As a landlord or property owner, having total control over property management seems ideal. And in many cases, managing your own property is worth the time and extra effort. Not having to pay management fees means extra savings, and handling your rentals will be a breeze as long as you stay organized and integrate your responsibilities into your schedule.
Those are all advantages, sure, but there are also downsides in managing your own property that are legitimate causes for hiring a property manager rather than becoming one. In this resource guide, we’ll discuss why you might not want to manage your own property and what considerations to keep in mind when hiring a property manager.
Below is a list of short topics we will cover in this guide. Go ahead and click on any of these links, and you’ll be taken to that specific section.
- Tackling Task Management
- Timing Trade-offs
- Figuring Finances
- A Few Skills Property Managers Should Have
- Where to Find Property Managers
- Modern-day Property Management
Tackling Task Management
Managing your own property comes at some personal cost to you. But how can you decide if that cost is worth the consequent reward? One thing to consider is the volume of your business and your goals for growth. For example, hiring a property manager to assist you is likely necessary if you own multiple or large properties (apartment complex owners, college student housing owners, etc.). That can improve efficiency and lead to a higher return on your investment. The same can be said if you own properties in other states or regions, especially those with highly desirable traffic, as these factors encumber your ability to manage effectively.
If an extensive portfolio is your goal and part of how you want to engage in your business, hiring a property manager grants you more time to devote to expanding your portfolio and directing your experience where you want it to go. Moreover, some property owners intend their property to be a more passive form of income accumulation than having to manage that property actively. Therefore, hiring a property manager may be ideal if you want your property ownership to be more passive—especially if you supplement your investments, debt improvement, and credit building with a day job.
It takes a special kind of person to manage properties. And while that person might be you, it’s crucial to fully understand the responsibilities you’re agreeing to shoulder by managing your own property.
Real estate laws can differ across states, counties, and cities, so you need to be sure that you are updated on local ordinances. Though some concepts are shared from one entity to another, you should still be thoroughly aware of the laws where your tenants reside. A good property manager can assist you in keeping abreast of these laws and be a resource to you and your residents. A good property manager is also likely to have other contacts in the industry and can help steer you away from legal issues before they happen. Don’t be pressured, however, as you can always hire a real estate lawyer when the need arises.
But being a property manager involves more than legal awareness. Are you prepared to drop what you are doing to handle inconvenient emergencies for your residents? While the broken toilet at 3 am is a bit of a myth among landlords, the insinuation remains that managing your property means that you are willing to anticipate and act upon the needs of your residents whenever they need you. It is also true that these same inconveniences can crop up even if you hire a property manager, but only for major issues. A good property manager will be worth their weight in gold for taking care of these inconveniences, saving you time, and keeping property ownership a more passive means of income. Of course, that is unless you love tinkering about when something needs fixing!
Another significant property management responsibility that needs thorough discussion is screening tenants and collecting rent. If you are lucky enough to have residents that pay their monthly rent without prompting and are responsible tenants, property management is easy and can even be exciting! But in reality, interviewing tenants, screening potential residents, collecting rent payments, and taking constant calls are more manageable when you have a good property manager to handle these tasks for you. Especially if you live further from your property or have limited time, it simply may not be feasible for you to be on call and handle bad tenant situations without some assistance.
Up to this point, the elements discussed have revolved around your time and commitment. But we can’t neglect the crucial importance of your financial situation. First and foremost, the primary consideration is if you can afford the luxury of hiring a property manager. It is an investment that requires careful calculation and intentionality. Managing the property yourself costs you time and limits your options to expand your portfolio, but you can save much and forge more personal relationships with your clients. Is hiring a property manager worth losing both?
If you already successfully manage a few small properties on your own, then now is not the time to invest in a manager unless your finances permit and your goals shift you away from being actively involved. On the other hand, if you’re losing money because of an inability to manage your property efficiently, it’s time to restructure your management. Of course, how you operate your business is ultimately up to you. Still, outsourcing management needs to be a well-informed decision that is only worth the expense if it serves your business goals.
Here are some red flags that indicate it’s time to restructure your management:
- A large number of vacancies in your properties
- Frequent or high turnover
- Low rates of lease renewal
- Low customer satisfaction ratings
All of these indicate poor performance and that your business is missing out on significant potential growth. If that is the case, hiring someone new can offer an outside or even more informed perspective to help you and your business flourish.
After you’ve thought things over and arrived at the decision to engage the services of a property management expert, here are some tips that can help you look for the right one.
A Few Skills Property Managers Should Have
Let’s face it—the term “property management expert” is a bit vague since it does not come with the exact qualifications. For example, one person may consider a property manager an expert just because they have 2-3 years of experience. However, others believe a much more extensive time frame, such as 10-15 years, is necessary.
Either way, there are four key components that every great property manager should be able to do well.
1. Property managers should be great with people.
Remember the TV show “The Dog Whisperer?” The idea was that this guy would help even the wildest, most disobedient dogs to become great pets. Even though you can’t quite do that with people, a good property manager must have excellent people skills. When a tenant has an issue, they’re quick to find a solution that makes most (if not all) parties happy.
Got a tenant who isn’t paying their rent on time? A good property manager should know how to handle these situations as well. Specific scenarios may require a heavy hand, and a good property manager can diplomatically address these situations.
At the end of the day, your tenants are the ones that make your investment profitable. You’re losing money if they aren’t happy, and turnover is high because you have a lousy property management team.
2. Property managers should know how to find tenants fast.
Depending on the location and current market trends, finding tenants can be one of the most tedious parts of the industry. In today’s market, where apartments and condos are sprouting left and right, you need someone excellent at marketing. Otherwise, all the best prospects may end up with the competition.
