If you’ve considered becoming a landlord, you my have wondered if it’s in your best interest to hire a property management company. It is a question landlords often ask themselves, but are left unsure whether contracting out the management of their property is the right approach for their individual situation.
The prospect of having some assistance from a property management company can be very appealing to landlords, given that owning a rental property brings with it many unique challenges — above and beyond the responsibility of ownership. But before you make a decision, there are a number of considerations you should make to determine whether hiring a property management company is right for you.
Here are the top 5 reasons a landlord should hire a property management company.
Table of contents
- Your experience managing a property
- The condition of the property
- Tenant screening and turnover
- Your other personal commitments
- Final words
The distance between your home and your rental property, even if it is just one property, can be the most important factor when making the decision to hire a property management company. You may think that traveling to the property several times a year or the ability to travel on short notice is adequate to keep abreast with the issues which come part and parcel with property management. The reality is that, although it can be adequate in some circumstances, unfortunately it usually is not.
The reason being that tenant and property problems do not follow a time schedule. If the distance is anything more than a few hours, and especially if it requires a day’s travel, problems can start to mount – quickly. Furthermore, as a landlord, you may have to be at the property at times of the day that are not convenient for you due to work and other commitments (refer to Reason 5 for more information).
In the case you live a fair distance from your property, the solution may be to find lodging close by to ensure that you are dealing with any problems or issues in a timely manner. This adds unwanted expenses and stress that only you will have to bear.
2. Your experience managing a property
Before taking the plunge and investing in property, it is difficult to conceptualize what exactly property management entails. Having a base level knowledge will no doubt aid you in the beginning stages, however, in the cut-throat world of real estate, this is often not enough.
It may be difficult to give up the reigns of your newly acquired property – after all, it is part of the enjoyment for many investors to play a “hands on” role in the management of their property.
That being said, if you lack experience and you have an unfaltering drive to be front of deck managing your property, in the end this may be to your detriment as an investor, landlord and individual. Particularly if you are a first home buyer, or are just at the early stages of tinkering with the property market, it is often advised that help early on is invaluable.
Utilizing the skills, expertise and professionalism of a property management company does not mean you have to hand over full control if you do not want to. As the owner of the property, you can retain as much or as little responsibility for the management of your property as best suits your situation. As not every property management company is the same, make sure to do your research and find one that’s willing to work with you to match your expectations.
3. The condition of the property
A further reason that convinces many landlords to hire a property management company is in regards to the condition of the property. Unless you have the financial capacity to buy a pristine property, chances are you will have to settle with buying a property that needs a considerable amount of fixing and maintaining.
What’s more, as your property empire becomes more fruitful, you will need to deal with things becoming broken, clogged, or leaking on a growing basis. While some people take to this task quite naturally, the overwhelming amount of people find it quite a struggle to find the time, resources, or motivation to do so.
Furthermore, if you need to deal with more fundamental problems, like a perpetually leaky roof, or multiple problems at the same time, you may find yourself becoming exasperated at the effort it takes to keep a handle on it all.
The hard truth is that if you want to remain someone who has the time to acquire property, you can’t spend all of your time fixing and maintaining the property you own. Make the decision about property management based on your ultimate goals. In the property game, pragmatism often goes a long way.
4. Tenant screening and turnover
As a landlord, you will soon discover that conducting effective tenant screenings is integral to finding a tenant who meets your expectations and standards. It goes without saying that you need to select a tenant who cannot only afford to pay rent, but also is responsible enough to pay it on time, every time.
In addition, you will want to find someone who reflects the qualities you believe an ideal tenant holds. Perhaps you’re looking for someone who doesn’t party too much, has a full-time job, or is fine with your no-pets policy.
“Leaving it to the professionals”, in this case property management companies, will take some of the pain out of this often arduous process. Property management companies are trained in the process of vetting prospective tenants, so they know the exact qualities and red flags to look out for. In turn, they can find the most suitable people to sign your Lease Agreement and become your tenants.
In the end, getting the right person the first time around can save you the money, time, and stress it takes to evict a troublesome tenant. The best advice for anyone who is unsure how to conduct tenant screenings, or doesn’t feel confident in their capabilities to source reliable tenants is to hire a property management company to do the job.
5. Your other personal commitments
Another vital consideration you need to make is in regards to your personal time availability. In order to determine your personal time availability to manage your leased house, you need to evaluate what facets of your life take up your time:
Employment: Are you a full-time employee, retired, or somewhere in the middle? If you have a career that always has ultimate authority over your time and plans, you cannot reasonably devote the necessary time to manage your property at a moment’s notice. If you’re retired, perhaps you have the time, but you may not want to spend it worrying about your property when you have other valued commitments in your life.
Family: Whether you have a big, bustling family or are flying solo will significantly affect your decision to hire a property management company. If you have kids in tow, chances are that your weekdays, nights and weekends are already packed to the brim. If you’re in a relationship of any kind, it is likely that a big chunk of your free time is devoted to spending time your other half. Even if you don’t have any commitments of this nature, do you really want your time eaten up by trying to manage your property?
Social life: Imagine sitting down for a lunch with a friend you rarely see, and your phone rings. You hear the dreaded words- “You need to come to the house. Right. Now.” What’s a landlord to do? Sure, you could continue with your lunch, but that decision may come back to haunt you. As a landlord, you need to appreciate your responsibility to your tenants, and also your own property. It’s definitely not a ‘convenient’ responsibility to have- oftentimes, your tenants and house can’t wait for you to finish loading your plate at Olive Garden’s salad bar.
“Me time”: Hey, we all need “me time”. We understand. With increasingly busy lives that barely have any wiggle room, most of us savor any free time we have. So it’s perfectly reasonable that your rental property is the last thing you want to deal with. If you’re busy spending your available time making sure the kitchen sink is finally in working order, you may begin to question why you’re working so hard when you can’t even enjoy the fruits of your labour.
6. Final words
Making the decision to hire a property management company will require you to reflect on your personal situation and capacity to adequately maintain your property. The aforementioned reasons are a solid starting point for landlords considering handing over some or all of the responsibility for the management of their property. The fact is that managing properties carries legal responsibilities that could put you on the wrong foot, and end your landlord business prematurely.
The price tag for another set of eyes may seem a bit steep at first glance, but it’s sometimes a small price to pay for the comfort and freedom it affords you. The ball is in your court, landlords, so make a decision which will be strategic for you in the long run.