If you’ve never owned property, it can be a bit of a tantalizing idea since you’re actually profiting in many cases. But, what’s not factored in the landlord duties that come with this. It’s not as easy as you think, and it’s like shooting fish within a barrel, especially since it involves looking for tenants, chasing the rental payments that come with this, and addressing maintenance that comes with this.
If you are an investor or a buyer, you can either self-manage or appoint a third-party to help with this. So which choice should you make? The answer is that it really all depends on the investment circumstances, and here, I’ll outline the advantages and disadvantages of each.
For self-management, the best thing is that you save on the property management fees, and usually, since you’re the owner, you’ll manage it better than everyone. Self-managing this also gives you a better say on the tenants that you select. You can evaluate the application forms and speak with the renters yourself. Since it is yours too, you can go to extra lengths to ensure that it’s tenanted, and usually, if you have property managers, yours isn’t the top priority.
With property management, while it may not be advisable due to the extra costs, it can minimize the stress that you have and make your life easier. They also understand the ins and outs of the market, so they can help you find the optimal ROI for you, along with any market conditions that must be considered.
Usually, these property managers handle the tenants better without any issues on your end, and they handle property damage. They also handle multiple properties, and usually, they have better deals on maintenance services, so you eliminate the need to outsource the labor every single time. Usually, the good maintenance management bodes well for your bottom line.
There are cons to self-management though, and that’s what it isn’t easy, and it requires a lot of commitment on your part in order to ensure that everything is up to snuff, and you’re chasing down payments, ensuring that the tenants are taken care of, and inspections are done. You also may not have the up-to-date information that they have, and it may prevent you from making a correct decision and can involve legal implications. Property managers also have access to a wealth of other resources that can help with marketing the property, and it can ultimately impact your returns if you don’t have this.
Now, with property management, no matter how professional, there is that chance that the property manager may not manage it the way that you want it to be managed since they’re overseeing multiple properties. There is also the fact that you could end up with someone completely incompetent, or someone who is dishonest may overcharge for maintenance, and someone who may be trying to line their own pockets by taking money away.
There is also the question of hiring someone since it does take a cut from your income, and usually, it’s about 5-10% of the fees that you typically charge. Some also may charge a placement fee for a new tenant that’s brought in, and sometimes, his can equal a month’s rent. There is also the fact that other additional costs for maintenance must also be levied, so you need to make sure that you and the property management leader are on the same page before you get into an agreement with them.
At the end of it, you should really just measure all of the different options, choose for yourself what works best for you, and ultimately choose the option that you feel is right. Whether it be having someone that works for you, or handling it yourself, this was to show you all of the different pros and cons that come with this, and anything that you need to think about. You as a point breeze Real EsTAte investor do need to look at all of these different concerns and questions, and from there, choose the option that works best for you, and the one that you can truly benefit from no matter what happens.