When interviewing property managers, you need to know how they’ll market your property, who they’re going to sell to, how long it usually takes them to fill a vacant home, etc. Every piece of information matters.
If they get a tenant in tomorrow but are the type to trash your place, you lose. If they find a fantastic tenant, but it takes them six months, you lose as well. If they have a well-thought-out marketing plan, it can cost you a lot of extra fees, and your ROI will suffer in the short run (but can bring in long-term gains).
3. Property managers should keep up with local trends.
Does your property manager know your area’s current rental rates per square foot? How about what your target market is looking for in a rental home? How are they staying competitive in an industry that fluctuates with rising interest rates?
If you’re paying someone to manage your property, you want them to know more about the industry than you do. So even if you spend a decent amount of time staying up to date, it’s their full-time job to stay abreast with what the big players are doing, what new laws are affecting real estate and rentals, etc.
4. Property managers should have an extensive network.
If something goes wrong on your property, the property manager probably has limited discretion to fix it, right? It depends on your agreement, but there is often a dollar threshold where they will have the repair done without first getting your permission.
Because they’re constantly managing these maintenance projects, property managers should have a strong network of people they trust in multiple industries. Lawyers, plumbers, electricians, landscapers, HVAC, driveway – you name it. They should know exactly who to call to get fast, excellent service.
For instance, it always makes sense to hire a certified plumber or electrician, so it’s easier and more reassuring for any landlord if their property manager already has someone in their back pocket.
There is no right or wrong answer regarding how much experience people need to become property management experts. However, any real estate professional you hire must know how to do their job well and have excellent references and an impressive track record.
Let us now move on to finding the ideal property management expert for your rental. For most new landlords, figuring out how and where to find a property manager can get overwhelming. Even though there are many good ones out there, some may need more experience or personality to build good landlord-tenant relationships.
Also, you may need help figuring out where to start looking for one. But no worries—we’re here to assist you. After reading this article, you’ll be better equipped and know where to find the best property managers in town.
Where to Find a Property Manager – Your Best Options
When you start your search for property management experts, you’ll quickly learn that you essentially have just three different options:
- The Internet
- Phone books
We’ve listed these options from the best to the least desirable. So let’s start by discussing why getting referrals is the best way to go.
OPTION #1: Property Management Referrals
When you’re thinking of a good movie to watch or a restaurant to try, what’s the first thing you do? Probably ask friends or family with similar interests what they would recommend, right?
Throughout history, referrals have been the method we’ve relied upon the most. When talking to someone we like and trust, we know there’s a good chance we’ll like whatever they recommend. As a result, this is the most common (and best) way to go, whether you’re looking for articles of clothing or a roofing contractor.
Keep in mind that it works a little differently with property managers, though. Knowing how to find a property manager through referrals requires knowing people that have actually used them in the past, right? So that means you need to be talking to the landlords themselves. If your friend or a family member has never rented out houses or apartments, their referrals just won’t be as helpful. No matter how much “they’ve heard” about a particular property manager, it just isn’t the same as actually having worked with them.
If you don’t know any landlords, consider joining a local real estate investing club. This will help you get great referrals and give you access to potential deals, business partners, or mentors.
Something else to keep in mind— be extra cautious if the landlord you’re talking to is also friends with or related to the property manager they recommend. That connection may create a bias and hinder their ability to tell whether hiring the property manager is worth the investment!
OPTION #2: The Internet
The Internet has made almost everything much, much easier for us. From getting the news to finding a new furniture set for the living room, just a few clicks can get you there.
I probably don’t have to explain why this can be so useful for finding a property manager, either. But knowing how to find one through the Internet is a little different from finding other service providers. That’s because services such as Angie’s List don’t have nearly as many customer reviews for property managers as they do for plumbers, carpenters, or electricians.
Instead, you’ll have to rely on other review systems such as Google or maybe Yelp. They still won’t have tons of reviews, but they’ll have enough to get you started.
Once you do find a few that look good, it’s time to do a quick phone interview. Again, make sure you have a good list of questions to ask a property manager beforehand. It’s best to list them so you can zero in on what matters most.
While doing the interview, pay attention to the attitude and disposition of the person on the other end of the line. Do they sound friendly and knowledgeable? Are they quick and eager to respond to your queries? Or do they come across as someone you (or your tenants) may not feel comfortable working with for years to come?
OPTION #3: The Phone Book
You probably won’t have to pull out the old phone book, but it’s still an option. The only problem is that you’ll have to look up property managers based on their names or how much they paid for in ads in the Yellow Pages, and not based on how good a service they can provide. You cannot also see what other customers think about them, which is why the Internet is generally a much better and more reliable tool.
Wrapping it up
Keep in mind that effective property management can be challenging while you’re doing this search. While there are many people in the industry, only a few are top-notch. Your task as a landlord is to continually update your skills in finding a property manager and pay close attention to the job they do without you needing to micromanage.
Modern-day Property Management
Thanks to state-of-the-art property management software, managing a rental nowadays isn’t as daunting as it used to be. While everyone may have their individual preferences when running a business, we strongly encourage hiring a property management expert who automates the entire rental process over one who does things manually.
With the benefit of modern technology, tenants can access their lease provisions digitally, pay their rent, or make non-emergency maintenance requests through an online portal. On the other hand, property managers can keep all their lease agreements and accounting files in one place. Furthermore, they can conduct tenant background checks and communicate with their renters and service providers from the same workspace.
We hope this comprehensive guide to hiring the right property manager has helped you with what you need to consider before deciding whether to manage your rental or entrust the job to a property management expert. Either way, state-of-the-art tools such as property management software can streamline the whole process for you.