Property investors and small business owners are alike in the sense that they believe they can manage everything on their own.
Sure, it’s possible, but is it the best use of time? What are the pros and cons of self-managing? What other projects or priorities can you be focusing on instead? Here are some key questions to consider before deciding on a course for property management.
What goes into managing properties?
Property management is a lot more work than many believe, especially for a first-time investor. And for investors who are looking to grow their portfolios – is the amount of work required to self-manage sustainable at scale?
Here's a list of tasks when managing rental properties:
Vacancies – It can take days or even weeks to fill units between resident turnover or when acquiring new properties. Properties need to be advertised, prospects contacted, showings coordinated, and follow ups scheduled.
Leasing – The leasing process can be extensive with all the paperwork. Rental agreements need the right legal language to stay compliant and protect your assets. Then, the key exchange must be arranged after the lease is signed.
Repairs & Maintenance – When the need for repair and maintenance arises, the manager must respond and coordinate the vendor's visit with residents to schedule the repair.
Evictions – These can get ugly and may require some legal intervention. If a dispute ends up in court, it can also get expensive.
Compliance – Staying up-to-date and complying with local laws can be challenging. There are a lot of local and state regulations, and it's critical to understand them to safeguard investments and avoid any fees or penalties.
Managing property is time consuming
The number of hours that go into every aspect of property management can add up to a full-time job.
The decision to self-manage depends on how an investor views their properties and portfolio: are these investments a full-time job, or a means of building wealth in a more passive way.
Does it make sense to self manage?
Investors should ask if property management fits in with their skill set, and if they are ready to devote the time to do it properly.
Connections to trusted vendors are important to ensure that repairs and maintenance are handled in a timely and cost-effective way.
What’s the better alternative?
Professional property managers charge a portion of the total monthly rental income, usually between 8 and 12 percent. Property management companies like Mynd, which also has an all-in-one property investment tool, set fees based on location.
The challenges of self-managing rental property
Most investors will, at some point, take a stab at self-managing. It allow a property owner greater control and can lead to valuable hands-on experience. There is also the savings associated with not paying a property manager.
The downside of self-managing can leave owners frazzled and feeling like the time required is unsustainable. Many decide that the daily frustrations of managing rental properties is not worth it and will hire help.
It's also difficult to think of growing a real estate investment portfolio when bogged down in the daily tasks that come with self managing a property.
The bottom line
The reality is that savvy investors tend to build “teams” of people and companies manage rental properties, which allows the owner/investor to maximize their time and value.
Working with a property management company can actually improve an investor's bottom line. Property management companies typically have existing relationships with service providers, which means they’re able to access those services for a better price and with a higher degree of responsiveness.
A property owner can also avoid fees associated with non-compliance issues, and save time by having an experienced team manage and fill vacant units. The time regained allows an investor to focus on the most important task: building long-term wealth.