Before purchasing rental properties, real estate investors are left contemplating one thought: “How do I manage the property?” The answer is not as simple as one might think it should be. Managing a rental property takes effort, time, and skills to make it a successful investment for its owner. This is where it becomes a matter of personal preference what method you will choose to manage your income property. A real estate investor can decide to personally manage the rental property by himself/herself or to hire professional property management companies to do the required tasks.
Property management companies are one of the rising trends in the real estate market nowadays. They offer their clients an array of property management services that help make the job of the property owner and landlord easier when dealing with anything related to the real estate investment. The services, of course, are set for an annual fee. The reason that investors and landlords go for the property management companies is because the tasks needed to manage a rental property are usually many and repetitive or even tedious. However, some real estate investors who like to keep things personal and under their own watch choose to manage their rental properties themselves. Having said that, while both property management options have their pros and cons, here we will be discussing why it is better for first time real estate investors to manage the rental property themselves.
Related: Consider Property Management Options for Your Rental Property
Why Opt Against Hiring Property Management Companies?
It would be easier to pass on hiring property management companies if as an investor you are aware of what needs to be done to maintain the high standards which these companies set. The tasks are fairly simple but demanding because of time and effort involved.
Gaining Experience
One of the first tasks of property management companies is checking the condition of the investment property before setting to rent it out. Periodic repairs of real estate properties are a necessary task to have your property fully prepared for tenants who shouldn’t face any problems when they move in there. Doing this yourself allows you to gain some much needed experience on fixes and maintenance, their costs, and setting up a network of handymen that can do the job efficiently. It is just a way for you to gain experience in the real estate business.
One of the major reasons that make real estate investors hire property management companies is that this option rids them of the necessity to deal with tenants. Dealing with tenants and the high maintenance of rentals can be very tiring for the majority of investors. However, learning how to tackle tenants gives you vast knowledge on what is needed to improve and make your rental property more appealing than competitors’ rentals. Interactions with tenants usually involve tenant interviews and screening, rent collection, and sometimes even evictions in addition to state and federal laws that apply to these situation. Without trying out first hand how the landlord-tenant relationship works, you will be left lost in the rental market, simply because it is hard to understand something that you have no experience with.
Saving Money
Property management companies charge various fees depending on the location of the property, its size, and the required frequency of the managerial tasks. The range of the fees is 8-12% of the rent in a monthly payment as well as a larger amount that is paid every time the income property gets rented through the property management companies. This sum is likely to be deemed unnecessary for first time investors who only need to worry about their first rental. Why pay such amounts to professional property managers when the tasks are fairly easy? When investing in a rental property, real estate investors have to think about getting their invested money back and/or paying off their mortgage payments as quickly as possible. Hiring a professional property manager goes against money earning and saving.
Related: Professional Property Management: Pros and Cons
Easier to Execute Your Own Ideas
When you are in charge of the rental property, how it is run, and the details that make it all come together, then it becomes easier for you to implement your own ideas. This can include redecoration, installing new security, dealing with tenants, and other major and minor things that can be changed quicker when the investor is in charge of everything.
Property Management is for MultiProperty Owners
This is exactly how professional property management companies came to existence, because real estate tycoons were not even able to deal with multiple properties all by themselves. Not being able to deal with multiple properties puts the owner at risk of losing money by not having enough time or manpower to deal with his/her many real estate properties.
For investors who are just getting into real estate, it proves redundant to hire a professional management company. The line that should be drawn is simple: hiring professional property management companies should be a way for you to not lose money rather than a way to spend more money on a “luxury” service. If you own one rental property, then it is still easier to be in control of how to manage it because there would be a lot of time for that.
The only valid reason why investors should go for property management companies if they are new to real estate is if they are using the property for Airbnb rentals. Airbnb is extremely demanding because guests come and go frequently, and turnover becomes so high at times that being an Airbnb host can turn into a full-time job. Professional property managers handle Airbnb rentals extremely well to ensure you keep a high standard without overworking yourself managing your income property.
Related: How to Manage Multiple Investment Properties on Your Own
Your Property Means More to You
A real estate investor will without a doubt care more about making his/her property more successful and better than any professional property manager ever would. It is a well-known fact that the stakes become higher and you put more effort when it is your own investment that is at stake. A property manager will never take the initiative to improve your rental or care about tenants as much as you do.
Conclusion
Hiring professional property management companies might be easier and less time consuming, but it definitely rids you of the chance to improve and grow financially and professionally in the real estate and rental market. The need to hire one might arise later on in the future, but when you are entering the real estate investing business, it is better to gain some much needed experience by forging your own success.