When investing in real estate, three critical decisions frame your experience as an investment property owner. How you approach them will determine whether you endure or you enjoy owning rental properties. These three crucial decisions are:
- Your choice of financing
- The location of your properties
- How you manage the assets
Most investment property owners will understand why mortgage and location are essential. What they may not know is that management is just as important as the other two. It is an integral part of the three-legged strategy for making a property profitable.
How you manage your property determines the quality of the rental, the overhead cost of operating it, the type of tenants in it, and the overall performance of the investment. Management can unlock or impair a rental property’s potential.
There are many tasks involved in managing a rental. But the most enduring quality of all of them is that they are never-ending. Overseeing a rental is a time-consuming undertaking with no days off. It can stretch into odd hours of the night and rob a landlord of their peace of mind.
If you have been self-managing your investment property and are faced with just this type of situation, it might be time to step back and revise your strategy. Maybe, you should ask yourself if the time has come to surrender the reins and hand the property over to a property manager.
Who is a property manager?
A property manager is a professional who oversees a rental property to ensure that it meets the, sometimes, conflicting needs of property owners and tenants. The manager ensures that renters get the most from the lease, while also helping the owner maximize profits.
A property manager must be organized, hands-on, financially astute, and skilled in communication and people-management. This is because they administer every aspect of the rental, from maintaining its physical structures to marketing it.
How can you tell if it is time to take a less active role in your property and hire a property management company to look after it?
Vital signs that it is time to hire a property manager
If any of the signs below describe your situation, then it is time to employ the services of a property management company.
You have more properties than you can manage yourself
If your portfolio has been growing steadily, a time will come when the rentals’ quality will start to deteriorate if you insist on managing them yourself. This is because the scale of work has exceeded what you can effectively carry out on your own. To oversee the properties efficiently, you must hire employees, create an elaborate management system, or hire a property manager.
Your properties are in a distant city
Often the most profitable real estate opportunities can be found in cities far away from you. Investing in distant towns allows you to take advantage of developments in other places without moving to those locations.
But it is only possible to do this if you are willing to let someone else manage the assets on your behalf. It is almost impossible to successfully manage a rental property from a distance because many of the tasks involved require in-person interaction.
You don’t have the time
If you are not willing to surrender the time you dedicate to other things to look after your properties better, you should hire a property manager. This may be the case if you have a job, hobbies, or care for your family. It may also be that you want to have more leisure and prefer to give your time to activities you love, rather than activities you are forced to do.
You hate menial work
If you want the rewards of owning a rental property but are entirely uninterested in the physical work of maintaining the property, you need a property manager.
Perhaps you are annoyed by the mere thought of doing any physical maintenance task. Or you are not the type of person who knows their way around mechanical devices. If this is you, you can still invest in properties without ever having to inspect a burst pipe; you need to hire a property manager.
You are willing to make a little less money
If you are happy to surrender some of the profits you could have made in exchange for more time and less stress, you should hire a property manager. Most property managers will charge 5%-10% of what you collect in rent as their payment for taking over the burden of managing the property. If you are happy to part with this money, you should hire a property manager.
In conclusion, even if you pay to hire a property manager, you will also make more money because of the property manager. This is because your costs are likely to be lower while your revenue is higher. Hiring a property management company is an investment more than it is an expense.
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