Things To Consider Before Getting Started in Property Management
While it might seem suspect, a property management company writing an article convincing you that managing your own property is a bad idea, we wanted to present you with lessons we learned when we first started in property management.
Having said that, we don’t think everyone needs to hire a property management company (and many aren’t a fit for our company), so we hope you’ll read the following and make your own informed decisions on the best path for you.
Simply put, we couldn’t find a company to manage our own investments, so we expanded years ago to include a residential property management arm.
It’s tempting to want to save on the management and leasing fee you’d pay a company and manage the property yourself. But ask yourself first, what happens if you go this route, and are there unanticipated costs and consequences?
Consider a home improvement or repair you need to make. Do you call a contractor to take care of it? Or do you do it yourself? It depends. If you have the skills, you’ll do it yourself. If you think you can do it, you might watch a few tutorials on YouTube and give it an amateur try. What happens is, you risk doing something like not grouting your slate tiles properly because you didn’t realize the porousness would collect it, and now you have a finished project that can’t be reversed, and it’s covered with unsightly grout.
You wasted the cost of the supplies, possibly at least the weekend, if not more, and have to start all over again. That’s quite a bit more expensive than having someone do it right from the beginning.
That’s why, for those who don’t have the knowledge and the skills, it sometimes makes sense to work with property management to rely on experts who watch your back. (In fact, you can read our new ebook on Choosing and Working with a Property Management Company to make your own determination.
Let us explain. If you don’t know the business, you take many risks and could end up with an eviction process, a nightmare you want to avoid at all costs. Your property management company protects you from many things, mostly legal and certainly financial.
- Property management companies have the resources and access to tools and vendors individual property owners might not have. This saves money on repairs and removes the question of what to do if/when you get the midnight call from the tenant. You don’t get the call, to begin with. (You don’t have to work with the tenant directly.) Also, you don’t waste time getting quotes, then wondering if it was done right and at a good price. Your property manager has it covered.
- They conduct extensive background checks to ensure the right tenant is in place. This is the absolute foundation of a worry-free rental experience. A bad tenant makes your life miserable and erodes your return on investment.
- Understanding the leasing and renewal process: Many owners don’t completely understand what to do. For example, we start the process 60 days prior to the desired occupancy date to make sure we have everything lined up. This decreases your likelihood of having a vacancy.
- Tenant communications: Do you understand the legalities in tenant communications, including your rights and theirs? If a tenant asks for a repair or improvement, do you legally have to do it or not? Having a third party represent you again protects you legally and financially. Say the wrong thing, and it could come back to haunt you later. Or, you might find yourself investing in improvements you don’t have to.