Hiring a Property Manager: What it offers you

Some of you are thinking about diversifying your investments and see real estate as a viable option to accomplish this. It can be a valuable investment to consider for anyone. Some of you may not like the idea of real estate as an investment because of the idea of dealing with tenants and the potential damage that any tenant could cause. I am here to tell you that this should not prevent you from investing in real estate. Hiring a property manager can help free up your time and protect your investment.

What a Property Management Firm Offers You

Those of you who are personally responsible for your personal finances may have never considered hiring a property manager. After all, you have been able to responsibly manage your personal finances, why would you choose to hire someone else to manage one of your investments. Wouldn’t that just take away from your potential earnings? While it is true that you can’t find a property manager for free, it doesn’t mean that the small fee (typically 6-12% of the rent) is not worth the benefits that they offer. In fact, there are so many benefits to hiring a property manager, it may make it hard to own real estate and not have one. Here are just some of the benefits:

Convenience: This may not be a surprise, but having someone handle all the emergencies as well as collecting rent from tenants can save you precious time, that would otherwise consume your life. It is important to remember that emergencies don’t just happen on the weekend. Most often, emergency plumbing or broken appliances can and will happen during the night or when you are on vacation. Paying for someone to do this unexpectedly can cost you just as much as having someone take care of this on a regular basis.

Security: If you find a property manager who knows what he/she is doing, it provides you with extra security. The good managers will perform background checks on all potential tenants. This is extremely important because just one bad renter can ruin your experience with real estate. Don’t let something that can be avoided keep you from earning money from a secure investment. Another aspect of security that it offers you is that they will fight to collect rent if it isn’t paid. Instead of you having to personally fight for what is rightfully yours, a property management firm has the resources and experience to obtain this.

Great Relationship/More Secure Investments: While building a strong relationship with your property management firm may not be your first priority when starting out, it should be included on the list. After you develop a great relationship with them, it is very possible that they will hear about other properties on the market. If you are providing them with quality business, it is possible that they will present you with more great properties to own. The people working for these firms may not be interested or financially able to take on certain properties, but don’t let this keep you from considering these options.

Is a Property Manager Right for You?

Hiring a professional to take care of the day-to-day details may not fit everyone’s situation. Every situation is different and requires careful consideration. Without going into too many details, here are some situations that may help you decide.

When to Hire

  • Investing in a Different Market:If you are interested in investing in a different market than where you are familiar with, hiring a property manager only makes sense. It provides you with someone to keep a close eye on the property without you having to travel to this place just to check in on the renters. It also gives you the expertise of someone who is probably more familiar with the market then yours. This can be a great resource for calculating the appropriate price for rent, etc.
  • Already Working Full-Time: If you are already working full-time and life is busy already, it may be a great way to venture into real estate without it having to take up all your time.

When NOT to Hire

  • Living in/Renting a Duplex: If you are just starting out in real estate investments by purchasing a duplex that you will live in while renting out the other side, it may not be worth the fee. You can easily keep a close eye on the property without too much hassle. This same rule can apply if you have multiple properties in the same area.
  • Lots of Free Time: If you are retired or have lots of free time, you may be willing to put in the extra time to take care of a house in order to save a few bucks.

Is it worth it to you? What’s your situation?

*featured image provided by: turkeychik

25 Responses to Hiring a Property Manager: What it offers you

  1. Can you negotiate management fees? Or, are they pretty much set in stone? I always here the 10% of rent mark thrown out there, but it would be awesome if it was closer to 6%.

    • I haven’t negotiated management fees, but it is a good practice to cover all of your bases. From my experience (in surveying fees to get ready to invest), there is generally a lower fee (%) for multi-unit houses.

    • I am starting to get serious about real estate investing (haven’t committed yet) and I know that I am not a handy person.

  2. We don’t own any extra real estate yet but it is something that we are looking into for the future. We have talked about a rental management company and for us it would make the most sense to hire someone. You’re right though; if you have a lot of free time, than you can often manage these things on your own.

  3. I’m also looking into real estate, it seems daunting having to possibly spend a lot of time into it while having a full time job, so trying to learn as much as possible.

  4. This page had a lot of interesting information on it. You know I have been to this site over and over now, off and on. I have yet to make a comment, so I thought I’d drop you a line I really appreciate the work you do on here… always providing great content! This one’s going to facebook!

  5. I don’t own any rental real estate yet, but I would be thinking about hiring someone to manage it, that’s for sure 🙂

    Nice decision process you have outlined here!

  6. Once I start investing in rental properties I am definitely hiring a property manager. I don’t want to deal with repairs and such, just pick up the rent check.

  7. I’ve used both methods with rental properties: self-managed and having a property manager. I’ve come to the conclusion that I prefer the hands-on method. I think it just aggravates me too much to pay someone to do something that I’m capable of doing and enjoy doing. (Although I did need a property manager when I had one, because that rental was located out of state. Which I won’t do again if I can help it…)

  8. When we were renting we had a retiree who was working as a property manager. We were amazed to learn the number of properties she was managing!

    Something I need to put more thought on.

  9. I think it just costs too much hiring property manager. In my situation, I do not have a property manager. But fortunately, I have a close friend who is a realtor and manages properties. I tend to go for his advice when there are issues at the property. It helps a lot to have a friend who is in real estate. So, if you do not have a property manager, go make new friends!

  10. We are looking into a rental property as well. I would probably manage the property myself as I am pretty handy with the hammer. On some of the maintenance items I would hire a contractor. Cash flow is usually pretty tight on rentals so I would look at reducing the management fees if possible. Keep up the great work – almost at 100K!

  11. We don’t have any real estate investment yet. When we do we are most certainly getting a property manager just to avoid getting calls at the middle of the night when something breaks. We are not very handy either.

    (Totally irrelevant addition, you have credited for a featured image and I am not finding anything. May be its my computer)

  12. Given my lack of free time (and handy-man skills), I’d never buy a real estate property without using a property manager. I have a job, kids, blogs, businesses and other stuff that would make dealing with routine tenant issues a nightmare. That being said, there are a lot of lousy property manager experiences out there to boot too. So, I’d definitely try to keep on the prior one from the seller (assuming they recommend them) or buy something somewhat locally so in the event they flake out you can get up there now and then to manage issues.

    We’re using a property manager for some college real estate we just bought and he seems pretty solid. But it does make me a bit nervous if he walks.

    • I think that would make me nervous as well. I plan to start investing in real estate in the next few years and will seriously consider hiring a property manager.

  13. Great points. Paying a property manager to spare me from headaches and save time? Well worth it in my book!