Congratulations on buying a rental property! Now, what next? Should you self-manage it, or should you hire a professional property manager? This is a common question for landlords just starting out.
Now, each option comes with its own unique set of merits and demerits. Knowing what each option entails is the best way to make the right decision.
On one hand, managing an investment property on your own can be lucrative. After all, you’ll be cutting down on the expenses of hiring a professional. That said, managing a rental property does require certain skills and experience which not everyone has.
On the other hand, hiring a professional can make all the difference. A professional property manager will usually have the experience, knowledge, and resources to run a successful rental investment business. And besides helping you maximize your income, it can also save you time, energy, and stress.
Who is a property manager?
A property manager is an individual who can be hired to handle the day-to-day operations of a rental property. A property manager oversees a myriad of tasks, such as follows.
- Marketing and advertising a vacant unit. Property managers can help advertise your property on your behalf. They will advise you on how to stage it, take quality photos, create a rental ad, and then circulate it to reach prospective tenants.
- Choosing prospective tenants. After a successful marketing process, prospective tenants will naturally reach out. A good property manager will help you choose the right tenant from the prospective tenant pool.
- Collecting rent when it is due. Collecting rent can be a tumultuous process for landlords, especially if you’re just starting out. A good property manager will know how to handle difficult situations, such as when a tenant is late or has missed a rent payment.
- Handling maintenance requests. As a self-manager, providing round-the-clock maintenance responses can prove to be a daunting thing to do. A good property management company, however, will have established systems to handle maintenance requests from tenants 24 hours a day, 7 days a week.
- Handling tenant issues. Just like maintenance, your tenant will encounter issues during the tenancy. They may need help, for instance, with a neighbor who plays loud music, or a neighbor’s pet that keeps making a mess on their property. It’ll be your duty to act professionally and offer effective solutions.
- Evicting a problem tenant. As a self-manager you may not have the experience or be knowledgeable on the proper tenant eviction process. A good property manager will know what it takes to remove a tenant legally.
- Crafting a comprehensive lease agreement. This is another area where you may need professional help. A good property manager will help you create a lease that encompasses all important terms and policies.
What is the cost of hiring a property manager?
This is another common question among first-time rental property owners. The cost of hiring a property manager depends on the specific services you are looking to get. On average, however, expect to pay anywhere between 8 and 12%.
With the percentage-based model, you pay the property manager a percentage of the gross monthly income you get. For instance, if the monthly rent is, say, $1,500, then you’d have to pay property management fees of between $120 and $180 a month.
The percentage-based model isn’t the only payment model property managers use. Others use a flat rate model. Here, the property manager charges a flat rate regardless of whether you’re making an income or not.
Should you hire a property manager to manage your rental property?
Running a successful rental property not only requires time and patience, but also experience, resources, and industry knowledge. And when you’re starting out, you may not possess all these qualities.
And in such a scenario, hiring a reputable property management company may be the ideal thing to do. A good property manager can help you to do the following.
- Find a tenant when you’re first renting out your property or after a tenant has moved out.
- Choose the right tenant that will help you meet your investment goals.
- Show the property on your behalf and answer questions that prospects may have.
- Craft a solid lease agreement that highlights all important terms and policies.
- Respond to tenants’ maintenance requests.
- Collect rent on your behalf and take care of any issues that may arise.
- Inspect the property from time to time to ensure it’s in great shape and to check for lease adherence by the tenant.
- Determine the right rental price for an optimum return on investment.
- Keep up with both local and state laws that affect landlords and tenants.
How do you know whether to hire a property manager or to self-manage your property?
The following are some questions you may want to ask yourself to ascertain whether you’re suitable or not.
- Will you be able to dedicate 100% of your time to managing your rental property?
- Do you have the right contacts to call when maintenance issues arise?
- Do you know how to screen tenants?
- Can you rent out your property quickly when it becomes vacant?
- Can you determine the right rental price?
If you answered “no” to any of these questions, hiring a professional may be your best option.
Hiring a professional and experienced property management company can help you meet and even exceed your investment goals. If you need expert help in managing your property, McCaw Property Management can help. We’re a trusted property management company in the Dallas/Fort Worth area. Get in touch to learn more!