For many potential landlords who are unfamiliar with real estate investing, the thought of owning a rental property can be very alluring. After all, all you do is purchase a property, place tenants and collect a monthly check…right? Wrong, what is not often factored into this decision is the actual property management of the investment—or what one could call landlord duties.
At first glance, managing a rental property may seem like a piece of cake. But don’t get caught off guard, there’s much much more to managing a rental property than just collecting a monthly paycheck. Marketing your property, showings, looking for qualified tenants, screening potential tenants, chasing rental payments, and addressing any maintenance issues can be nothing short of overwhelming. Investors really need to consider all the factors before deciding to go about this on their own.
Property Management VS Self-Management
When investors purchase a rental property they have essentially 2 choices when it comes to management of their investment. They can either DIY the property or hire a third-party professional, or property manager, to do so. There’s no right or wrong answer, it all depends on the individual investor’s circumstances and goals for the property.
The Pros of DIY Management
The most beneficial element for DIY-ing property management is saving on management fees. However, the basis of being a landlord comes with many legal, financial, and ethical obligations. As an investment property owner myself, at the end of the day, time is money and I have to ask myself, how do I want to spend my time?
But another pro to self-managing the property is you also have a bigger say in tenant selection. The landlord can personally evaluate the applications, speak with the potential renters and make the final decision. Oftentimes DIY Landlords aren’t bound to the laws that property management companies might be. Always check your local and state discrimination laws when screening potential tenants.
The Cons of DIY Management
Managing a rental property might seem like an easy thing at first, but it calls for a good amount of commitment. Showings, potential tenant screening, maintenance requests, chasing late rent, emergencies, bookkeeping, and keeping up to date on the constantly changing laws are just a few of the tasks demanded of a landlord.
An experienced property manager is privy to up-to-date, crucial information necessary to run your rental property business smoothly. Depending on the investor’s experience, this may prevent them from making informed decisions, which could have an effect on not just their revenue but could also carry legal implications.
Property managers have access to a wealth of real estate and rental market resources that are key to the effective marketing of the property. This is not something that one can say of self-management, which could ultimately impact rental returns.
The Pros of Property Management
While hiring a property manager may come as an added cost to the list of overheads, one of their biggest selling points is that they can leave the running of their business in capable and experienced hands. You’ll be working with professionals who have established policies, procedures, and structured systems and processes in place. Your property manager is ensuring the revenue of your business is strong.
Property managers also have a good understanding of the market and are well aware of all the ins and outs of property management.
Emotion is always bound to get in the way of owners when it comes to handling some critical situations. Having a professional property management company can be reliable in handling any and all aspects of any issues that may arise.
Property management companies have faster rates of occupancy, more thorough screening of prospective tenants, and basically run your business for you. Investment property owners aren’t typically looking to invest because they’re wanting a second or third job. This is why you hire a property manager to do it for you.
So, basically, property management companies do it all. This is very appealing to investors that don’t want to get into the weeds with tenants, leases, and maintenance.
The Cons of Property Management
There is always the question of cost when it comes to hiring a property manager. They take a cut from the rental income, and a professional management company will usually pocket 5%–10% of the rent per unit they manage, in addition to other fees.
Or maybe you are an investor that wants to do your own maintenance on your property. If this is the case, then professional property management might not be the best fit for you. There are likely management companies out there that will allow this, however, this is a great opportunity to open the doors for litigation. Professional management companies will only use licensed and insured vendors whom they trust to be professional and courteous to the tenants when working at the property. Involving the owner with maintenance only confuses the tenants and makes them feel uncomfortable. This type of situation always muddies the waters and then the tenant doesn’t know who to call or what to do when a maintenance issue or emergency arises. This creates a bad experience for not only the tenants but the owner AND the property management company as well.
At the end of the day, the decision to self-manage or hire a professional management company will be your decision to make. If you’re up to the challenge and interested in another part-time or even full-time job then self-managing might be for you. However, there is a lot of value available to investors who use property managers, most importantly, your property manager is a part of your team. There’s a lot of advantages when it comes to managing your business if you have a good property manager working with you. At Envy PM we are here to do the things that you don’t need or want to be doing yourself. As an investor, you are likely buying real estate as an end goal. You’re not investing in properties to have a second or third job. You use a property management company for the same reason you use an attorney, a CPA, or an auto mechanic. The expertise of a professional property management company is worth more than the actual tasks that are handled for you.
Sophisticated investors want a property manager who will take care of every aspect involved in the leasing and management of an investment property so you can go and live your life while your property manager takes complete and total care of your asset. If you want to talk more about the value of a Northern Utah property management company, please contact us at Envy Property Management. Whether Envy is managing your property or not, we love educating investors and talking through how to have a better rental experience. Give us a call today at, 801-337-4337, or visit our website for more valuable information at evypm.com.