As a Real Estate investor and an owner of a rental property, there are two ways to go in managing the property and tenant relationship. You can manage the property yourself (self-manage), or you could consider hiring a property management company. If you are leaning toward self-managing, it is usually with the intent to save money. But does it really save you money? Many rental property owners don't realize the full "time is money" calculation and that there are also hard costs along the way. This video update ponders the question, as a Real Estate investor, should you self-manage or should you hire a property manager?
Being a landlord comes with many financial legal and ethical obligations. And as an owner of an investment property, let's face it. Time is money. There are two ways to go. If you are an investor in rental properties, you can manage the property yourself, or you could consider hiring a property manager, but why would you do it yourself? Possibly it's because of money? But again, time is money and there are also hard costs along the way.
Should you manage yourself or should you hire a property manager? If you are considering self-management, ask yourself and honestly answer the following basic questions.
- Am I internet savvy? And do I have the photographic writing and communication skills required in listing the property on various websites?
- Do I have time and the mechanism for responding quickly to the inquiries from prospective tenants?
- Do I live near the property and, am I available to visit the home when it's required?
- Can I be on call 24/7/365 to respond to tenant maintenance requests, complaints, and emergencies.
- Do I have the time to handle tenant interactions, dispatch vendors for repairs and handle all the other details involved in running a rental property successfully?
- Am I level headed and can I remain calm and reasonable when conflict resolution is required.
- Will I be firm with a tenant when necessary, or might I be too much of a pushover?
- Do I have the bookkeeping skills to maintain detailed and accurate income expense records related to the rental property?
- What if I get audited? Do I have the organizational skills required to supply an auditor with the financial records pertaining to my tax return?
- And then finally, am I willing to study the respective community, state city and federal ordinances and laws pertaining to tenant landlord law? And do I have a way of staying up to date and compliance on ordinances and those laws?
If you answered no to any of those questions, or maybe you're not quite sure, don't worry, most people get a bit nervous when reviewing this list or asking themselves these questions. But if you're not completely confident in handling all these items properly, then perhaps it's a good idea to consider hiring a property company.
Property management companies like North County Property Group have skilled teams of professionals who are specialists in handling all of these nuances of renting your property and managing it correctly. We estimate that on average, as a team, we spend about four hours a month on a typical property. That's 48 hours a year. For the typical, do it yourself or self managing owner, we estimate this to be probably 30 to 40% more time involved because they don't have access to systems available to property managers. So, the self managed property is typically probably closer to 70 hours per year.
For real estate investors, time is money, right? There is a lot of time and effort spent on getting your property rent ready, marketing your property, showing perspective, renters screening applicants, writing the lease and moving them into the property. These are hard dollar costs to landlord, true cash out of pocket or not coming in as cashflow.
Finally, there is compliance both financially and with tenant landlord laws. If the IRS did call you in an audit or if you're not up on the current laws, particularly in the times of COVID-19 with eviction, moratoriums, one slip up could cost you again, thousands of dollars.
We recommend any property owner considering self-managing as a landlord to take time to explore what a property management company can do for you.