Should I manage my own properties or am I better off with a property manager?
The answer is that it depends on the property and also if you are willing and qualified to even be a property manager yourself.
Benefits of managing your own properties:
Complete Control - As the manager, you have complete say and control over everything. If you have a property manager, conceivably, you still have control as well, but there may be some times where there are some differences of opinion and you might be persuaded to do something a certain way that was different from what you had originally wanted.
Save Money on Management Fees - You will save money on managment fees of about 4% of the gross income if you "do it yourself." This can add up to a substantial savings of money. However, your time is worth money and the amount of hours you put in can add up fast in dealing with rent collections, general maintenance and tenant relations. You might want to do a cost benefit analysis on if your time is better spent in your career or other endeavors. Ask yourself, "Is that time for other things more valuable to me than the time I'm willing to dedicate on property management?"
Benefits of having a property manager oversee your investment properties:
Expertise - Most property managers have had experience with late pay tenants, how much to give off when negotiating rental lease rates, how much build out dollars to allocate on commerical spaces and how to delicately raise rents with out objection. Unless, you as the property owner are a seasoned veteran at this type of stuff, you might end up being better off with a property manager. Even if you shell out 4% of the gross to a manager, you might still might come out ahead because of the prudent and sharp decision making judgement calls that they will make on your behalf that ultimately save you money and prevent lengthy vacancies.
Local Presence - If you are not local to your investment property, it is often very difficult to manage that property from afar. If you employ a leasing manager that is boots on the ground local to your properties, then they potentially can be more effective in managing the property by in person inspections, meetings, collections and more.
Pro-Activeness - Most good property managers want to have a long-term relationship with the owners they represent and are not interested in just a short-term fly by night fling. Because of this, these property managers want to be retained and they know that the only way to do accomplish this is to show good results and success for the represented owner. They typically don't just sign you up and just collect checks and hope for the best. A good property manager will maintain close ties with the tenants as well as making sure the property itself is well run and maintained properly. This pro-activeness and "staying on top of things" will make for a win win good long term relationship. If you have a property manager who is not pro-active, then fire them and replace them with a go getter and someone who represents your property as if it were their own.
Conclusion: Each owner will have to make their own decisions on how to go with each individual property they own. Some properties might make sense to manage yourself and others may not. You also need to self assess and know what your strengths and weaknesses as in if you are even qualified to be a competent property manager and if you even have the wear with all or chops to handle such tasks.
We wish you the best of luck in managing your properties and hope you have very low vacany rates, great annual incomes and extremely high returns on those investments.
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Thanks,
Greg Arbutine
Alan Development Co-Owner
Invest in real estate with along side with us at Alan Development! We are the real estate experts that you can trust.
Great Article on property management!