Every investor has a unique situation, there are multiple factors that will guide rental property owners in one way or the other. The following questions will help you decide if hiring a property manager is the right decision for you.
1. How many rental properties or units do you own?
The more your portfolio grows so do the challenges of management. It becomes much easier for important things to fall through the cracks. Investors that have large portfolios will see a significant benefit by utilizing a property manager. The size of a portfolio can also hinder an investors’ ability to purchase new properties if they are already spread too thin managing what they already own.
2. Do you feel overwhelmed with your property(s)?
Managing rental properties can be overwhelming, even for the most experienced investors. Something is always going on that requires attention and it doesn’t take long for things to get out of hand. By hiring a property manager, you can regain control and stability to both your properties and more importantly, your life.
3. Do you live close to your rental property(s)? Can you visit often?
By living close, it increases your ability to make the regular visits required for maintenance, inspections, collections, etc. However, the further you live, the higher your travel time and expenses will be. When you do not live close, it is easier for things to be neglected which can be a recipe for disaster. Plan on making monthly visits and don’t forget the potential for a middle of the night emergency call that demands your immediate attention. Down the road, is this really feasible for you?
4. How do you deal with stress? Do you consider yourself to be a tolerant person?
We typically view ourselves as level-headed, but at the end of the day it takes a special kind of person to deal with all the issues that can arise with property management. On top of just collecting rent every month, there are a number of unpredictable scenarios that can really drive people to their limits. Here are just a few of those scenarios that can occur with your tenants:
- Physical/verbal altercations with other tenants or neighbors
- Domestic disputes and law enforcement visits
- Illegal businesses operating on the property
- Noise disturbances and all-night parties
- Trying to sneak extra people or animals into the property
- Lawsuits and being sued
- Destruction of property
- Refusal to pay rent because they know how to work the legal system for free housing at the owners expense
5. How much experience do you have with maintenance and repairs?
If you can’t do it yourself, do you have the right people to call? It can take a while to find reliable handymen and contractors and you may unknowingly hire people that are unethical, uninsured, do terrible work, or over charge. Maintenance and repairs are a significant component of property management. Consider hiring a property management company that has their own maintenance staff and can provide quality service at a great price.
6. How quickly can you get your unit rented and is it for the best rate?
Advertising, interested calls/emails/texts, and showing the units on your property can take a considerable amount of time, but they are essential as vacancies can easily erase your profit margins. If you are unsure whether you have the skills or the time to make this happen, OR if you have historically had an unacceptably high vacancy rate, you should consider hiring a property management company. Your bottom line will thank you!
7. Can you handle all of the accounting and record keeping for your property?
Balance sheets, profit and loss statements, income statements, labor and appliance warranties, and delinquent rents, all of these require special attention and can easily become a larger burden as portfolios grow. Owners who have a background in accounting can handle this better than others, however, most choose to hire an accountant to help with the bookkeeping. If you feel like this might be difficult for you then consider hiring a property management company.
8. Are you available 24 hours/day? 365 days/year?
When an emergency occurs at your property you can’t ignore it or deal with it at your convenience. Your birthday, important meeting, vacation, or personal commitment doesn’t relieve you of your responsibility to your tenant and investment property. While these emergencies don’t happen all the time, when they do, you have to be able to handle them immediately. Choose a property manager that can be called at 3:00am when you don’t want to be.
9. Are you willing to confront tenants about late payments and if need be evict them from the property?
Not many people like to be the bad guy so they try to be understanding and make exceptions. The problem is that this will certainly invite additional abuses and an array of excuses from tenants. Late rent payments must be dealt with immediately, and while sometimes a friendly reminder is all that’s needed, other times, it can be a very expensive process that ends in an eviction. Unless your rental investment is a charity, being successful means enforcing the rules.
10. Is managing your property(s) the best use of your time?
In the end, whether you hire a management company should depend on if it is compatible with your lifestyle and makes sense financially. As an investor, you will have to assess the opportunity cost of both options based on your unique circumstances.