The age-old question: Should you self-manage or hire a property management company? This is the one decision which can entirely dictate your experience in real estate investing. The purpose of this article is to help you weigh your options, explore the pros and cons of both sides and discover the resident’s perspective. Furthermore, this article will outline some of the most common opinions in the industry. If you've ever wondered if you should hire a property management company or manage yourself, this video is for you!
PROS OF HIRING A CENTRAL FLORIDA PROPERTY MANAGEMENT COMPANY:
- Existing Infrastructure – When hiring a good property management company, you will walk into an existing infrastructure and be able to plug in rather than figuring out everything yourself as you go. All great management companies have gone through many vendors, contractors, mortgage brokers, attorneys, etc, and they have selected the best ones in their field. This drastically reduces risk and saves time for you as an investor.
- Experience and Expertise – Every professional in every industry constantly improves and becomes better and more efficient at what they do. By investing in a reliable property management company, you are hiring a team of professionals with years of experience. Self-managing owners will have a tough challenge outperforming a good property management company.
- Rental Market Knowledge – Property management companies are designed with systems to get properties occupied quickly, and rent out dozens of properties every month. They have unbeatable knowledge of the current Orlando rental market, neighborhoods, tenants needs, marketing tools, and much more.challenge outperforming a good property management company.
- Screening Procedures – The best property management companies in the industry have strict procedures which they follow during the approval process for every tenant. This helps ensure a good occupant for each property with fewer issues down the road.
- Specific Knowledge of Landlord-Tenant Law – Property management is their full-time job, so any good management company will have extensive knowledge and experience with Landlord-Tenant law. Can you post that 3-Day non-payment of rent violation notice or do you need an 8-Day? Or a 13-Day? It depends on both where you are and where your rental property is. Examples like that are only a small piece of the knowledge you’ll benefit from if you hire a property manager.
- Day-to-Day Operations – Again, property management is their full-time job! They’re not trying to find a plumbing company after they get home from work for the day, or answer questions from a resident before putting the kids to bed. They do this all day, every day so you don’t have to.
CONS OF HIRING A PROPERTY MANAGEMENT COMPANY:
- Cost – Though pricing varies from company to company, you can generally expect to spend about 10% each month on management fees. This can be cost prohibitive for some owners, depending on their personal expenses and their ownership of the rental home, so it’s important to factor in the management fee expenses when deciding if you’ll hire or try it out yourself.
- Lack of Control and Personal Relationship with Tenants – Some owners prefer to be very close with their residents and feel as though they have a good personal relationship, which means they feel a disconnected lack of control with using a property management company. We don’t necessarily subscribe to that belief, and believe a solid, respectful, and professional relationship with residents it a better fit.
- Risk of Hiring a Bad Property Manager and Risk of Fraud – In every industry, you’ll find rumors of fraud and bad behavior and this is true in property management as well. But while there may be some bad eggs out there, there are even more truly excellent management companies. The best thing you can do is look up their online reviews, talk to them, and ask intelligent questions to judge for yourself!
PROS OF SELF-MANAGEMENT:
- Sense of Greater Control – You’ll make every decision, no matter how small, and will have full control over the home rather than trusting a management company to make these decisions for you.
- Closer Relationship with Tenants – You’ll get to know your residents well (especially if they call you at 3am with a plumbing issue!) and can use that personal relationship as a boon to help you renew the lease each year.
- Gaining Experience – You’ll do it firsthand, and will know exactly how much goes in to managing a rental home. This experience can be used in the future should you decide to buy more rental properties.
- Cost Savings – Though you’ll still have out-of-pocket expenses for maintenance calls, drafting a lease or marketing a property, you won’t have a management fee chipping away at your potential net income.
CONS OF SELF-MANAGEMENT:
- Time and Effort Required – From fielding emails about the rental listing to handling midnight emergency maintenance calls, a lot of time, energy, stress and frustration can come along with managing the home yourself.
- Liability Issues – Unless you’re well-versed with Fair Housing regulations and Landlord-Tenant law, there’s a good chance you’ll post the wrong notice on the property or use the wrong turn of phrase when speaking with a resident, which can open you up to massive legal liability.
- Lack of Experience and Expertise – By doing it yourself, you’re essentially reinventing the wheel, trying to create advertising, documents, and procedures that already exist within an established management company.
What is the residents perspective? Would they rather work with a Property Management Company or directly with an owner? It all depends! Tenants are looking for the following things:
- How easy is the person or company to work with? Along those same lines, how easy is it to make an appointment to see the home? Do residents have to jump through hoops to submit an application or sign the lease agreement? How easy is it to make their monthly payments and submit maintenance requests?
- Responsiveness: How quickly does the person or company respond to both basic questions and essential problems like plumbing or A/C-related issues? Is there someone that will answer the phone every time they call?
By having convenient, easy-to-use systems in place, the residents will have a better overall experience with an increase in their quality of life, which will go a long way towards getting them to sign that lease renewal. This helps lower your expenses over time with reduced vacancies!
COMMON CONCERNS WITH PROPERTY MANAGEMENT
- Why do you get paid so much to do so little?
We would love to get paid so much to do very little! But the truth, is, it takes an entire team of people to service rental properties on a day-to-day basis. This is our full-time job, and it takes a lot of time and effort to manage the owner requests, resident requests, HOA concerns, maintenance issues, agent questions, and any and everything else that comes up with our portfolio, especially in a timely manner.
- If I want something done, I’ll do it myself!
While this is sometimes the case, life is too short to do everything yourself! While you can certainly do all of these management related tasks with one or two properties, it’s simply not sustainable when you are growing your portfolio. Would you say that “do it yourself” phrase to a doctor? Probably not!
YOU CAN ONLY SCALE WITH A GOOD PROPERTY MANAGER
Once you grow your portfolio to about four or more properties, it will be increasingly more difficult to handle them yourself. Remembering to offer lease renewals timely or follow-up on pending maintenance issues will take a great deal of time and energy on your part. Ask any owner with a sizable portfolio and they’ll agree that in order to scale and truly maximize your income, you’ll need to partner with and trust a good property manager.
A GOOD PROPERTY MANAGEMENT COMPANY PAYS FOR ITSELF
A good management company will help increase your income and decrease your overall expenses, and it’s within that space that we pay for ourselves.
JUST A NOTE…
No matter what you decide to do, don’t hesitate to get in touch with us! If you’re self-managing and have questions about the process or need some advice, just reach out and give us a call. Our goal is to educate, and we’re always happy to help.