Most real estate investors need a property manager to take care of the everyday running of their property. However, property management services do not come cheap. The good news is that not every property owner needs a property manager. Read on to find out whether or not you need to hire a property manager to look after your real estate holdings.
Functions of Property Management Firms
Property managers deal directly to prospective tenants as well as existing tenants. This saves the owner time and money. After all, the owner does not need to market vacant units, vet tenants, collect rent, fix problems in the building, address tenant complaints, maintain the building or evict rent defaulters. The best property managers have the knowledge and experience needed to properly manage rental properties, so you will have peace of mind knowing that your property is in good hands. Since management firms are independent contractors, you can avoid all the hassles of managing employees.
When to Hire a Property Management Company
While there may be many benefits of hiring a property management company, this can be incredibly costly. This means that not every property owner should hire a property management firm. Read on to learn about the factors to consider when weighing whether or not to hire a property management firm.
You should only hire a property management firm if:
You have many rental units or properties to manage. The more the units you own, the more likely you will need help from property managers to maintain those properties.
You live far from your rental property. If the rental properties you own are located far from your home, then a professional manager can help you manage those properties.
You are not interested in the hands-on management of rental properties.
While some landlords may look forward to finding suitable tenants to occupy their units and would instead hire plumbers, painters, and electricians to carry out repairs or maintain their properties, others do not. If you do not prefer a hands-on approach, you should think about hiring a property management company.
You are always busy.
If you always have a busy work schedule and lack the time needed to take care of the day to day running of your property, hiring a property management company is highly recommended. Besides, most investors would rather spend their free time with the family or to look for better investments. Fortunately, an experienced property manager is able to take care of your rental units as if they were their own.
You can afford professional property management services.
Most property managers usually charge 5-10% commission on the rental income generated by the property under their management. If you can afford to sacrifice 5-10% of your rental income, therefore, hiring a property management company may not be such a bad idea. During a down market, you can take up the responsibility until you have 100% occupancy in your rental units.
You have more responsibilities.
As a business owner and real estate investor, you may reach a point where you have too many responsibilities to take care of each one of them properly. At this point, it may be a great idea to spend your money on property management services as this can help you free up some time.
You do not want to become an employer.
The alternative to hiring a property manager is to hire a caretaker as well as a maintenance crew. Since you may not want the responsibilities and obligations of an employer, you can outsource the management service to a property management firm.
You have a property under the affordable housing program.
If you are an investor participating in the affordable housing program, things may get complicated. You need to hire someone who understands all the rules and laws governing the program. After all, investors usually receive financial assistance in the form of tax credits, low-interest loans, and grants. In return, the property owner agrees to rent the property to tenants within a specific income range.