People rarely stop with just one investment property. They’re a bit addictive, and one tends to lead to three and three to ten. At some point, it becomes necessary to sit down and give thought to how you plan to manage your investments, not just now but in the future. Forethought today leads to smooth sailing later on.
The Dilemma: Self-Manage or Hire a Property Manager?
Perhaps you are currently your own property manager, but are considering whether you wish to remain in that capacity. The more properties one owns, the more support one must generate and provide to keep them habitable and in good repair for your tenants. There is no correct answer to the dilemma of whether to self-manage because each situation is unique. The answer often depends upon the influence of life factors unrelated to property management, such as other areas of life that limit the available time.
The tasks involved in property management are wide-ranging and diverse. They involve everything from bookkeeping to building maintenance and repair. Someone must be available to answer tenant concerns as they arise. Marketing, inspections, rent collection, and the actual showing of properties are a full-time job for the property owner unless they hire out part or all of their responsibilities. Property owners often quickly discover that what they can do on their own with one or two properties is impossible with ten or twenty or even with a high rise.
Study the Current Rental Market Before Buying
Before buying a first rental property, consider all of the rental property pros and cons in your area. Consider the profit you expect to make and weigh that against the amount of work it demands. Is there room within your profit margin to hire a management firm? Having someone else to manage a property frees property owners to spend their time looking for more rental properties. One thing to always consider is how well the rental market is currently performing in your particular area. Is there a surplus of rental property in your area, or is it in hot demand?
When you contract with an outside firm for property management services, you are essentially turning your property enterprise into a source of passive income. You might not pocket quite as much, but you remain free of the daily grind burdens that go along with owning such a business. You are free to invest your time in other endeavors, such as additional money-making opportunities, family, and hobbies, as you see fit.
Some of Both
One other option is to do some of both, perhaps. Many people like to stay in touch with their businesses and even with their tenants. If this is true for you, consider hiring out some of your duties. Many business owners contract with bookkeepers, a janitorial firm, and a building super but meet with their clients and collect rents personally. Be flexible, and you’ll find the right blend for your circumstance. The best thing about this scenario is that it is so easily altered when your needs change.
Something property owners should always keep in the back of their minds is the fact that it is easy to make more money, but nobody knows how much time they have. Do the parts of your business management that are rewarding to you, and hire others to manage the rest.