One of the biggest decisions you'll make as a landlord is whether you should hire a property management company or manage it yourself. It is a decision that is usually made after careful thought and personal experience. Property management companies can be a huge asset to your business, but come with some cost. There may also be other reasons why you may want to look into this option further. Below are 6 topics to consider before looking for a reputable company and deciding if this is the best course of action to take with your investments.
1. The Number of Properties You Own. The more rental properties & tenants you have, the more maintenance, vacancies and complaints you will have to deal with. Also consider with multiple properties the time and cost to physically commute from property to property to handle all the issues that can arise.
2. Where You Actually Live. The further you live from your rental property, the harder it is to manage. Hiring a property management company can actually save you money when you take into consideration the time it takes you to get to your property and your costs getting there.
3. Do You Have the Time? Even if you enjoy hands-on management, you may not have much time to devote to your business. If you have a full time job while you are investing in property and simply cannot give your property the attention it needs, the success of your investment could depend on hiring a good property manager. You may also prefer to spend your time growing your business, including searching for new properties, arranging financing for renovations, or changing your business structure, then a management company is a good way to spend your money.
4. Affording the Cost of Property Management. Hiring a property management company is an attractive option if you can afford the fees. Before you hire a property manager, you need to take a look at your finances. Property managers are not free. They will charge a fee, on average, between 6% and 10% of the monthly gross income for the property. The typical fee for a single family rental property is closer to 10%. Most property managers will also charge tenant placement fees, which is a bonus for finding a tenant. These fees will vary from a few hundred dollars to as much as one month’s rent. Take into consideration that Property Management Companies are very familiar with determining fair market value. You just may find that you are able to absorb the cost by increasing the rent you receive. Reputable Property Management Companies are skilled at finding and screening tenants quickly, therefore you may see less time in turnover between leases.
5. What is Your Tolerance for Dealing with Tenants? Is the stress of dealing with complaints and maintenance issues or evictions taking a toll on you? Property managers are skilled in handling landlord-tenant conflict. Good Property Managers have an understanding of landlord-tenant law, and can serve as the middle-man, or buffer, for problems that arise with rental property. In most cases, when the tenant knows they are dealing with a third party, they will act more professional as well.
6. You are just not interested in being an employer. Many property owners get excited and look forward to the challenge of finding good tenants and maintaining a safe and desirable property on their own. But, if you have to hire a resident manager or other employees to help with your property, you become an employer. You'll be responsible for payroll and dealing with a host of other legal requirements and considerations. A property management company isn't your employee (they are an independent contractor), and neither are the people who work for the management company.
What can a Property Management Company do for you?
A Property Management Company is primarily responsible for maximizing the return on your real estate investment. They will deal directly with prospects and tenants, saving you time and worry every month. The Management Company will generally be responsible for marketing your rentals, collecting rent on time, handling maintenance and repair issues, responding to tenant complaints, and when necessary, evictions. A good management company brings its know-how and expertise to your property, giving you the peace of mind that comes with knowing your investment is in good hands. The company will act in the best interest of the property owner.
The reason to hire a Reputable Property Management Company
- To reduce your liability risk. A Reputable Property Management Company knows Texas Property Code as well as city ordinance requirements and insures your property is in compliance.
- A Reputable Property Management Company makes sure everyone working with them is insured and bonded. This is for your protection as well as the tenant and the management company.
- A Reputable Property Management Company holds all your landlord reserves in an audited, owner’s trust account.
- A Reputable Property Management Company holds all tenant security and pet deposits in a separate, audited, tenant’s trust account.
How to Find a Good Property Management Company
If you decide to hire a property management company, use caution in selecting one. Here's how:
