Are you a real estate investor who is thinking about hiring a property management company?
Yes, property management is an expense that eats into your profits. But property managers become cost effective at some point, and free you up to make even more money.
So, when should you hire a property management company?
What is Property Management?
Property management in its broadest terms is the operation, control, and oversight of real estate that is owned by another individual or entity.
Property management indicates a need for the property to be cared for and monitored, and includes the management of personal property, equipment, tools, and physical capital assets bought and used to build, repair, and maintain aspects of the property. It also involves the processes, system, and labor, such as cleaners and landscapers, needed to maintain and manage the property.
Property management, therefore, is a costly and labor-intensive job, especially for large multi-family properties and/or investors with large real estate portfolios.
What Does a Property Management Company Do?
Property managers act on behalf of the property owner to preserve and maintain the property’s value while generating income.
Large multi-family properties, such as apartments, usually hire a staff to manage the property. And investors with smaller properties typically hire a property management company to whom they pay a percentage of the rent collected for their services.
Property management companies deal directly with property owners and tenants, saving landlords and real estate investors time and money over marketing rentals, collecting rent, handling property maintenance and repair issues, responding to tenant complaints, and pursuing evictions. They understand the technicalities, logistics, and overall business elements of owning and managing rental property.
When Should an Investor Hire a Property Management Company?
Property management companies come with many advantages, but there are also some important things to consider.
#1 You Are Too Busy, or Don’t Have the Desire or Skill Set
If you are not going to hire a company to manage your investment properties, are you going to do it yourself? Do you really want to be tied down and manage the mundane tasks of getting tenants, collecting rent, responding to complaints, evicting tenants, turning the property when tenants vacate, and overseeing repairs at all times of the day and night?
Many investors like to self-manage their investment properties, and it is within their skill set to accomplish the job. But other investors are either too busy with other things in life, or simply don’t have the desire or skill set to do the job.
If you do not have the desire or skill set to self-manage your investment properties, you should hire a property manager. It will save you time and money, and most likely enable you to make more money in the long run.
#2 You Do Not Live Close to Your Investment Property
You should also consider hiring a property management company if you don’t live near your investment property.
Attempting to self-manage investment property long distance is a prescription for disaster. It’s nearly impossible to self-manage properties from far away, and in the end you’ll probably lose money.
Typically, absent property managers can’t effectively deal with the issues that arise with residential rental property. Besides the personal inconvenience for the owner, tenants also become frustrated, which negatively impacts the investment property over time.
#3 You Own Section 8 Rental Property
Low income, Section 8 housing provides a necessary service, with real estate investors providing the housing as part of a government program.
An investor who owns Section 8 property must meet specific criteria and pass stringent inspections related to Section 8 regulations.
It can be difficult for local real estate investors to pass Section 8 inspections at times, and it can be practically impossible for long-distant owners to deal with Section 8 unless they have a good property management company.
Therefore, real estate investors who own Section 8 property should have a property management company experienced in dealing with low income housing, especially if they do not live near the investment property.
Graystone Developments assists real estate investors rehab newly purchased property and get it on the rental market as quickly as possible. And, we assist investors and property management companies turn vacated rental property quickly and efficiently.
To learn more about our services, including our VIP Client Services, Property Maintenance, and Turn Rental Property service, please see our Services page.