Do You Really Need a Property Management Company?
You have a rental property (or maybe more than one). What now? Should you hire a property management company or try to manage it yourself? While every vacation rental situation is unique, you can ask yourself a few simple questions to lead you in the right direction. Not every rental property owner needs to hire a property manager. However, for the right property and the right landlord, they can be very helpful. The 10 questions below can help you determine if hiring a property manager could be the right choice for you.
1. How far do you live from your rental property?
The more miles between you and your investment property, the harder it is to manage. It will be harder for you to find tenants, to handle tenant complaints, to quickly respond to emergencies, to take care of maintenance issues, and even to make sure rent is collected on time.The time it takes you to get to the property and the cost of getting there will also add up. In situations such as these, hiring a good property manager can make sense and actually save you money.
2. How many rental properties do you own?
It makes sense that as the number of units you own increases, so do your responsibilities. The more tenants you have, the more maintenance issues, complaints, and vacancies you will have to deal with. In addition, if your units are spread across multiple properties, you will spend even more time managing the cash flow of each individual property, as well as physically commuting from property to property to handle issues.
As your portfolio grows so do the management challenges, and it becomes easier for things to fall through the cracks. Investors with large portfolios stand to reap significant benefit by leveraging the efficiencies a property manager can provide.
3. Do you have any property management experience?
Ensuring the property is run in accordance with the law is critical in both preventing lawsuits and shielding yourself from liability if you are sued. Familiarity with contracts is also very important as your rental agreement is the only binding agreement between you and the tenant.
If you want to invest in real estate, but don’t know the first thing about property management, hiring an experienced property manager can be the right choice for you. Learning as you go can become very expensive.
For a property investor who is just starting out, hiring the wrong repairman or taking too long to fill a vacancy can quickly eat into your potential income. Mistakes such as being accused of discrimination because you did not understand the Fair Housing laws, or of being a slum lord for not getting the heat fixed in time, can lead to the demise of your investment.
4. Can you afford a property management company?
Before you hire a property manager, you need to assess your finances. Property managers are not free. Property management companies charge a percentage fee of the monthly gross income for the property. These fees fall into a wide range of percentages depending on such factors as the gross rental income of the property, as well as the location, size and amenities.
5. Do you have access to vendors to ensure maintenance issues are addressed correctly and in a timely manner?
If you can't do it yourself, do you know who to call? Finding reliable handymen and contractors can take a while and in the mean time you may unknowingly hire people that are unethical, uninsured, do poor quality work, or over charge. Maintenance and repairs are a significant component of land lording and if you question your ability to ensure the work is done well and in a timely manner, you might want to consider hiring a property management company.
6. Do you feel comfortable being on call 24/7?
It's important to answer this question honestly, because when an emergency happens at your property you can't ignore it. Your special event, important meeting, vacation, or personal crisis doesn't relieve you of your obligation to your tenant. These emergencies don’t happen all the time, but when they do you have to be willing to handle them immediately. Can you handle being called at 2 in the morning to fix someone's overflowing toilet?
7. Are you having trouble finding or keeping tenants?
Good property managers are skilled at finding and screening tenants quickly. Advertising, fielding calls, and showing the unit can take a considerable amount of time, but are critical tasks as vacancies will quickly eat into your profit margins. If you question whether you have the skills or the time to make this happen, or if you have historically had an unacceptably high vacancy rate, you may want to consider hiring a property management company.
8. Can you handle confrontation?
Many new owners dislike feeling like the bad guy and try to be understanding by making exceptions. The problem is that this only invites additional abuses and excuses by tenants. Late payments must be dealt with immediately, and while sometimes a friendly reminder is all that’s needed, other times, it can be a very confrontational process ending in eviction.
Is the stress of dealing with evictions, complaints and maintenance issues taking a toll on you? Property managers are skilled in handling landlord-tenant conflict. They have an understanding of landlord-tenant law, and can serve as the middle-man, or buffer, for problems. In addition, if the tenant knows they are dealing with a third party, they may act more professional as well.
9. Are you willing to give up control?
This is a simple but profound question to ask yourself. If you feel the need to micromanage every aspect of your rental then a property management company may not be for you. However, if you're looking to offload a good portion of the rental management responsibilities and feel comfortable doing so, then your next step is to seek a competent property management company to assist you.
Property managers can be in charge of everything from collecting rent to filing taxes for the property. While they may have the experience and a piece of paper that says they are certified, do they have the same passion for your investment? These are things to investigate and research before committing.
10. Do you have the time and energy to manage your rental?
Realize that time is money and managing a property takes time. If you feel like the daily obligations of property management are taking away time that could be better spent making more money at your other job or looking for other investments—hiring an outside manager may be the right move for you.
Ultimately, your decision to hire or not hire a management company should hinge on whether or not it is a good fit with your lifestyle and makes sense financially.
Sun-Surf Realty in Emerald Isle, North Carolina offers Property Management Services tailored to meet your needs while avoiding "big company" fees. Take a look at our property management services and let us go to work for you! We are always happy to meet with you and provide a free market analysis and comparison for your resort rental home or condo. Please email your inquiries or requests for information.