One of the most difficult business dilemmas is whether to pay for a task you know you can do. Even though you can save some money by doing it yourself it is important to ask what you are giving up to do so. This is a popular question with rental property owners. Rental property management is something almost anyone can do but not necessarily do well. Regardless if you have one single family rental or a large portfolio you need to strongly consider property management. Not only does property management save you time but it has an auxiliary impact on other areas of your business. Instead of worrying about a tenant or chasing rent checks you can focus on more important items.
The detractors of property management argue that you may be throwing away money every month. The roughly 10% fee directly eats into your cash flow and makes the rental less appealing. Another deterrent is the lack of knowledge and control you give up with a property manager. Many landlords feel they would rather work with the tenants than with a property manager. As with anything in business you need to weigh the positives against the negatives. In the case of property management paying the monthly fee is worth not having to deal with everything a rental property entails on a monthly basis. Here are four main reasons you should hire a property manager.
- Price. One of the main negatives of property management is also one of the biggest positives. The average property management fee is 10% of the monthly rent received. While at first glance this is a sizable chunk of money on closer inspection you are really getting a bargain. Think about how many trips you make the property every month. With an average property, you most likely swing by once a week if it is on your way to the office or home. If you have difficult tenants you are probably at the house anywhere from seven to ten times a month. Between the gas and work time lost alone you are pretty close to breaking even with a property manager. Instead of stopping whatever you are doing and driving to the property your property manager will deal with any issues. As corny as it sounds you can’t put a price on your time. The ability to focus on whatever task you are doing without a tenant calling you is worth 10% of the rent.
- No More Late-Night Phone Calls. As any experienced landlord will tell you tenants contact you with a variety of questions, concerns and complaints. This can be one of the most frustrating aspects of the job. Instead of worrying about getting contacted at all hours of the night you can let a property manager deal with it. They will handle calls about parking concerns, issues with the neighbors and the occasional clogged toilet. Some of these calls are legitimate but most are from inexperienced tenants who don’t know what to expect. Your property manager will also handle any minor repair issues that pop up. Instead of spending hours looking for a locksmith or a plumber a good manager has a rolodex of people they can call at any time. You are still on the hook for the payments to these people but you don’t have to go through the time and aggravation of finding them.
- New Tenants. One of the most time-consuming aspects of being a landlord is finding new tenants. Not only do you need to tinker with marketing and listing the property online but you have to deal with prospective tenants. Whether this is in the way of emails, phone calls or showings this is a very time consuming, but important, part of the process. Every showing requires travel to and from the property in addition to the time spent with a prospective tenant. Ideally you will find a tenant after just a few showings but it doesn’t always work this way. In popular markets, it is not uncommon to go through a dozen or so prospective tenants until you find the right one. It is not enough to show the property there is an application process that must be followed which will lead to follow up phone calls and emails. A property manager has a vested interest in finding good tenants so you can bet they will not rush the first decent applicant into the property.
- Regulations. You don’t want to have to worry about staying on top of any local or federal rules and regulations. All it takes is one law oversight to get yourself in some serious hot water. A property manager not only knows all the federal fair housing rules but also knows the local guidelines as well. Failure to update an application at town hall could force your application to be void. In college towns or niche areas this can literally cost you thousands of dollars in lost rent. With all the things going on in your business the last thing you may be thinking about is renewing a license in the middle of the summer. It is good to have a property manager that knows when these tasks need to get done and does them without any thought.
Regardless of your cash flow level you should strongly consider a property manager. You can’t put a price on piece of mind or your time.
By JD Esajian with CT Homes, LLC