It is important to realize that each potential investor’s circumstances are different and that many factors can influence whether an investor needs to hire a property management company or not. Consider these questions below to determine whether hiring the management services of a company would be worthwhile for you.
1. What distance do you live from your rental property and how often can you realistically visit the property regularly?
If you are living locally, it will be quite simple for you to visit your property for any required inspections, maintenance issues, or collections. However, if you live further away, you will have increased travel time and costs to maintain your property properly. If you do live far away, it can cause you to be less motivated to constantly monitor your property. As a result, your property could be having repair issues or tenant damages while you are not paying attention. Ideally, you should be making monthly scheduled visits and the occasional middle of the night emergency that requires your immediate attention. Depending on how many properties you are managing and what your other responsibilities are, you have to be realistic about how much time you have to ensure your properties are being well-managed.
2. Are you an individual that gets stressed easily? Are you a tolerant person?
It is important to be honest with yourself about whether you are a tolerant person and assess whether your personality type can handle the various ups and downs that can occur while being a property manager. Even though collecting the rent seems simple, many other tasks can push property owners to their limits. You need to be honestly asking yourself how you would react if the following scenarios occurred:
- Tenants getting into arguments with other tenants or neighbors
- Violent domestic disputes
- The illegal business being conducted on the property
- Late night parties
- Sneaking extra tenants or animals into the home
- Tenants deciding to sue you
- Trashing or destroying the property
- Cause issues with your HOA because of deed restriction violations
- Refuse to pay rent because they know how to maneuver the legal system for the maximum amount of free housing at the owner’s expense
3. Is managing your properties currently overwhelming you?
It is wise to be realistic and assess whether you are currently overwhelmed by the properties that you are managing. Usually, many different tasks are going on at once that require attention and it takes a small amount of time for things to get out of control. By allowing a property manager to take on the burdens you are facing, you will be able to have stable management at your properties with less direct involvement.
4. How many rental properties or units do you currently own?
When you own multiple properties, it becomes easier to forget important tasks. Investors that have large portfolios can positively benefit from getting a property manager. By having a property manager, investors can also consider adding additional properties to their portfolios.
5. What is your level of experience with maintenance and repairs?
Do you have experience with finding cost-effective, ethical, and efficient contractors? Not many property owners do. Having a property management company is a great way to have access to a portfolio of contractors or maintenance providers that you can count on since maintenance issues are a large part of owning and managing a property.
6. Does it take you a long time to get your unit rented?
Finding reliable tenants and marketing efforts take up a substantial amount of time. Having vacancies can also cause your profit margins to go down. If you know that you need assistance to fill your units, then you should consider hiring a property management company.
7. Are you capable of handling the accounting and record-keeping for all of your properties?
Do you have the required expertise to handle profit and loss for tax deductions? Understanding this area is essential, particularly if you have a larger portfolio. If you have a strong background in finance, this could be simple for you. However, if you don’t, hiring a company to manage your properties could help take care of these tasks for you.
8. Are you willing to be constantly accessible to your tenants 24/7/365?
What is important to understand is that your tenants may need you late at night or on holidays. Emergencies happen all the time at properties. Even though these emergencies do not happen all the time, they still need to be dealt with. If you know that you will not always be able to respond to these emergencies, then it is best to hire a property management company.
9. Are you willing and able to confront tenants about late payments or evict them if necessary, from the property?
Many inexperienced owners do not like having difficult conversations with tenants. Tenants tend to take advantage of this. Late payments must be dealt with immediately and can sometimes result in evictions. To run a successful rental business, you have to be strict on payment rules and evict tenants that are not complying with your policies. If you feel that you are not able to have these kinds of conversations with tenants, then you should hire a property management company.
10. How well versed are you in laws related to landlord and tenant relationships?
It is imperative to make sure your property is complying with local laws so that you can shield your liability in lawsuits. You should also have a basic familiarity with contracts to know which important clauses need to be included for your protection. If you are not familiar with contracts, it will be best for you to bring in a professional that has the required experience. Having a property management company can help you to manage all formal contracts while simultaneously ensuring your tenants comply with those contracts.
11. Is managing your property taking away time from your other profitable business ventures?
It is a common misconception that managing real estate properties is only a matter of collecting rent each month. The reality is that owning properties takes a great deal of time and effort to manage. If you have a larger portfolio, you have to ask yourself whether you realistically have the required time to manage your properties well and also whether you can travel long distances if required. If the answer is no, then you need to assess whether it would be worth the investment to hire a property management company to manage your properties. Many times, property management companies take a percentage of your monthly rent and if you have room in your margins, it is a great way to be able to take on more investment properties and make larger returns in the future.