Investing in rental real estate is one of the best investments you can make with your money. However, it comes with some hurdles around managing properties and looking after the tenants. It can often get difficult dealing with the tenants – especially if it’s not your cup of tea. At the same time looking after all the other technicalities such as managing a property’s maintenance and making sure the occupancy rate stays high can get difficult if you have other things to look after.
This is where a property manager truly helps! You can look for a property manager to aid you with finding tenants, bookkeeping, maintenance work and almost every other thing related to your rental property.
In-House vs. Third-Party ManagementJust like other things in life, each strategy has trade-offs. Managing properties yourself saves money you would have to spend paying a property manager. Most property management agencies bill 10 percent of the rent collected from the property.
With that said, as any business book would tell you, time is money! Employing a property management firm saves you time, so you'll get a chance to focus on expanding your portfolio.
Yet, the expenditures are more than just the money exchanged. Managing yourself reduces the risk of fraud and cheating as well.Managing the ManagerEven if you hire a property manager, you will have to manage the manager. You will have to request monthly income, vacancies, and receivables reports. If something isn’t going well, make sure to ask them about it. Be a little firm. The squeakiest wheel, after all, gets the grease.
Which Should You Choose?It probably makes more sense to do it yourself if you only have one or two properties, particularly if you're house hacking. For a property management company, you will not be a high-value client.
If you have reasonable amount of properties, for example, 5 or 10, then hiring a property manager will likely be more beneficial for you. Such a portfolio will take a large amount of time but will rarely produce ample profits for you to leave your job, so you need to prioritize whether you want to keep up with your job, the investment business, or juggle both.
If you go really big (50+) then starting your own management company is, in my opinion, the best option.
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