If you are a landlord or you’re considering being buying rental properties, you have no doubt asked yourself and many others this question: Should I hire a property manager? Are they really worth the investment? Here are five things to consider that we hope will help you make the decision one way or the other.
What type of landlord do you want to be?
Are you looking to make being a landlord a career or do you want passive income (income you don’t have to invest a lot of time to earn)? If you are interested in making being a landlord a career and are willing to learn about the laws and invest some sweat equity, you might want to go it alone. If you want to have more passive income and perhaps have a different full-time job, it can be worth it to pay a percentage of your income to have someone else invest the time and know-how into earning you money.
How many properties do you have or do you want to have?
Most of the time a landlord can personally handle 1 or 2 units, sometimes even 3-4. But the more units you add, the more time you must invest in managing all of the tasks and duties of a landlord. Once you cross over into 5-10+ units, you’re usually looking at quite a lot of tenants and paperwork and maintenance to manage. It can definitely behoove you to look at hiring a property manager.
How far away is the property?
Sometimes you can get a house right across the street or buy a duplex and rent out one side. This typically makes management much easier. However, if you live more than 50 miles from the property you own, then it can be worth it to hire a local property manager. A local company will have more familiarity with the area, which usually makes it easier for them to find new tenants as well as respond to maintenance and emergency calls faster.
Can you afford a property manager?
Typically a property management company will take a monthly cut of between 4-10% of the rental income to cover their fees. Most professional real estate investors will consider the property management fees when setting their rental prices. If they cannot make enough to cover the property management fees and still have positive cash flow, then they do not invest in the property.
Do you have the time, knowledge, and skills?
If you are just getting into being a landlord and you want to invest in the adventure that is renting property, then there are resources out there to teach you how to be a DIY landlord. However, there are many people who want to be investors only. They do not want to deal with collecting rent, evictions, keeping all of the exacting paperwork, or maintenance issues. If you fall into the latter category, then it is worth talking to a property management company.
Good property management companies take a lot of the angst out of being a landlord and allow you to receive the benefits of your investment. If you decide a property management company is worth a look, then make sure you do due diligence and find one that is going to represent you well and check out our blog on the Top 5 Questions to Ask When Hiring a Property Management Company.