Should You Hire a Property Manager?

By
Services for Real Estate Pros with Manage My Property

While every investors situation is different, there are certain scenarios and factors that typically pre-dispose owners one way or the other. The following questions are designed to help you determine if you should consider hiring a property manager.Question mark

1. How far do you live from your rental property and how frequently can you visit the property on a regular basis?

If you are close you may be able to make the regular visits required for maintenance, inspections, collections, etc., otherwise the further you live the higher your travel time and expenses will be. The larger the distance the more temptation there is to not keep a close eye on things, and that can be a recipe for disaster. You should plan making monthly scheduled visits and there is always the potential for a middle of the night emergency call that requires your immediate attention. In the long run, is this feasible for you?

2. How do you deal with stress? Do you consider yourself to be a tolerant person?

This is a tough one. We all like to think of ourselves as level-headed and even-keeled, but at the end of the day it takes a special kind of person to deal with the ups and downs of property management. Behind the seemingly simple task of collecting rent every month lie a number of unpredictable problems can push people to their limits. 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?

3. Are you currently overwhelmed with your property(s)?

Managing rental properties can become quickly overwhelming, even for experienced investors. There is always something going on that requires attention & it takes very little time for things to get out of hand. Hiring a property manager can provide an opportunity to regain control and restore stability to both your properties and possibly life in general.

4. How many rental properties or units do you have?

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. Size can also constrain investors' ability to consider purchasing new properties if they're already maxed out managing their current holdings.

5. How much experience do you have with maintenance and repairs?

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, over charge etc. 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. How quickly are you able to get your unit rented?

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.

7. Are you capable of handling 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.

8. Are you willing to be on call 24/7/365?

Its 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?

9. Are you willing to confront tenants about late payments and if need be evict them from the property?

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. Unlike running a charity, running a successful rental business means enforcing the rules even it means evicting a single mother who lost her job and won’t be able to pay rent anytime soon.

10. How well do you understand the laws governing land lording?

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.

11. From a financial standpoint, is managing your property the best use of your time?

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.  Individual investors will have to assess the opportunity cost of both options based on their unique circumstances.

Next: Property Management Services

Photo Credit, Marco Bellucci

Originally posted on managemyproperty.com under, "11 Questions for Determining if You Need a Property Management Firm"

Comments (12)

John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

Great Questions and very well thought out answers.

Thank you for this resource

John

Oct 24, 2009 07:34 PM
Nancy Deichman
Re/Max Premier Realty, Inc. - Ocala, FL
CDPE

THank you for the post. I have emailed this to our property manager to use with prospective clients.

It will help her in her campaign.

Oct 24, 2009 10:19 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

All rental property owners need professional property managers * they just don't know it. 

Renting out an investment home is not like giving $5,000 to e-TRADE. If your e-TRADE purchase looses money, that is all you have lost.

In landlording, you can loose much more for lack of knowledge, experience or professional guidance.

Your points are ALL excellent and we all need to continue to educate the public on the values of our profession. 

Oct 24, 2009 11:25 PM
Dave Humphrey, Broker
RE/MAX Marketplace - Celebration, FL
Real Estate Advice You Can TRUST!

Whether they hire an outside firm to do the functions, each investment property requires management. It will be done by someone or the value will go down before the investor's eyes. The choice is do it yourself (and really do it) or hire it done.

Oct 25, 2009 12:23 AM
Diane Rice
Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - Lansing, IL
SFR, SRES, CNC

EXCELLENT EXCELLENT EXCELLENT!!!!  KEEP 'EM COMING!!!!!!!!!!

Oct 25, 2009 02:34 AM
Diane Rice
Rice Prprty Mgmnt & Rlty, LLC, South Holland, IL - Lansing, IL
SFR, SRES, CNC

This should not just be for MEMBERS ONLY.... we need this information out there.... I'd like to RE-BLOG it for my Illinois audience! (if you don't mind)

Oct 25, 2009 02:36 AM
Leslie Prest
Leslie Prest, Prest Realty, Sales and Rentals in Payson, AZ - Payson, AZ
Owner, Assoc. Broker, Prest Realty, Payson,

Very good points. Many Owners tell us they coe to us because they are too soft-hearted to deal effectively with tenants. I would say that's your #2 and #9.

Oct 25, 2009 04:53 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

When take over self-managed properties, I feel comfortable advising clients I will cover my mgmt costs within 6 months....decrease expenses, increase income!!!

Oct 25, 2009 06:02 AM
Eric Boyd
Red Rooster Property Management, 904-469-6335 - Jacksonville, FL
FL Lic Real Estate Broker / Property Manager

I'd also like to "re-blog" this.  Do you mind?  Great blog post!!

Oct 26, 2009 02:58 PM
Jordan Muela
Manage My Property - Austin, TX
Manage My Property

Thanks for the great feedback all, sorry for the delay response. Please feel free to reblog anything I post.

The positive feedback I have seen thus far has prompted me to go ahead and try out the RainMaker program. We shall see if its worth the monthly fee, I am hopeful.

Oct 27, 2009 10:53 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Jordan * be selective on what you post to your outside blog AND make sure you PROMOTE your blog - I have my blog on my website, business cards AND under the return address on my correspondence envelopes UNDER my website and return address!!!

Nov 05, 2009 10:57 PM
Florida Management and Consulting Group Inc.
Florida Management and Consulting Group, Inc. - Coral Springs, FL
Real Estate Brokerage and Property Managers

Great points that have been made before but it's always good to be reminded!

Thanks for the contribution.

Jan 17, 2010 05:59 AM