With U.S. housing affordability at an all-time low and American consumers increasingly considering renting over buying, the rental market’s flooded with first-time investors. Like fix and flip investing, the residential rental market consistently yields high returns for skilled investors.
Unlike short-term flipping investments that garner a lump sum, long-term rental properties provide a steady cash flow for an investor–and the added benefit of time for the property’s value to appreciate. However, renting out a property requires a bit more leg work. Real estate investors are in charge of managing their investment property and its tenants throughout its holding.
The added workload, or even fear of the unknown, has many investors wondering: “Is it worth it to self-manage, or should I hire a property manager?”
Deciding whether to hire a property manager can be a challenging process for first-time landlords unaware of the inner workings of property management.
Unlike short-term flipping investments that garner a lump sum, long-term rental properties provide a steady cash flow for an investor–and the added benefit of time for the property’s value to appreciate. However, renting out a property requires a bit more leg work. Real estate investors are in charge of managing their investment property and its tenants throughout its holding.
The added workload, or even fear of the unknown, has many investors wondering: “Is it worth it to self-manage, or should I hire a property manager?”
Deciding whether to hire a property manager can be a challenging process for first-time landlords unaware of the inner workings of property management.
The Pros and Cons of Hiring a Property Management Company
Let’s look at some of the advantages and disadvantages of hiring a property manager–or property management company–compared to self-managing:
The Pros
Industry Experience
One of the most important things to consider when hiring a property management company is how long they’ve been in business. Knowledge and experience keep the lights on for property management companies, so a proven track record means a higher level of industry insights and skills.What does experience get you? For starters, a system. Established property management companies have a defined, uniform process with proven success. Most companies will even post their step-by-step process on their website. If not, feel free to ask for them.
Here’s what to look for in a property manager’s process:
Preparation
Property managers ensure your property is ready to rent by:
Marketing
Property managers handle all the marketing for your rental property, including:
Property managers handle all the marketing for your rental property, including:
- Property photos
- 3D tours
- Online listings
- Lease management
- Showings
Tenant Screening & Application Process: A huge benefit of a property manager is that they handle tenant application and screening processes. A key to being a successful landlord is a well-rounded, consistently audited tenant screening and application process. However, without assistance, this may seem like a daunting undertaking.
For property investors looking to avoid taking on this process, property managers can take care of:
Rent Collection & Tenant Communication: Property managers act as the property owner’s collection agent and mouthpiece, assisting with and conveying guidelines for:
For property investors looking to avoid taking on this process, property managers can take care of:
- Application screening
- Tenant selection (with your final approval)
- Lease signing
- Tenant onboarding
- Move-in condition checklist and photos
Rent Collection & Tenant Communication: Property managers act as the property owner’s collection agent and mouthpiece, assisting with and conveying guidelines for:
- Rent collection
- Tenant support and questions
- Property maintenance
- Annual inspections
- Lease renewals
- Evictions
- Move out guidelines, including:
- Pre-move out inspection
- Utility management
- Final walkthrough
- Security deposit disposition
Shorter Vacancy Times
With a tested and proven track record, property management companies’ processes usually equate to shorter vacancy times. Some landlords assume getting a tenant to sign a lease is the hardest part. However, maintaining satisfaction is pivotal to tenant retention.Regardless of how great of a property manager you are, that tenant will eventually leave. Long vacancy times can quickly decrease your property’s profits. Starting the application and tenant screening process over–while moving the previous tenants out and getting the property move-in ready–can be a lot for one person.
Property managers are trained in rental transitioning, ensuring the move-out, tenant screening and application, and the move-in process is fluid and fast. This helps investors to maintain a steady cash flow.
Maintenance Response Times
Dealing with maintenance issues can quickly become an inconvenience for landlords. They can come up at any time and become a bigger problem than expected, especially when not handled promptly.Great property managers not only respond quickly to maintenance issues, but they also tend to have a fleet of vendors on call. If one plumber isn’t available for the day, three other trusted vendors can handle your tenant’s issue.
Gives You Time & Peace of Mind
Managing a property can be time-consuming. Landlords are on call 24/7, 365 days a year. Depending on your circumstances, this can mean leaving your kid’s dance recital early or missing out on a future investment opportunity because you’re bogged down resolving a maintenance issue.Renting a house through a property management company frees you up to focus on the more important things in life–including expanding your investment portfolio–giving you peace of mind and confidence that you can move throughout your day uninterrupted.
The Cons
Lack of Involvement
Not all property investors are the same. Some owners simply want to purchase a property, renovate it, and hand it off to a rental expert. Others prefer to be heavily involved in every decision made for the property.While the final say will typically go through the owner, certain time-sensitive repairs or appointments may be relayed after the fact. So, if you’re more of a hands-on property owner, lack of involvement can be one disadvantage of hiring a property manager.
Costs
How much does it cost to hire a property manager? The answer to this question varies. Most property management companies charge a monthly fee of between 7-10% of the tenant’s monthly rent.There may also be additional costs for marketing and other miscellaneous fees. Certain property managers charge for cancellations, extra maintenance, renewals, etc. Budget-conscious investors weighing the pros and cons of a property management company should have all the fees mapped out before taking on the added expense.
The Decision
The answer to “Should I hire a property manager,” depends on your personal situation. While the pros of hiring a property manager typically far outweigh the cons, the decision ultimately boils down to three things:
Once you’ve made the decision on what’s best for your rental property, securing financing with a trusted lender is the next step.
- Your desire to be involved in and learn the ropes of property management
- Your profit margins
- Whether or not you have extra time and resources
Once you’ve made the decision on what’s best for your rental property, securing financing with a trusted lender is the next step.
CIVIC: Your Capital Partner for Investment Success
Whether you are looking for a Single Rental loan or a Rental Portfolio loan CIVIC provides flexible and dependable financing options for real estate investors.
CIVIC delivers the most simple, honest, and reliable lending solutions for real estate investors. With flexible terms and rates as well as prepayment options, we provide the capital and agility to get your property move-in ready.
Want to partner with the market’s simplest and most reliable rental property capital provider? Fill out this form to schedule a FREE consultation today!
- Competitive 30-year term loan options
- Maximum rental flexibility
- SFR, warrantable cons, townhomes, PUD, and 2-4 units eligibility
- DSCR blanket loan with no W2s, paystubs, or tax returns required
CIVIC delivers the most simple, honest, and reliable lending solutions for real estate investors. With flexible terms and rates as well as prepayment options, we provide the capital and agility to get your property move-in ready.
Want to partner with the market’s simplest and most reliable rental property capital provider? Fill out this form to schedule a FREE consultation today!
