When Is It Time to Hire A Property Management Company?
As your real estate investment business grows, you’ll need to evaluate how much of the hands-on property management you can handle on your own—or if you need help. Property management companies can take on most of the day-to-day tasks of being a landlord. This includes marketing the property, finding tenants, collecting rent payments, and hiring tradespeople or contractors to make repairs or improvements.
Several factors play into deciding whether to hire a property management company. Maybe you own a few properties in the greater Atlanta area, and need a Suwanee property management company; or perhaps you own several properties scattered across the country. When your responsibilities as a landlord start to feel overwhelming, it’s time to take stock of your priorities, evaluate why you’re in the real estate business, and clarify your goals.
Landlord or Investor
Why did you get into owning properties? Was it because you enjoy rehabbing houses or turning underperforming apartment complexes around? Do you enjoy getting to know your tenants and solving their issues and concerns? Perhaps your focus primarily on your properties as investments. Being honest with yourself about why you got into the business is a good starting point for deciding when it might be time to hire a property management company.
Maybe you’ve been very successful at acquiring properties that generate income and appreciate. But with every acquisition comes additional responsibility and compounding issues—from maintenance to vacancies to tenant concerns. If you like to see the income rolling in but aren’t crazy about dealing with a growing to-do list, it might be time to hire a management company to handle that list for you. This is especially true if you don’t live close to your properties: are you able to respond quickly to emergencies, tenant complaints, or unexpected maintenance issues?
If you own properties in addition to having another full-time job, you’ve got a lot on your plate. Searching for and assessing properties to acquire as investments can be a full-time job by itself. Make sure you have the time to devote to managing the property after you buy it.
Finding tenants requires market knowledge, an ability to set appropriate rental rates, and a willingness to conduct showings, advertise, and even manage a social media presence for each property. Performing appropriate assessments of prospective tenants while complying with all applicable laws and regulations requires experience and a commitment to staying up to date. If that’s too much for you, it’s time to call in an expert property management company.
The time may come that you’ll have to perform the unpleasant and emotionally difficult task of evicting a tenant. Make sure you can handle that. After all, you’ll be the person who gets the phone calls complaining about noise, pets, cleanliness or other tenant concerns. A good property management company will act as an intermediary in these situations, solving them before they balloon into greater problems.
What if your property needs work, or if there’s a sudden, major maintenance issue? If you’ve got a deep list of licensed, bonded plumbers, electricians, and carpenters that can come out on short notice, good for you. If developing that kind of network is not your strong suit, a reputable, experienced property management company will have those lists at the ready. That means they can marshal a response quickly when repairs are needed.
Good property management firms typically charge a percentage of the monthly gross income of your property. If you’re operating on a shoestring, you might not be able to carry the cost. Do the math and decide if saving yourself time and headaches is worth the cost of a property management company.
If you decide to sign a contract with a property management company, you’ll be entrusting that company with setting and collecting rents and fees, getting that money to your or into the appropriate accounts, and even filing property taxes. You’ll also entrust the company with your reputation as a landlord. Hiring the company to take care of day-to-day management doesn’t absolve you of your responsibilities as a landlord. If the company violates housing laws when screening tenants, or fails to maintain the property according to local codes and regulations, you’ll still be on the hook. If you’re a hands-on type and relinquishing control makes you nervous, you might not be ready to hire a property management firm.
Rehabbing one or two single-family homes might have been possible when you were first starting out, but keeping up with housing laws and zoning regulations requires continuing education and vigilance. Property management companies are professionals, and they stake their reputations on expertise in these areas. Make sure any company you are considering hiring is a member of the National Association of Residential Property Managers and that the company has put in the work to achieve Certified Residential Management Company status. Certification indicates the company has someone aboard who has individually earned the Master Property Manager designation, that the company has substantial experience, and that the company follows industry best practices.
If you started small as a real estate investor and are happy to stay that way, you may not need a property management company. You may be happy getting to know and helping your tenants, and you may find that providing good, personal service to them is just what you were seeking when you got into the business.
On the other hand, if daily contact with tenants doesn’t excite you and you’d rather keep your eyes on income and wealth-building, a property management company may be just what you need. Do your research; find out what companies charge for their services and do the math to decide if you can afford them. Ask around: what do other property owners in your area have to say about hiring a management company, and how did they go about it? For your property management needs, look no further than Excalibur Homes; we’re here to make the process simple, streamlined, and professional.