The Challenges of Managing Your Own Rental Property
Many rental property owners struggle when trying to determine whether the cost of a professional property manager is worth the potential benefits.
Owners often have to weigh known factors, like the cost of professional management fees, against factors that are hard to estimate, including the amount of time and hassle it will take to handle tenant issues and repairs. When managing your own rental property, it is possible that everything will go smoothly – the tenant will be a low-maintenance joy who pays rent like clockwork, and all the appliances and systems will keep humming along – or that one thing after another will require your attention.
In the short term, managing your own property is likely to save money. Property managers usually charge between 5 percent and 10 percent of the monthly rental income to manage a property, most typically at the high end of that range. In addition, leasing to a new tenant will often cost 50 percent to 100 percent of the first month’s rent in fees.
Do it yourself, and you may only be out the cost of advertising your rental and associated marketing costs. Unless it takes you months longer to find a tenant than a professional would because you priced it higher than the market could bear, didn’t spruce it up enough to appeal to renters, or didn’t have time to show the place when applicants wanted to see it. Vacancies cost money.
According to BiggerPockets.com, distance from the property and a lack of time or interest in learning skills needed to manage it well are circumstances where hiring a property manager can save money and problems in the long term.
But even when those circumstances don’t apply, landlords should consider the value of their time when thinking about the costs of hiring a pro. Property management can eat into leisure and work time, especially if owners have more than one property or end up having to deal with a problem tenant.
Despite the time and effort required, many owners are reluctant to delegate responsibility for their property. Managing your own rentals ensures that every decision about the property – large or small – is in your hands, from which tenant to choose to whether to allow residents to paint the living room. That level of control can be a real benefit for experienced landlords who like to handle things their way. But it can also be a problem for investment owners who would welcome and benefit from expert advice.
There’s no right decision for every landlord. The choice requires taking an honest look at personal factors, including how much time you have and are willing to devote to daily management tasks, how much expertise you have or are willing to gain through research and consultation with experts in the field, and how well you would be able to deal with the work and stress of major problems if they come up.