When you own investment properties, many factors come into play, especially when you are looking forward to maximizing your cash flow. Apart from selecting the right investment properties to purchase, one of the most important decisions you need to make is who is going to manage the properties. Some investors can opt to hire property management companies to handle all these duties or even self-manage their investment properties.
Selecting one of these options often determines how the day-to-day operations of your investment properties are run. Therefore, before you decide to hire a reputable property manager or self-manage the rental properties, you should understand what goes into the management of rental properties. To help you know the most suitable option for your portfolio, we are going to look at the benefits of self-management and property management and what each of them entails.
Self-managing is where a person owns a rental property, also takes care of all the daily operations needed to maintain that property. That means that you will be the point person that tenants will look to when it comes to addressing any issues that arise and routine things such as rent collections.
When to self-manage investment property
You should consider the self-management option if:
• You have a lot of time on your hands
If you are a retiree, unemployed, or have a day job that’s not demanding and you love hands-on management, then the self-management route can be an attractive option for you. That’s because you will have enough time on your hands to manage the day-to-day operations of the property.
• You have a few rental units
If you have one or a few rental units, you can benefit more from self-management because it will help you cut down on management expenses.
• You have the expertise and are interested in hands-on or active management
If you are a landlord and you are looking forward to the challenges of screening and finding good tenants as well as the rewards of maintaining an attractive and safe property on your own, then self-management is a good option for you.
Benefits of self-management
There are a few benefits to managing your rental property yourself, especially if you have the relevant expertise and time to do it well. Some of the advantages include:
• It saves you money
One of the main benefits of self-managing your rental property is that you can save lots of money because you will not be sharing your rent revenue with a property management firm.
• You will enjoy a closer relationship with your tenants
When self-managing your property, you get the opportunity to interact closely with the tenants. In case of any concerns and issues, your tenants will directly contact you, giving you a more hands-on approach when it comes to finding resolutions.
• You gain ground and experience
Managing your rental properties will expose you to all the details of the real estate industry, and you’ll experience the first-hand experience that comes with owning rental properties.
Property management is where a professional managing agent handles the daily operations of your rental property for you. A management company deals directly with tenants and prospects, saving you time, effort, and worry over collecting rent, marketing your rentals, handling repair and maintenance problems, responding to tenant issues, and pursuing evictions as well.
When to hire a property management company
Although hiring property management companies has many benefits. You should consider working with a property management firm if:
• You have a lot of rental units or properties
The more investment properties you have and the more rental units they hold, the more you are likely to benefit from property management firms.
• You live far from your investment properties
If your rental properties are far from where you live, working with a property management company will help you deal with the numerous issues that you cannot handle from afar.
• You are not interested in active management
If you view ownership of rental property strictly as any other investment and want nothing or little to do with the daily management of the properties, you should consider hiring to get assistance in managing your property.
• You have limited time on your hands
If being a landlord is not your day job and you prefer spending your time developing your business, then a property management company can be a great way to spend your cash.
• Your rental properties are part of any affordable housing programs
If you’re involved in affordable housing programs, then things may get complicated at times. With a lot at stake, it's worth working with a property management firm that has experience and expertise with housing programs.
Benefits of using a property management company
• It helps you separate personal life and business
Hiring a property manager to manage your rentals will not only save you time, but it’ll also help you separate your work and personal life, which helps you balance your life in the long run.
• It will save you time
One of the biggest benefits of hiring a property manager is that it’ll save lots of time. That’s because the long list of landlord responsibilities will be off your shoulders.
• Property managers can easily address and fill tenant vacancies
A property management firm relies on proven screening processes to gauge prospective renters and also get the best tenants.
• Property managers have the relevant expertise and experience
A property manager has the relevant knowledge and experience when it comes to property management. Also, they have a lot of experience, especially in dealing with tenant and legal issues.
Investing in rental properties can be a wonderful way to diversify your asset portfolio and build equity. When deciding whether to delegate the management duties to a property manager or self-managing your properties, you need to understand all that goes to maintaining a rental property effectively. By keeping that in mind, you will be able to make an informed decision that will be best for your investment properties.
Ian Stanistreet is the Managing Director of Scanlans Property Management