The decision to give up a portion of the profits and hire a property management company is one of the most difficult decisions a landlord makes. So in this article, we review important factors that investors should consider when making this decision.
Stress and Time Commitment
How valuable is your time, and how much stress do you want to add to your life?
Self-managing investment property can take a great deal of time, and add considerable stress to an investor’s daily life.
Here are a few of the things a property manager must deal with:
- Advertising vacancies, finding tenants, and managing tenants.
- Repairs and maintenance.
- Emergency calls.
- Turning properties that are vacated.
- HOA violations.
Many real estate investors hire a property management company simply because of quality of life considerations. They do not want to devote the time, or deal with the stress, associated with self-managing investment properties.
There are financial advantages to using a property management company, especially for investors who are successful in other professions.
Doctors, lawyers, Realtors, financial experts, small business owners, and people from many other professions own investment real estate. Busy professionals, such as these, make much more money by working in their field of expertise, and paying a property management company to oversee their investment properties.
Many investors also take advantage of purchasing investment property with a Self-Directed IRA, in which case they are forbidden from participating in the management of the property. These investors, therefore, must use a property management company.
Lastly, real estate investors who have a large portfolio of properties, or want to retire without the hassles of day-to-day property management, use property management companies.
Personal Location vs. Location of Investment Properties
Some investors have tried to self-manage investment property from long distance, which usually ends in disaster. It goes without saying that an absentee property manager is doomed to failure.
So, real estate investors who do not live a reasonable distance from their properties to respond to emergencies in a timely manner should hire a property management company.
Personal Skills and Life Choices
Managing investment properties takes a great deal of skill. The manager must market vacant properties, manage tenants, maintain the properties, do the bookkeeping, do the repairs, and keep up with local, state and federal laws while also enforcing them.
Investors should hire a property management company if they do not have the skills required to manage their properties, or do not want to spend their time doing these types of tasks.
The best property management companies, their employees, and their contractors have the expertise to manage investment properties while maximizing profits.
Some real estate investors manage their investment properties very well, and enjoy doing it. But, many investors do not have a desire, or skills, to self-manage rental properties.
So, which real estate investors should consider hiring a property management company?
- Investors who have a large number of investment properties.
- Investors who don’t want the stress, or to devote the time, to managing rental properties.
- Professionals who can make more money in their field of expertise, compared to the expense of hiring a property management company.
- Investors who want to take financial advantage of using a property management company, such as purchasing investment property with a Self-Directed IRA.
- Investors who are not located close enough to their investment properties to effectively manage them.
- Investors who don’t have the skills to manage rental properties.
Graystone Investment Group
Graystone Investment Group is a real estate wholesaler. We have researched the Tampa Bay area neighborhood-by-neighborhood to determine where investments are likely to have the most most return on capital.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.