Pros and Cons of Hiring A Property Management Company - Hiring the Best Real Estate Professionals in 2023
Both novices and seasoned experts in the real estate industry struggle with this reoccurring question: When is hiring the services of a professional property management company worth it?
Indeed, property management firms offer both small and large real estate investors a plethora of valuable services. And while these services can markedly increase your passive earning potential from real estate, they also come with fees that can quickly eat into your profits. This is also not forgetting the numerous other caveats it entails.
When you strip it all down, the choice to hire a property manager usually boils down to time and money. If it costs less to hire a property manager than manage your properties yourself, it’s probably wiser to hire one. However, investors will have to work out the viability of this choice themselves.
But first, if you want to learn how to increase your property management budget by reworking your mortgage, click the link below to book a free strategy call today.
Property Management Vs. Asset Management
Before we delve into the merits and demerits of hiring a property manager, it’s crucial to highlight the differences between property management and asset management.
Property managers are mainly concerned with overseeing the daily tasks associated with managing and renting a property. On the other hand, asset managers are more focused on maximizing the earning potential of a property. Only large-scale investors tend to use asset management companies.
Property managers help manage properties for investors, so they don’t have to spend too much time doing it themselves. They harness their wealth of experience in the industry to provide property owners and tenants with a more seamless and professional leasing experience. Most investors favour letting a property management company handle their properties.
Whether you choose to work with a management company or not hugely depends on your property type and personal targets for your investment.
Discover Residential Property Management With This Step By Step Guide
Pros: Why You Should Consider Hiring A Property Manager
Hiring a property manager allows you to escape all the time and energy-sapping hassles that come with managing your own property. Below are three advantages of letting a professional handle your investment property:
Regulatory expertise
Property managers are familiar with all the necessary local rules and guidelines that concerns renting a real estate property in any market. They will ensure that your paperwork and regulatory obligations are always up to scratch. They can also help you evade the potential legal tussles you may lack the expertise to deal with when managing your own property.
Professional know-how
Apart from their extensive regulatory expertise, property managers also know how to best maximize your property's earning potential. They know the best methods and practices to help you best serve your tenants and generate consistent passive income for you. Property managers also do a great job of marketing your property. This skill is crucial to helping you get the most out of your real estate investment.
Peace of mind
When you hand your property over to a professional manager, you no longer have to worry about dealing with tenants or leaving town for an extended period. This gives you increased flexibility and affords you more time to chase other goals or secure your next investment property. Basically, you isolate yourself from the day-to-day running of your rental property.
These benefits make hiring a professional property manager an attractive option for many real estate investors. More so, as the rental income continues to pour in, hiring a property manager may just be worth your every penny.
Cons of hiring a property manager
Like with almost everything, there are also cons to hiring a professional property management company. Highlighted below are some of the disadvantages of allowing a property manager to handle your investments:
High charges
The most apparent drawback of property managers is that they don’t come cheap. Their typical fees include the full first months’ rental income of your property and a further 8 to 10 percent on subsequent months. This can be an uncomfortable price to pay, especially if your property was already profitable before you hired them. However, it goes without saying that property managers will often help you increase your property’s earning.
Poor communication
As you may have imagined, when you work with property managers, they act as middlemen between you and your tenants. This means that you don’t get to meet or talk to your tenants frequently. While most property managers do a fair job of relaying information between you and your tenants, there is still a reasonable chance that communication will fail from time to time.
If you are the kind of investor that cherishes a physical and personal approach to managing your property and establishing a relationship with your tenants, then you may want to think twice about handling such duties to a property manager.
Differing standards
Property management companies generally handle several kinds of properties. As such, their procedures and assessments are bound by a certain standard. This can mean that you aren’t always on the same page on certain issues. For instance, you may have a stricter process of vetting tenants, and they might not be as thorough. Or perhaps you prefer to work with certain kinds of maintenance contractors, and they don’t. Ceding control of your property might also mean compromising your standards in certain circumstances.
These cons may be substantial enough for you to scrap the idea of hiring a property manager. Or, they may just prompt you to do better research before hiring one. Regardless, you should mull over them before you sign any management agreement for your property.
Ultimately, the choice is that of the investor
The buck stops at your table, and it’s you, the investor, that has to okay hiring a property manager for your investment property. However, your decision should factor in your long-term objectives for your assets. If you think hiring a professional property management company is the way to go, be sure to first consult your local real estate community members for more information about the best ones in your locale.
While it’s no easy choice to give up some of your profits in the form of management fees, remember all the benefits you stand to gain. If you agree that the expense is worth the value you get in return, look for a reputable property manager that aligns with your investment objectives. If you feel competent enough to manage your own property, pocket your cash by paying yourself that property management fee.
If you are ready to learn how to increase your property management budget by reworking your mortgage, click the link below to book a free strategy call today.