Landlords and investors who are deciding between self-management and professional property management need to keep some important things in mind. Rental property owners often ask us if it’s possible for them to manage on their own, without professional help. Of course it’s possible. However, if you’re hoping to maximize the return on your investment, it might be useful to partner with a professional who can manage and protect your asset. If you have experience with managing rental properties and the time you’re willing to give to this business, then you should strongly consider managing on your own as a landlord.
Before you make your decision, be sure that you’re fully educated on both options. You also need to consider your own specific situation. Managing one home is a lot different than managing an entire portfolio or a fully occupied building.
Compare What you Know to a Professional’s Knowledge, Experience, and Resources
There is a lot you can do to educate yourself on property management and the local Orlando rental market. You can take classes, read blogs and books, and network with people who have more experience than you do in this field. Obviously, with a professional management company, you are going to find a wider range of knowledge, experience, and resources available.
Professionals will know and understand the market much better than you. Your professional property managers will have an easier time pricing your property than you would alone, because we know rental rates and how to attract the best tenants to your property. As an individual landlord, you may be nervous about placing a tenant, and worried that your tenant will stop paying rent or damage your home. A professional property manager knows exactly what to look for and how to screen tenants to find a well-qualified renter.
You’re probably going to make a lot of mistakes when you’re managing your property on your own. Property managers have already made those mistakes, and learned from them. What you get with a professional property manager, in addition to the knowledge and experiences, is a set of procedures and processes that have been designed based on things that went right and wrong in the past. Property managers will have applications, leases, and rental criteria that have been reviewed and approved by attorneys. You won’t have to worry about accidentally violating a fair housing law or security deposit requirement.
Property managers will know the laws associated with renting out property. Individual landlords who self-manage aren’t always sure about the difference between an emotional support animal and a pet. As a landlord who is self-managing, you’ll potentially have to manage evictions on your own, serve legal notices, and stay up to date with the regulations regarding security deposits and lease enforcement. With a professional property manager, you don’t even have to think about those things; you’ve got a team of professionals on your side who have seen it all before.
Professional Management vs. DIY Management: Return on Investment
Treating your rental property as a business is an important part of being a landlord, even if you’re managing the property on your own. A property manager will do this without even thinking about it; every decision will be made from a business perspective; with your ROI in mind.
Earning short-term cash flow and long-term returns must be your main priority. Getting a return on what you are doing is why you do it. Property managers can help you earn more in a number of ways:
- Shorter vacancy times. Professional property managers have more marketing tools and resources. We can price your home correctly, get it ready for the market, and advertise it to desirable tenants. Shorter vacancies mean more money.
- Less tenant turnover. If you cannot respond to your tenant right away or solve the problems they’re having at your property, those tenants are unlikely to renew their lease at the end of the tenancy. Property managers can handle tenant relationships and diffuse potential tenant disputes. With a better chance of lease renewals, you won’t have to worry about losing money on turnovers.
- Consistent rent collection. Tenants are less likely to pay rent late when there’s a professional property manager collecting the payment every month.
- Lower maintenance costs. Many vendors offer discounts to property managers because they throw so much work their way. This volume discount can save you hundreds, if not thousands of dollars on maintenance and repairs. Individual landlords probably cannot expect to get this kind of discount because they are unable to provide the same volume of work to vendors and contractors.
It might seem like you are spending money on professional management because you’re paying that management fee every month. However, with a good property manager working on your behalf, you are actually going to spend less on your rental property and earn more. Property management fees are often tax-deductible, so you can use what you pay to reduce your tax liability. Talk to your accountant or your CPA about the other tax benefits associated with owning rental properties and professional management.
Professional Management Can Reduce Stress
Owning and managing a rental property can be stressful, especially if you own more than one. You have to be ready to respond to tenants and their needs at all hours of the day and night. There may be maintenance calls in the middle of the night or over the weekend. You may have to chase down late rent and deal with tenants who aren’t paying rent or who are violating the terms of your rental agreement.
It’s hard not to get emotionally involved when you’re managing your own property. The home you’re renting out might be the home you once lived in, and it can be difficult to watch tenants live there and not take care of it the way you’d like them to. It can be hard to enforce your lease and collect your rent on time if you’re not a confrontational person by nature.
Professional managers take all of the emotion and the stress out of your rental property. They are an important buffer between you and your tenant. They’ll let you decide how informed and involved you want to be with the management of this property. With a professional property management company, you will not have to worry about who you will call when there’s a leak in the middle of the night. You won’t have to show up in court for an eviction hearing or face the fines and repercussions of not returning a security deposit correctly. When you hand the management duties off to a professional, you get a lot of peace of mind in return.
Consider Best and Worst Case Scenarios – Which is More Cost-Effective?
What’s the worst thing that can happen if you manage a home on your own? Perhaps you place a bad tenant who doesn’t pay rent and damages your home. You’ll have to evict that tenant and pay for all the damages before you can re-rent the property. That’s going to be costly and time consuming.
What’s the worst case scenario if you hire a professional property manager? Perhaps it’s the fear that the property manager won’t do a good job or won’t love the property as much as you love it. If you talk to your property manager and choose a reputable, reliable business, you will feel comfortable turning one of your biggest assets over to the professionals.
In the best case scenario, you manage the home on your own successfully. You rent it to great tenants and you don’t run into any problems during the course of the tenancy. This is also the best case scenario with professional property management, except the result is obtained without you having to do anything. The tenants are placed and managed by someone else, and all you need to do is check for your rental deposit every month.
As professional property managers ourselves, we are always going to recommend that you hire a management company to ensure you earn as much as possible on your investment. If you haven’t had a good experience with professional managers in the past, it’s understandable that you’d rather do it yourself. However, if you find a good property manager who understands your property and your investment goals, you’ll find that you feel better about being a landlord, and you’re more confident as an investor.
Making this decision can be difficult, and there are a number of costs and benefits to both options. Do your research so you know exactly what you’re getting into, whether you decide to manage on your own or hire a professional company. Talk to other rental property owners who have done it, and get an idea of whether you’re ready to take on the challenge of self-management.
Whether you’re ready to talk about our management services or you’re simply looking for additional resources, please contact us at Specialized Property Management in Orlando. We’d be happy to talk you through each option, and help you come to the decision that’s best for you.