The Pros and Cons of Hiring a Property Manager
If you own a rental property, you may be inclined to hire someone to oversee the property’s management. However, you may also be reluctant to trust a third party to handle the care and management of your real estate investment. If you’re considering hiring a property management professional, it’s best to weigh the pros and cons and see how each aspect will affect your situation.
Hiring a Property Manager – The Pros
The chief benefit of hiring a professional to manage your rental property is the reduced responsibility. Even though you as the owner of the property will still be held accountable for things like paying the mortgage, keeping up with property taxes, paying insurance premiums and so forth, a great deal of the legal work and logistics can be handled by a property management company.
Property management companies can handle tenant screening, which can be a process in itself. Going through applications, conducting background checks, verifying references and collecting deposits can all be handled by a property manager.
Property management companies can also handle the financial aspect of your rental property. No, they won’t pay your bills for you per se, but they can take care of collecting rent, sending out late payment notices and will alert you of any problems.
Lastly, a major benefit of working with a third party property management company is reduced interaction with tenants. If you’re the type who would prefer to let someone else handle taking calls, maintenance requests and the like, then hiring a property manager is a no-brainer. Just remember, even though your property management team will field correspondence from tenants, it will still be on you to take the appropriate action.
Hiring a Property Manager – The Cons
The biggest concern for most property owners when it comes to hiring a property management company is the cost. Working with a skilled and experienced property management group isn’t cheap. In most cases, property management companies charge a fee based on the percentage of the gross rent they collect from your tenants. Others will simply charge a base rate. Some may charge both. This can reduce an owner’s overall investment return.
The second concern many property owners have is whether or not they feel a property management company will oversee their property’s needs in the same way they would if they were going the do-it-yourself route. Because property managers are not living in the home and are not as financially invested in it, they may not be as quick to address issues that the actual owner would consider important. This is why it’s very important to interview several property management companies before hiring one – this gives owners a chance to get a feel for the company, ask questions and familiarize themselves with the company’s policies on specific issues.
If you find a company with a good background, solid references, and a team of courteous professionals, then you can likely rest easy knowing that your investment will be handled with respect, care and responsibility. However, there are still some property owners who prefer to be as involved as possible and maintain more control. It all comes down to whether you want to save money and are up for the extra responsibility, or you’d prefer to trust (and pay) someone else to handle the work.
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