Depending on their circumstances, property owners may choose to manage their properties themselves, or they can outsource these responsibilities to a professional property management company. The following questions should help you decide whether or not you should consider hiring a property manager.
How far do you live from your property, and how often can you visit on a regular basis?
For your property to be a successful investment, inspections, maintenance, and collections need to be performed regularly and often. This can be feasible if your property is close by, but the larger the distance, the greater the temptation not to keep a close eye on things, and that can be a recipe for disaster. Plan on making monthly scheduled visits and be prepared for a middle of the night emergency call that requires your immediate attention. Determine if this is feasible for you in the long run.
How do you deal with stress? Are you a tolerant person?
In addition to the seemingly simple task of collecting rent every month, property management tends to come with its share of unique challenges. Ask yourself how you would react in the unfortunate event that tenants:
- Get in fights with other tenants or neighbors
- Have domestic disputes
- Conduct illegal business in the dwelling
- Carry on all-night parties and revelry
- Try to sneak extra people or animals into the home
- Decide to sue you
- Trash the property
- Incite the wrath of the HOA because of repeated deed restriction violations
- Refuse to pay rent because they are a "professional tenant" and know how to work the legal system for the maximum amount of free housing at the owners expense?
Are you currently overwhelmed with your property(ies)?Do you have things under control, or do you need help?
How many rental properties or units do you have?
The larger your investment portfolio, the easier it is to let things slip through the cracks, and the more you stand to gain by employing scalable best practices. Hiring a competent property management firm can help mitigate these challenges.
How experienced are you in handling maintenance and repairs?
Are you able to fix it yourself, and if not do you know who to call? Maintenance and repairs are an important part of landlording, and need to be done well and in a timely manner. If you question your willingness or ability to manage this, you might want to consider hiring a property management firm.
How quickly are you able to get your unit rented?
Advertising, fielding calls, and showing the unit have to be performed in earnest to keep vacancies from eating into your profit margins. If these activities are not your cup of tea, or if you have historically had an unacceptably high vacancy rate, you may want to consider hiring a property management firm.
Can you handle the accounting and record keeping for your property?
From profit and loss statements to tax deductions, this area needs special attention and becomes an increasingly larger burden for larger portfolios. Some owners (especially those with a back ground in finance) will do just fine, others may opt to hire an accountant to help with the book keeping. If you feel like this might be a weak point you might want to consider hiring a property management company.
Are you willing to be on call 27/7/365?
It's important to answer this question honestly, because as a landlord you have an obligation to your tenant. Emergencies don't happen all the time, but when they do, you have to be willing and able to handle them immediately. Can you handle being called at 2 am to fix someone's overflowing toilet?
Are you prepared to deal with late payments and if necessary evict non-paying tenants from the property?
Many new owners are uncomfortable with being the "bad guy", and try to be understanding by making exceptions. The problem is, this only invites further abuse and excuses by tenants. Late payments should be dealt with immediately. Sometimes only a friendly reminder is needed, but in other cases it can be a very confrontational process ending in eviction. It's also important to know the laws governing this process to shield yourself from liability and lawsuits from delinquent tenants.
How well do you understand the laws governing land lording?
Making sure your property is run according to the law is critical both in preventing lawsuits, and in sheltering yourself from liability in the event that you are sued. Whoever is responsible for managing your property, whether yourself or a management company, needs to be familiar with these rules.
From a financial standpoint, is managing your property the best use of your time?
Your decision to hire or not hire a management company should boil down to whether or not it is a good fit with your lifestyle and is financially the best use of your time. Individual investors will have to evaluate the opportunity cost of both options based on their unique circumstances.
Want to learn more about the fees property managers charge for their services? See our article on property management fees.
For more resources about property management and to find local property managers, check out our directory of property management companies.