Purchasing a property and converting it into a rental can be the start of fulfilling a dream. Entering the rental property business allows you to generate passive income. This is one of the main reasons people are always seeking to invest in real estate. If you’ve taken that first move, then congratulations!
The next decision you need to make is evaluating whether to self-manage your rental property or hire an experienced property management company. Are you a new landlord? Are you confident in handling the marketing, tenant screening, rent collection and property maintenance & repair of your new rental space?
This decision can’t be made in an instant. It’s always best to review the pros and cons of each side.
Here are things you need to consider when it comes to self-managing your rental unit:
If you handle all the property management on your own, you can save a lot. All your income can be directed towards paying off your mortgage, insurance or reinvestment.
You can implement all policies that you want and focus on your rental. All decision-making for your rental operation will rest on you. You’re able to drive your goals forward since you’re managing your own business.
You gain more management skills when you manage a rental by yourself. This leads to improvement in overseeing your rental business by better learning the ropes.
You’ll be exposed to more situations, making you more confident in handling them in the future.
You can cultivate a solid relationship with your renters since you’re visible as a landlord. The result is becoming more attuned to your tenant’s needs. This can encourage tenants to stay long-term.
When marketing your rental space, your reach is not as vast compared to a property manager who has several professional affiliations. You’re left with your small set of networks, so it may take more time to attract prospects. Furthermore, it takes more time for you to review rental applications. Your tools are limited and you can’t evaluate certain pieces of information quickly.
Managing a rental requires a huge time investment. You’ll be doing regular preventive maintenance, handling complaints, sending notices to tenants and accomplishing all the everyday tasks on your own. It’s expected that you’re always available if there are tenant emergencies. You can’t go on spontaneous trips, meaning sacrifices on your personal time will be made.
As a self-managing landlord, new updates might not easily reach you. Some new local laws in the property management industry may not immediately be available to you. You may need to work more to strengthen your knowledge and avoid legal fiascos.
If you’re a new landlord, you’ll struggle to balance your responsibilities and adopt the best management practices. It takes time to learn to manage a rental property well.
Unintentional errors may happen and you might even get penalized for failing to adhere to the law. This might result in tenant turnovers.
Here are things you need to consider when it comes to hiring a property management company for your rental unit:
The extensive experience, knowledge and exposure to the industry make property management companies reliable. You won’t have to worry about economic downturns or tenants moving out. Your rental property will rest on capable hands.
Objectivity is exercised more when dealing with renters. Since the company is hired, they remain professional when facing tenants and implementing policies. The property management firm also has advanced systems and tools that make their operation efficient.
As a business, the property management firm is composed of a team of experts equipped with excellent skills. They’re typically licensed and have long-term management experience. On your own, you’ll still need to do skills expansion and study more of the legal responsibilities of a landlord.
Turning over the full workload of managing a rental property to a property management company is less stressful. Evictions, complaints, conflicts and property repairs can be a headache to deal with on your own. It’s best to let a professional team tackle property maintenance issues, property vacancies, breaking of leases and refunding of security deposits among other duties.
You need to budget for management fees. However, this depends on the payment structure.
Some companies won’t accept payments if your rental remains vacant, making it a reasonable risk. Some also have several guarantees in place to eliminate locking up landlords in yearly contracts if they’re not satisfied.
Some property management firms can’t be trusted. They don’t include the hidden costs in their advertisements. Some may charge extra for some services they tagged as an inclusion and you will only know of it later on. They might also collect other fees from the renters to increase profits.
If a property management company is handling a lot of properties then your rental can be lost in the shuffle of management duties. This is a risk on the part of the property owner. However, if the company has a good number of managers to oversee the rental properties then it can give you peace of mind.
A ton of property management companies exist out there with different objectives and service quality. Some merely want to profit while some are trustworthy and reputable. It requires one to research well to choose the best. Read reviews and interview some of their customers to assure yourself that you’re paying your money’s worth.
Even if trusting a property management team remains to be seen until you work with them, the benefits of hiring one is still no match in comparison to self-managing. With us at MN Property Nerds, you can be sure that your property is in good hands. We only service our clients in a professional and supportive manner, ensuring that your rental gives you increased returns. Contact us today to find out more.