, the chances of this happening are fairly slim. This is especially true if you do your research when it comes to hiring a property management company.
Interviewing them first, fact checking their policies and procedures, and making sure you are involved every step of the way will help prevent illegal behavior from tarnishing your rental property business, while giving you some much-needed help with managing your property.
Altogether, self-managing your rental property is not all bad. In fact, many property owners choose to manage their own properties because they have the time and resources to invest proper management procedures into their business.
Benefits of Working with a Professional Property Management Company
For property owners that are not ready or are unable to take on the full-time duties an income property requires, outsourcing to a property management company can be very beneficial.
Here are some of the best reasons to consider employing a professional property management company, regardless of how many properties you own.
- Fluid Infrastructures. Property management companies come as an all-in-one management package. They have procedures in place that will help the leasing process go smoothly at all stages. This includes tenant screening, rent collection, and even eviction procedures.
- Timesaving Ability. Employing a property management company will free up your time to do the things you enjoy. This is especially true if you own multiple investment properties. You will not be responsible for late night emergency repairs, annual inspections, or countless time spent marketing vacant properties.
- Minimal Vacancies. The right property management company will advertise your rentals aggressively across many platforms. This way, your vacant property will reach the widest tenant pool possible. With plenty of exposure, you have the opportunity to place top-notch tenants in your property who are likely to pay on time, care for your rental property, and ultimately stay long term.
- Better Networking. Property management companies know the business of investment properties. With this comes the social connections required to get better pricing on materials and services when appliances are needed or repairs are required. Utilizing your property manager’s reliable and affordable contractors will help you save time and money.
- Money Management. By directly involving themselves in rent collection, late payment penalties, and your property’s accounting records, you can rest assured the finances are in order. Come tax time. you will have detailed records that will easily show your profits and losses for the year.
- Increased Supplemental Income. With the right property management company, you will make more money than ever before. With knowledge about the current market and the ability to create appealing rental homes for those looking to move in right away, your property manager will get the highest valued rental rate possible.
- Proper Legal Backing. Property management companies are in the business of dealing with all things rental property related. This also includes any legal matters that involve your tenants. Things such as excessive property damage, failure to pay, and other breaches of the signed lease agreement may cause you to take your tenant to court. A property management company will handle all of these hassles for you.
For those looking to keep control and handle all matters related to their investment properties personally, while also saving money on management fees, self-management is the way to go. Just remember, this option is not for those who wish to get involved in rental properties and make a passive income.
However, for investment property owners who wish to have a consistent stream of passive income and leave all other matters in the hands of qualified professionals, a property management company will work perfectly.
In the end, deciding to self-manage your rental property or hire a property management company is largely a personal one. However, each option has plenty of benefits that will help you succeed in the rental property business.