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This Old House - Do-it-Yourself

Should You Hire a Property Management Company?

Written by Posted On Thursday, 06 July 2017 13:34

Having rental investment properties is an excellent way to earn passive income. One of the best, in fact. There comes the point however when you often look around and think that it’s not really passive income anymore. You may find that you’re spending a lot of time managing your properties, and you may wonder if it’s time to hire a professional property manager.


You may even be thinking about buying your first rental property and wondering the same thing because it can quickly turn into a full-time job.


At the same time, property managers can be expensive, so you have to carefully weigh whether or not this is the right decision for your investments.

The following are some things to consider.


Know What the Property Manager Will Do

If rentals are a new investment for you, you may not even be entirely sure of what a property manager will do. In short, a little of everything, if they’re worth the cost.


Property managers will usually work to communicate with tenants as well as applicants on your behalf, they’ll market rentals, meet with people for showings, collect rent, deposit money made from the rentals, and also make sure repairs are taken care of.


If a tenant has a complaint, they’re going to go to the property manager who will then communicate with you.


A good property manager can essentially take all of the burdens of being a landlord off your shoulders, or at least most of them.


Where Is Your Rental Property?

If you have a single rental property and it’s down the street from your own home, a property manager may not be necessary because you can get there in a matter of minutes. If you have properties that are a good distance from you, however, a property manager is almost essential.


The Costs

To hire a property manager will usually cost around 8 to 12 percent of the monthly rental value of the property, and some expenses as well. Some companies will also charge a flat rate fee. If you have one rental property that’s simple enough to manage, that’s probably not worth the cost.


If you have any more than a few properties, however, the costs usually pay for themselves, especially with regard to reduced tenant turnover and the fact that a management company can help you make sure your units are always filled. The cost of unfilled units is a lot more than a property management firm’s fees in most cases.


Affordable Housing

As a final note, if you’re going to invest in properties that will be part of an affordable housing program, it’s usually best to hire a professional management company. Under these programs, you’ll receive various forms of financial assistance from the government to rent to low-income tenants. These programs often have pretty complex rules, which is why it’s usually best to go ahead and hire not just a property management company, but one with experience here. Otherwise, you can become overwhelmed, and possibly make an inadvertent misstep that could lead to problems receiving your payments.

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