When you first start buying investment properties and renting them, it makes sense to do all the work yourself and keep costs low. However, there comes a point where freeing up your time to focus on acquiring more properties and bringing in more money makes more sense. How do you know when the time arrives?
What does a property manager take off your plate, and is it worth the cost? An average property manager interacts with applicants and tenants, helping sort through the screening process. They also collect rent and organize repairs. Here are some of the benefits of hiring a property manager, plus tips on how to know if you’re ready or not.
1. Getting Top Dollar
Are you up-to-date with the rental rates in every area where you own properties? These rates change as neighborhoods are revitalized and become more desirable. A property manager typically manages a large number of homes, so they will know what rentals are going for and help you get the best rate possible.
2. Streamlined Tenant Vetting
Figuring out if someone will be a good tenant or not isn't always easy. People can look good on paper and then refuse to pay rent, tear up your property or otherwise violate the lease. A good property manager thoroughly vets potential tenants. Choosing the right tenant protects your investment and ensures you receive timely payments.
3. The Ability to Live Remotely
Perhaps you want to invest in a city where you don’t live. You shouldn't have to give up your investment property just because you won't be there to handle the day-to-day operations. This is where a property management company comes in handy. They can handle all the daily tasks, and you can simply check on your properties when you're in town.
4. A More Flexible Schedule
There are several scenarios in which having a property manager will help you balance your schedule. Perhaps you work a day job, and landlording is a side gig for you. You may not have time to deal with showing properties and collecting rent checks. Another scenario is on where you landlord full time and have acquired too many homes to handle efficiently on your own. A property manager can help fill in the gaps.
5. Help With Legal Compliance
As a landlord, you need to make sure you comply with all relevant laws and regulations. A property manager is up on local and national laws and can help you figure out how to be compliant with them. On the flip side of the coin, they are also aware of the best leasing agreements and how to tie up loopholes that would allow a tenant to take advantage of you as the landlord.
If these benefits sound good to you, you can start looking into some of the specifics of working with a property manager. These tips will help you make sure hiring a property manager is right for you and help you choose a fitting one.
6. Property Management Fees
Even if you see the benefits of hiring a property manager, you may wonder if you can afford one. Fees vary, but most charge between four and 10 percent of the gross income the property brings in each month. If you own more assets, the prices tend to be on the lower side of the spectrum. So, if your property grosses $1000 per month, expect to pay $100 – although it could be a bit less. If you can afford that payment, then a property manager may be for you.
7. Choosing the Right Manager
Once you've decided to hire a property manager, the next step is to find one that is a good fit for you. What do you hope to gain from the relationship, and does this person offer that to you? You should seek a manager with experience in the field, such as a former real estate agent or someone who is also an investor. Take your time and find the right fit, because a bad property manager is worse than no property manager at all.