When you purchase an investment property, one very important decision must be made – should you do your own property management or hire a property management company to help out? While self-manage would be cheaper upfront, it might be ideal to partner with a property manager that knows how to maximize the return on your investment. Before committing to a decision, let’s talk some more about both options.
What is Property Management?
Property management is – as it essentially states – the management of your investment property. It involves the daily oversight of said property – be it residential, commercial, or even industrial. The management includes – but is not limited to – maintenance, repairs, security, tenant selection, rent collection, and general upkeep. While many landlords do prefer to engage in DIY property management, these individuals often find that it is a time-consuming task.
What Does a Property Management Company Do?
A property management company specializes in managing the routine tasks associated with investment properties as delegated to them by the property owner. The purpose of the tasks are to preserve the overall value associated with the property while working to generate a lucrative stream of income.
Professional property management companies are the management of properties by a third party. The owner of the managed property then pays a fee or a specific percentage of the income generated by the property to the property management company for their services.
Why Do Landlords Typically Hire a Property Management Company?
There are numerous reasons why landlords make the decision to hire a property management company to engage in the duties for which they are typically responsible. The following outlines the most common reasons:
- One of the main reasons why property management companies are hired is to help landlords avoid tasks that are extremely time-consuming. The daily operations associated with investment properties take an immense level of effort and quite a bit of time to manage. Many landlords find themselves completely overwhelmed and unable to successfully fulfill all obligations. As a result, they find that they are unable to successfully maximize the profits associated with that investment property.
- Next, coordinating the proper amount of maintenance is often difficult for landlords. It is challenging to find professionals that are capable of handling all of the maintenance and repairs that are necessary for the upkeep of the properties. Not only is this a time-consuming and expensive endeavor, but delays could also result in legal and financial issues. By having a property management company, the maintenance and repairs are handled and property owners are not at risk of incurring additional financial or legal burdens.
- Finally, many landlords will hire a property management company in order to ensure that their property does not experience vacancies for long periods of time. These companies offer tenant selection services, handle all of the necessary background checks and paperwork, and ensure that the property is not vacant. This is made possible by the immense number of tools and resources at their disposal – most of which are not available to landlords that are engaging in DIY property management.
How Do I Know if I Need to Hire a Property Management Company?
While there is no official guideline in place that states that a property management company must be hired, there are several points in place that highlight the fact that it is a productive measure. These include the following:
- If you are a landlord that plans on purchasing multiple investment properties or already has a large number of properties in your portfolio, it is advised that you enlist the assistance of a property management company.
- If you would like the income of your investment property to be passive and have no desire to engage in the active management of said property, it is in your best interest to have a property management professional handle the daily operations of your asset.
- If you do not live close to your investment property, a property management company should be hired to keep up with it.
- You may hire employees to handle the tasks associated with your rental property. However, if you do not want the legal responsibility of those employees, you should use a property management company. The professionals that work with you from the company are not considered to be employees. They are considered to be independent contractors. Additionally, those that the company hires are not considered employees.
- Many individuals lack the time and resources to actively work on their investment property on a daily basis. If you have other obligations – such as a job, another business, or anything else that ties up your time – you will benefit immensely from hiring a property management company.
- If you have an investment property that is part of the affordable housing program, it is best to hire a property management company that will be able to ensure that you are adhering to the rules, policies, and procedures that govern these types of properties.
- If you have the financial means to hire help, a property management company is recommended. These companies charge small fees or percentages of your rental income for their services. The upside is that they will take all of the work off of you. That way, you may engage in other pursuits on the side – be it personal or professional. The work that is done by the company will provide you with a high level of freedom.
What are the Main Responsibilities of a Property Management Company?
Property management professionals have an immense number of responsibilities. The following outline their main responsibilities:
- Tenant Screening
- Creating and Handling Leases
- Collecting Payments from Tenants
- Property Maintenance
- Property Repairs
- Property Upkeep
- Budget Creation
- Ensuring Compliance with Landlord-Tenant Laws and Associated Regulations
What are the Benefits Associated with DIY Property Management?
While hiring a property management company to handle investment properties is the best way to go, there are some benefits associated with DIY property management. The top advantages are as follows:
- You have complete control when it comes to screening tenants and accepting those tenants.
- There are online platforms available where you may obtain lease forms, online payments from tenants, and manage your real estate budget.
- If you do DIY property management, you will not have to pay a fee or a percentage to a company to do the work for you.
- You may create your own rent price based on the market trends, rentals in close proximity to your investment property, and your personal needs.
- You have the freedom to handle your own maintenance, upkeep, and repairs or choose what you want to perform vs the work that you may hire.
- You are free to market in your own way, in your own time, with the platforms that you prefer.
- You may manage your own books and track your own expenses and income.
Are There Any Disadvantages to Hiring a Property Management Company?
To really determine whether you should hire a property management company, it is imperative that you evaluate all aspects – including any associated disadvantages. While the disadvantages are very few, you should consider them. The most common include the following:
- The property management company will charge a fee or percentage for managing the property.
- You may find that the tenant screening and selection process to too strict compared to that which you usually prefer.
- In-house crews used by property management companies may be a bit more expensive than the friends or contractors you normally hire on your own.
- If you want a hands-on approach to your investment property, you may find that you have a lower level of control.
- You may not like the marketing practices that the property management company uses to promote your investment property.
Get Property Management Help Today – YOUR Way!
If you are a landlord that likes to have some level of control but enjoys your freedom, you should contact us today at Pioneer Property Management. We will work closely with you to determine which aspects of your business we should manage and which aspects you should manage. An example of the services that we offer our clients include tenant screening and selection, rental analysis, video virtual tours, supervised showings, lease preparation and signing, inspections, tenant relations, rent collection, lease enforcement, maintenance, 24/7 emergency services, and more!
We here at Pioneer Property Management provide award-winning services to investors across the span of the Front Range of Denver, Colorado. We believe in being proactive, not reactive. We have thousands of highly satisfied clients that have exceptionally maintained properties that render high levels of financial success. For more information on property management services or to talk to one of our professionals today, call us at.