Starting a rental property business is no joke at all. Not only do you put so much thought into it but also a lot of work and money. One aspect that will require all three is rental property management.
Since making money in real estate is your objective, it is essential that you decide how you are going to manage your investment properties. Many investors, choose to manage their rentals themselves. It helps them save on property management fees and stay involved with the business at all times. However, there are times when it gets to be too much for real estate investors to manage their properties. As a result, their rental property business might suffer if they don’t act fast and hire a property manager.
So, if you are wondering whether you should hire the services of professional property management companies or not, here are the 10 signs you should look for. Of course, everything mentioned applies to both long term and short term rental property management:
Related: Professional Property Management: Pros and Cons
#1: You can manage your property, but you’re not all that into it
Many real estate investors choose to put their money to work and step aside to enjoy the cash flow. They do not wish to be involved in the process of making money to begin with. They mostly choose to limit their involvement in making core decisions such as buying rental properties. Other than that, they prefer to hire someone to take over all the tasks associated with owning a rental property. The rental property, therefore, becomes a passive investment.
So are you getting tired of managing your property? Do you want to sit back and let someone else do the work? This is a sign that you might be better suited for passive real estate investing. If that’s the case, professional property management is the way to go!
#2: You can’t seem to juggle your full-time job and your rental properties
Having a 9-5 job or even another business and investing in real estate on the side is one of the best ways to make money in real estate. However, is this the ideal situation if you are planning on expanding and buying multiple rental properties? Of course not. Things might spiral out of control. With all the tasks involved in the rental property business, managing rental properties might get extremely overwhelming unless you decide to give all your time and attention to real estate investing. But, if devoting your entire time to your rental business is not what you plan to do, then go ahead and research professional property management companies to help you out.
#3: You’re making a lot of mistakes because you lack the knowledge and real estate education
A proper real estate education plays a major role in the real estate rental business. In order to be able to properly manage your rental properties, you want to make sure you understand all the aspects associated with it. So, in this case, you have two options: 1) You learn all about property management yourself and take care of your business. 2) You go ahead and hire a professional property management company!
#4: You’re traveling back and forth all the time to out-of-state locations
If diversifying your real estate portfolio is your goal and therefore you buy properties out of state, then you definitely need professional property management services. Out-of-state investments require that you are available 24/7 in case you need to travel. So, things might get a little overwhelming and costly if you are going to do it yourself.
#5: Collecting rent on time is a challenge
Part of being a landlord is rent collection. But, what if your tenant is constantly late on rent payments? Going back and forth with a tenant trying to get them to pay the rent gets extremely stressful and is detrimental to your business.
So, what’s the solution? Professional property management, of course. Not only will a property manager collect the rent on time but he/she will find a way to make more money out of the situation which, by the way, brings us to the next sign…
Related: What’s the Legal Way to Deal With Rent Arrears?
#6: You are stuck!
There are two ways a real estate investor can get stuck: 1) The property has been producing negative cash flow. 2) The property has been producing the same amount of rent for as long as you have owned it. Either way, it is no good for you. This is where professional property management comes into play. Whether your investment property needs major repairs or just a few additions to boost the rental income, a property manager will figure it out. A professional will be able to spot the problem right away and help you resolve it as soon as possible. So, we really think that could be worth the property management fees they charge.
#7: You often wonder exactly how to find tenants
One of the goals of a professional property management service is to find good tenants to occupy your investment property. A good tenant will take care of your property saving you money on constant repairs. As a result, your rental income won’t be affected. Moreover, a property manager has the means to run a thorough background check on a tenant. So, you might as well leave that to the pros to take care of.
#8: You struggle to set a pricing strategy
In order to make money in real estate, you need to follow a solid pricing strategy. Mostly, it should be based on potential rental income, real estate comps, rental expenses, and other services/amenities that come with the property. To be able to get to the perfect pricing strategy, you will need to learn all about the process of investment property analysis as well as comparative market analysis. These will tell you exactly how much you should charge for rent.
But, if you don’t want to take the time to do that or are having trouble with it, then there are professional property management companies at arm’s length ready to help. These companies use the latest real estate technologies to perform the necessary calculations to put together a pricing strategy for you.
Of course, you could always use a tool like a rental property calculator to find real estate comps! Click here to learn more about Mashvisor’s.
#9: You’re suffering from high vacancy rates!
One reason for negative cash flow property is a high vacancy rate. This means that your investment property is mostly vacant which also means you are generating zero cash flow. Eventually, you’ll find your rental business going south because it is not able to maintain itself.
Some reasons for a high vacancy rate are a bad location, wrong investment strategy or even a property with low ROI measures. While you can actually learn how to improve the occupancy rate for your property, it is still a long process until you learn it all. So, again, leave it to the professionals to deal with.
Related: 7 Tips to Avoid a High Rental Vacancy Rate
#10: Legalities are not your thing
Investing in different locations, especially in the US housing market, might cause some legal challenges. Your business might be subject to different legal regulations based on their location. So, in this case, you have two options: 1) You learn it all and therefore, manage your rental properties on your own. 2) You hire professional property management services who actually have people specialized in this area to take over.
If, meanwhile, you are interested in learning how to avoid a failure as a real estate, read Why So Many Realtors Fail After 2 Years (and How Not to).
Final Thoughts
Whether you are in the short term rentals or the long term rentals arena, property management is an essential aspect of your business. If you are having difficulties or being a landlord is causing you stress, there is no harm in hiring professional property management services. In exchange for a few fees, you can rest assured that your investment property is well maintained.
If you still want to learn more about property management, click here to go straight to our blog filled with plenty of topics on professional property management and managing your own rental property business.