Whether hiring a rental property manager or managing an asset alone, only the investor will know what’s best for the property. It’s important to take all the necessary steps in evaluating each strategy to make the best decision for long-term success. Regardless of which side you fall on in the property manager vs. landlord debate, make sure your decision works best for your investing strategy and your long-term financial goals. Better yet, weigh the pros of each method below to make a more informed decision.
Benefits Of Self-Managing Rental Properties
You are your investment property’s gatekeeper and have responsibilities to both your tenants and your rental business. Tenants have certain expectations, and as a landlord, it’s your job to ensure those expectations are met. As the head of your business, you have a duty to make sure operations run smoothly, and your mortgage gets paid. The duties and responsibilities of a landlord include, but aren’t limited to:
Setting rental rates
Collecting rent
Maintaining clean environment
Responding to repair request promptly
Marketing/advertising
Finding new tenants
To be a successful landlord, it requires a combination of patience, knowledge and interpersonal skills. Not everyone is cut out to do it.
“Being a landlord is sort of like being a teacher. Most students like their teachers until they get their first bad grade, or until they get yelled at for the first time. It’s important to remember that you are running a business, not a popularity contest.”
At the end of the day, your job as a property owner is to protect your asset to get the most out of it as possible.
Becoming a landlord has its share of perks, which include:
Income: Renting will generate a monthly check to cover your mortgage and depending on current renting rates, you could also pocket a large profit each month.
Tax Deductions: As an investor’s best friend, tax deductions will come in handy down the road. These deductions include costs associated with repainting, replacing damaged furniture, replacing water pipes and disposal duct, buildings and contents insurance, accounting processes, cleaning and gardening, professional services, and wear and tear depreciation (upwards of 10 percent of the gross rental income).
Less Costs: Becoming the landlord will save you somewhere between eight and 10 percent in property management costs. When it comes down to your bottom line, every penny counts.
Benefits Of Hiring A Rental Property Manager
Sometimes in business, it’s just better to pay a professional to do it. For investors, a property management company can add significant value to your investment as they deal directly with prospects and tenants, helping to save you immense amounts of time and stress. They also bring a wealth of know-how and experience to your property, giving you peace of mind that your business is running like a well-oiled machine. Duties and responsibilities of a property management company include, but are limited to:
Setting rental rates
Collecting rent
Assigning maintenance
Marketing/advertising
Managing relationships
Finding new tenants
For investors, adding a property management firm can be very advantageous, especially for those with multiple properties or with limited time. However, it comes at a cost ranging from eight to ten percent of the monthly income or a flat annual fee. Here are a few of the ways property management companies earn their keep:
Higher Quality Tenants: Management companies employ rigorous screening processes to pinpoint reliable tenants and shield your investment from the bad ones. These professionals have experience analyzing information about candidates to ensure your property has the best tenants possible.
Shorter Vacancy Cycles: A good property management company will shorten the amount of time your property sits vacant, working around the clock to improve and prepare it for rent. Experienced companies will have a time-test tenant retention policy to keep clients happy and situated for the long term.
Better Processes: A property management company can streamline and improve the processes of your rental property, especially when it comes to collecting rent. As the difference between success and failure, collecting rent on time is the only way to maintain consistent cash flow, and a property management firm can significantly upgrade this.
Fewer Legal Problems: A good property manager has the knowledge of the latest laws as well as experience to ensure you’re not leaving yourself vulnerable to lawsuits. A management company can help investors avoid costly and time-consuming legal problems with a stringent screening process.
Less Responsibility: Probably the biggest benefit of hiring a management company is less responsibility. Along with less stress, investors will have more time and freedom to invest in other aspects of their business or future endeavors.
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