Not every rental property owner should hire a property manager. However, for the perfect property and the right landlord, they can be very helpful. The nine questions below can help you figure out if hiring a property manager might be the ideal selection for you.
Is Your Rental Property near Your Home?
The more miles between you and your investment property, the harder it is to manage. If your primary residence is in Illinois and your rental property is in Florida, it will be harder for you to find tenants, to handle tenant complaints, to rapidly respond to emergencies, to take care of maintenance issues, and even to make sure rent is collected in 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.
How Many Units Do You Have?
As the amount 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.
Furthermore, 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.
What Experience Do You Have Managing Property?
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 ideal choice for you. Learning as you go can become very expensive.
For a property investor who is just starting out, employing 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 didn't 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.
It is also important to note that hiring a bad property manager can also ruin your investment. This is why it is so important to do your research and thoroughly screen a property manager if you decide hiring one is ideal for you.
Do You Have the Opportunity to Manage Your Property?
If you have a full-time job while you are investing in property and simply cannot give your property the attention it needs, the achievement of your investment could depend on hiring a good property manager.
Also, 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 searching for other investments, hiring an outside manager may be the perfect move for you.
Are You Prepared to Give Up Control?
Property managers can be in charge of everything from collecting rent to filing taxes for the property. Are you willing to give someone else that much control? While they may have the expertise and a sheet of paper that says they are certified, do they have the same passion for your investment?
Are You Ready to Take on the Liability of a Property Manager?
Just as property managers have the ability to make decisions on your behalf, they can also make mistakes on your behalf, and the mistakes can cost you dearly. Property management contracts often have something called a"hold harmless" clause that is meant to safeguard the manager, except in instances of gross negligence, by placing the obligation on the property owner.
For example, the property manager violates Fair Housing laws when searching for tenants and has a complaint filed against them. As the property owner, despite the fact that you did not commit the violation, you hired the person who did, so you could be liable.
Do You Have a High Vacancy Rate or Problems With Your Cash Flow?
Superior property managers are skilled at finding and screening tenants quickly and will have a network of reliable, cost-effective repairmen to handle crises. Most professional property managers will also understand the landlord-tenant law, thereby reducing the risk of a lawsuit.
What Is Your Tolerance for Dealing With Tenants?
Is the stress of dealing with evictions, complaints and maintenance issues taking a toll on you? Property managers are proficient in handling landlord-tenant conflict. They have an understanding of the landlord-tenant law and can serve as the middle-man, or buffer, for issues. In addition, if the tenant knows they are dealing with a third party, they may act more professional as well.
You do not have to hire a property manager just because you are new to property investing, have many units or are having trouble filling vacancies. Personal experience is often the best teacher and everybody has to start learning somewhere. If you educate yourself about property investing, ask the advice of others and have a strong desire to manage your property well, chances are, you will succeed.