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For those of you starting with housing investments ask yourself: “Should You Self-Manage Your Properties or Hire a Pro?”.

KEY TAKEAWAYS

  • Learn about the Pros and Cons of self-managing rental properties.
  • Learn about the Pros and Cons of hiring a professional manager.
  • Find out what is professional property management.
  • Learn what makes a good or bad property management company.

 

Should You Self-Manage Your Properties or Hire a Pro? property management company

Simple Formula for Rental Profits

 

Too many real estate investment novices focus on this simple formula:

Rental Income – (Mortgage + Expenses) = Profit

But wait, this formula doesn’t factor in actual property management.

Managing properties might look like a breeze. Yet, it’s more complicated than you think. For instance, you might spend lots of time looking for tenants, addressing repairs and maintenance issues, and chasing rental payments.

Yes, property management is very time-consuming. If you are not a jack of all trades like an accountant, handyperson, private investigator, and an advertising guru you may lack what it takes.

Housing investments require early on decisions about self-managing versus hiring a pro.

 

Should You Self-Manage Your Properties or Hire a Pro?

 

self-maage. professional property manager

 

Whether you own one rental house or want to invest in multi-family properties only two options for managing them exist. You can DIY (self-manage) or hire a professional property management company to manage all of them.

Which is better for you?

The answer depends on your circumstances. Let’s explore the pros and cons of both options.

 

Pros of Self-Manage

 

Here are 5 Pros when You Self-Manage:

 

1. Save Money

The biggest benefit of self-management is the savings by not paying management fees. You get to pocket the 8% to 10% of the rent typical property manager fee.

 

2. Better Control of Tenant Selection

Get a bigger say as to who you rent to. You evaluate each applicant. You meet with the finalists and decide who you like.

 

3. Closer Relations with Tenants

Since you are the point of contact for your tenants expect a close relationship with them.

 

4. Greater Control of Daily Operations

You will make all the necessary decisions. You might feel comfortable controlling all details of how your properties are run.

 

5. Gain Valuable Experience

Learn everything about property management by doing it yourself. This is an advantage when you want to focus on management than as an absent owner.

 

The Cons of Self-Manage

 

As mentioned above, if you are a jack of all trades then DIY makes sense. Do it yourself works if you can:

  • Determine the rent rates, too high means no tenants, and too low means losing profits;
  • Advertise for new tenants;
  • Handling the calls and reading application forms;
  • Meet with prospective tenancy applicants;
  • Explain all the federal, state, and local laws;
  • Prepare a lease agreement that meets all those laws with clear terms and conditions;
  • Collect the legally allowed deposit amounts and correctly deposit them;
  • Collect the full monthly payments promptly;
  • Handle maintenance and repairs;
  • Be available for emergencies 24/7;
  • Evict bad tenants;
  • Cleaning the unit after tenants vacate; and
  • Finding new tenants.

Can you handle all those responsibilities? Is it worth the added stress?

In the end, you might find that by saving on property management fees, you will lose more money on time spent. Also, you may hire bad workers or too expensive ones to do the maintenance and repairs costing you more money.

Ever evicted a tenant?

It’s no fun and costs lots of money if you hire over-priced lawyers.

Or, you can be your own attorney to save money. Yet if the tenant knows the law better than you, errors will occur costing you more money. Worst, you may lose the eviction lawsuit and pay your tenant damages.

self-manage stress, eviction of tenant, landlord

We published blog posts helping landlords to self-manage like:

What is Professional Property Management?

 

A property manager takes care of all the self-management functions while you wait for the monthly rent deposits and year-end accounting with tax payments leaving you with the profits.

You can hire a property manager or a professional property management company.

 

What Is an Individual Property Manager?

 

The difference is that an individual property manager comes in different types. You can hire a live-in property manager in a large apartment building you own.

The live-in manager lives rent-free plus probably earns more for doing extra work. College students often get hired as live-in managers.

Or, you can hire an individual to manage your property without living in it. Either paid a monthly retainer or by the hour.

One problem with hiring individual managers is lack of experience leading to incompetency. Another problem is hiring someone dishonest who steals the rent. An individual may overcharge for repairs and maintenance. He or she could make side deals with the tenants to line the pockets.

