When someone buys a rental property, one choice that they have to make early on is whether they want to manage it themselves or hire a property manager to do the work for them. One might think that self-managing a property would be the easiest solution, as it would allow the owner to have full control over costs, tenants, and income. Yet while self-management can be a viable option for some, for others it would be far too much of hassle. At the same time, some might prefer the direct control offered by self-management, and if an investor has the time and expertise, this can work out quite well. Both strategies have their value, but it is ultimately your decision as to which option best suits your situation.
When an investor needs a landlord or property manager to look over their investment, they will most often hire a third-party manager rather than do it themselves. There are good reasons for this: sometimes an investor just doesn’t have the time to take care of the many daily tasks that go with being a landlord, so hiring someone else to do it is a necessity. Additionally, if you own multiple properties or live in a different city/state than your property, it might not be feasible to be the day-to-day manager.
- Reduced Workload: Property management comes with a number of important tasks, from price setting and tenant screening to lease enforcement and tenant relations. Having a third-party manager means that you can focus on other work.
- Greater Experience & Knowledge: Unless you already have experience managing properties, a third-party property manager will likely be more aware of the rules, regulations, and best practices that are necessary for success in the rental industry.
- Separation of Work & Personal Life: If you are self-managing a property, you must constantly deal with direct requests from tenants. Having a third-party manager means that you won’t have to drive out to your property to address every problem that comes up, leaving you with more personal time.
- Additional Costs: A third-party property manager inevitably comes with additional upfront costs, so you will have to make sure that you can properly budget one.
- Less Hands-On Experience: While it might be convenient to not have to deal with the daily operations of the property, it also means that you have less of an opportunity to learn how the property is run, which could have downsides in its own right.
Lack of Control: Property owners will usually give third-party managers guidance on how they want their property to be handled. However, there is little to stop a less scrupulous manager from ignoring an owner’s wishes.
Though not as common as hiring a third-party manager, some investors will elect to manage their properties themselves. This is more time consuming, but it also guarantees that the investor has full control over how the property is handled. It’s also generally cheaper to manage a property on your own, especially if you already have experience with the legal and business side of the job. Then there is the fact that some investors might want to become landlords or property managers themselves, so it would only make sense that they would want the additional experience.
- Reduced Costs: Hiring a property manager comes with its own unique expenses, from the regularly monthly paychecks to things like finder’s fees and other additional costs. Self-managing your rental property can save you a great deal of money.
- Closer Relationships With Tenants: Serving as a property manager means that you will have the opportunity to get to know and build relationships with your tenants, which can have long-term benefits for your business.
- Greater Control Over Property: Although third-party property managers are expected to follow the owners’ guidance on how the property is run, self-management ensures that these standards are continuously met.
- Time Investment: The sheer number of tasks that a property manager is expected to take care of is significant, so if you decide to self-manage, you had better be ready to invest some serious time into it, especially if you own multiple properties.
- Extra Work & Stress: If you decide to manage your rental property yourself, than you are responsible for fixing every problem that comes up, from a tenant breaking their lease to a burst water pipe.
Lack Of Experience & Knowledge: Hiring a third-party property manager means that you have some guarantee that the one managing your property is knowledgeable of the legal regulations, best practices, and overall prices that would do well in the area. Unless you already have experience in the field, self-managing can be a learning experience.
Which Option Works Best For You?
Whether you decide to self-manage your investment property or hire a property manager, you should base your decision on your specific needs. Before deciding to self-manage, ask yourself if you can afford to make the time investment necessary to properly handle the most important aspects of your property. Alternatively, if you decide to hire a property manager, take the time to find one who will work for you. Not all property managers are created equal, and if you do decide to hire a third-party manager, you need to make sure that they are reputable and trustworthy.