 

What is a Property Management Company?

 

A professional property management company provides day-to-day services for landlords and real estate housing investors. They will do everything on the above DIY list and more.

 

Property Management Company Pros

 

Here are 6 Pros for hiring a property management company.

 

1. Experienced and Qualified

It’s easier to check out the experience, qualifications, and reviews of an established company than individuals.

A big advantage of hiring a property management company over an individual manager is that California laws require a real estate broker’s license. Typically, the owner of the company holds the broker’s license while the employees work under the broker’s direction.

You can verify the broker’s license and check for any disciplinary actions (if any) against the broker by visiting the California Department of Real Estate license check webpage.

California requires property management companies to know the California eviction laws.

 

2. Saves You Time

As mentioned above, the property management company does everything on the DIY list. Also, the company does the bookkeeping and accounting to show the expenses, collected rents and deposits, and annual profits.

You don’t need to do anything about managing your rental properties. Just sit back and enjoy your lower stress life while the company does the work.

 

3. Expertise

Knowing the laws, local ordinances, and rules regarding rentals is the company’s responsibility. Also, they stay current with changes and updates.

In addition, they know the current federal, state, and local Fair Housing laws that apply to screening tenants.

 

4.  Easier to Fill Vacancies

Running a classified ad on Craigslist or a local newspaper isn’t good enough to find the best tenants for your rentals. Besides better advertising, they use better screening processes to find you better tenants.

 

5. Knowing the Best Cost-Effective Professionals

Hiring lawyers, maintenance, and repair persons that you don’t know will cost you time and money. Professional property management companies establish long relationships with the best competent, reliable, and cost-effective professionals to work for you.

 

6. Can Evict Bad Tenants

Don’t try to be your own lawyer. Let the management professionals hire an experienced eviction attorney for you.

 

benefits of a property management professional

Property Management Company Cons

 

The few potential cons for hiring a property management company include these three.

 

1. Not all Property Management Companies are Equal

Like all businesses, some are better than others. Some companies hire the best employees to take good care of their customers. While others cut costs to make larger profits.

 

2. Some Property Management Companies Don’t Care About Your Properties As You Do

Good companies take pride in their work and the results. Others are only happy when they make a profit.

Professional pride is only found in people with good values.

Some companies take on too much work and are too busy to care. Others don’t hire enough employees or contractors to handle all the rentals’ needs.

It’s ideal when you find a property management company that meets your expectations and runs your rentals smoothly.

 

3. Some Property Management Companies Cost Too Much

Since management prices are not set in stone, companies are free to charge a wide range of fees.

Make sure you understand all the fees (no hidden fees) for all services before hiring the company.

Compare different companies’ fees and services before starting a business relationship.

 

Should You Self-Manage Your Properties or Hire a Pro? – Conclusion

 

What is the answer to the question: “Should you self-manage your properties or hire a pro”? Compare the pros and cons between self-managing and hiring a professional manager or company.

It boils down to whether you possess the skills to self-manage your rentals. For instance, can you:

  • Do the accounting and bookkeeping?
  • Deal with maintaining and repairing your rental properties?
  • Set the right rental price?
  • Advertise for tenants?
  • Do tenant background checks?
  • Prepare and explain legally binding lease agreements?
  • Understand fair housing laws, contract laws, and landlord-tenant laws?
  • Collect deposits and safeguard them? and
  • Evict bad tenants?

If your answer is “No”, then you shouldn’t self-manage them.

On the other hand, finding a reliable honest live-in property manager is not easy. Choosing the right property management company can make the difference between profits and bankruptcy.

 

Hire a Professional Property Management Company in San Diego

 

As explained above, the benefits of hiring a professional property management company are:

  • Experienced and qualified;
  • Expertise;
  • Saves you time;
  • Easier to fill vacancies;
  • Know the best cost-effective professionals to help you; and
  • Can evict bad tenants.

 WeLease Property Management Company offers experienced managers who care;

  1. We take pride in our professional services; and
  2. We charge fair fees.

Contact us for all your property management needs in the greater San Diego area. No matter how small or large your rentals are in San Diego County.

 

Steven Rich, MBA – Guest Blogger

 

 

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