When you own rental properties, one of the main questions you’re likely to ask yourself is, “Do I need to hire a property management company… or can I handle managing my properties myself?”
Many property owners are tempted to handle things on their own. And while we understand that taking the DIY route can be tempting, if you want to protect your investment, it’s in your best interest to hire a property management company.
If you’re new to the real estate investment world or haven’t worked with a property management firm in the past, you'll probably have some questions. What does a property manager do? How does property management work? What property management fees can you expect to pay for management services?
Let’s take a deep dive into the world of property management to answer those questions and to show you why hiring a property manager is the right decision for your properties, and how to find the right property management partner:
Why You Need to Hire a Property Management Company
When you own rental properties, one of the main questions you’re likely to ask yourself is, “Do I need to hire a property management company… or can I handle managing my properties myself?”
Many property owners are tempted to handle things on their own. And while we understand that taking the DIY route can be tempting, if you want to protect your investment, it’s in your best interest to hire a property management company.
If you’re new to the real estate investment world or haven’t worked with a property management firm in the past, you'll probably have some questions. What does a property manager do? How does property management work? What property management fees can you expect to pay for management services?
Let’s take a deep dive into the world of property management to answer those questions and to show you why hiring a property manager is the right decision for your properties, and how to find the right property management partner:
Why You Need to Hire a Property Management Company
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To kick things off, let’s take a look at why you need to hire a property management company. There are a number of reasons why hiring a property management company is a better business decision than trying to manage your properties on your own:
Property Managers Save You Time
First, hiring a property manager is in your best interest because it saves you an immeasurable amount of time — time you could be spending building your business.
Managing a property is extremely time-consuming. Between dealing with tenant issues, staying on top of maintenance, managing contractors, inspections, screening new tenants, preparing units for turnover, advertising to keep vacancies low, and all the other tasks that need to get done on a daily basis to keep a property running smoothly, managing a property is easily a full-time job — and then some. If you were to try to manage your property yourself, your time would be monopolized. You wouldn’t have the time or bandwidth to handle the other areas of your business, causing it to stagnate — and eat into your profits.
Property Managers Can Afford You the Lifestyle You Want
As we mentioned, managing a property is a 24/7 job. That means, if you’re managing a property, there’s no days off — not weekends, not holidays, not special days for your family. The 24/7 nature of the job can be a drain on your lifestyle and cause other areas of your life to — especially when you consider the fact that managing your property isn’t your only responsibility.
Your property manager is there to handle things around the clock so you don’t have to.
But hiring a property manager solves that problem. When you have a property manager, you don’t have to worry about fielding late-night calls, dealing with a tenant issue on Christmas morning, or spending too much time away from your family or other business responsibilities. Your property manager is there to handle things around the clock so you don’t have to.
Property Managers Act as Your Enforcers
There is a lot of not-so-pleasant parts of managing a property, particularly in the billing and eviction department.
The truth of the matter is, some of your tenants won't pay their rent on time. That means someone will have the tough job of finding out why the rent is late, getting the rent quickly, ensuring it’s on time in the future, and evicting tenants if they can’t get the rent paid.
If you manage your property yourself, the person having that tough conversation will be you. And not everyone’s made out for those conversations! They’re awkward, uncomfortable, and if you’re not naturally assertive, you have a strong possibility of walking away from them without the rent you need from your tenant.
But when you hire a property manager, they act as your enforcer for billing, delinquencies, and evictions. They handle all of those tough conversations for you and make sure your tenants are current with their rent. And because they have years of experience in dealing with tenant and billing issues, the conversations are no longer uncomfortable, and they have a much higher chance of walking away from the conversation rent in hand.
Property Managers Bring Experience to the Table
Owning a property doesn’t necessarily mean you know how to manage one. Do you know how to deal with maintenance issues? Do you know what to look for when screening tenants? Do you know how to handle conflicts between tenants? The answer is probably no, and without that experience, managing your property will be significantly more difficult.
But property managers bring years of experience in managing properties to the table. They know how to handle the issues that crop up with maintenance, tenants, and billing because they’ve already handled them before. This will save you tons of time, hassle, and headaches.
Property managers bring years of experience to the table. They already know how to handle issues that crop up with maintenance, tenants, and billing because they’ve handled them before.
Property Managers Bring the Right Team
No one — not you and not your property manager — can handle everything that needs to be done to effectively manage a property. But the benefit of hiring a property manager? They have the right team waiting in the wings.
When you hire a property management company, they’ll have a list of trusted vendors on call (like plumbers, electricians, and landscapers) to handle any needs associated with your property. And because of their pre-existing relationship, you’re likely to get a much better deal than you would if you approached the vendor on your own.
So, in a nutshell, when you hire a property manager, they’re responsible for:
- Keeping the property occupied
- Maintaining the property
- Enforcing the lease
- Managing tenants
- Handling repairs
Questions to Ask When Hiring a Property Manager
The key to a successful property management relationship is hiring the right property manager. And the key to hiring the right property manager? Asking the right questions.
Here are the questions you need to ask before hiring a property management company:
How do you plan to market my property?
Marketing brings awareness of your property to potential renters. How a property management company markets their units will clue you into the urgency (or lack of urgency) at which it occupies vacant property.
For example, some companies will leave listings off of MLS to avoid sales competition — even if listing it there could rent your property sooner. Instead, they use their own sites, Zillow, or Craigslist to keep the sale in-house. This kind of practice is a red flag that a property management company doesn’t have your best interest in mind.
How do you screen tenants?
Tenants should be chosen with care. You need tenants you can trust will pay you on time and take care of your property. The thoroughness of the initial application screening will help you avoid the future headaches of difficult residents.
You should feel comfortable with the process your property management company utilizes to screen potential applications. Ask what systems they use for background and credit checks and the criteria for acceptances and declines.
How close is your office to my property?
Doing business with a company that has an office near your property will give you peace of mind. You need a manager that will respond to your tenants’ needs quickly. If your property isn’t in close proximity to their office, your manager may be less responsive — especially at 4:30 p.m. on a Friday afternoon. Make sure you find someone that’s responsive and willing to check in on issues — even when it’s inconvenient.
Can you explain your process to me?
A good property management company will have their systems and processes locked down to a science —and they should be able to explain those systems and processes in a way that makes sense to you. If your property manager can’t explain what they do and how they do it in simple terms, they’re not someone you want to work with.
If your property manager can’t explain what they do and how they do it in simple terms, they’re not someone you want to work with.
Do you up-charge on repairs?
Starting rates advertised by property management companies might look like a great deal, but if it sounds too good to be true, it probably is. Be sure to ask your property manager how they charge for repairs. Do they up-charge a flat fee for repairs? Or do they take a percentage of the cost of each repair?
Do you charge me when the property is vacant?
Ask whether the property management company charges you a fee if your property is vacant or when the tenant isn’t paying rent. If managers are still collecting your fee even when your property isn’t generating income, they may be less inclined to be aggressive with marketing or eviction efforts.
Are there any other charges besides leasing, renewal, and management?
It’s important that you get a clear picture of a property management company’s fee structure before you sign on the dotted line. Ask property managers to go through their entire fee structure with you before you make a decision. Make sure you’ve located all hidden fees before making an agreement and never feel pressured to sign a contract unless you understand the terms.
Is Hiring a Property Manager Worth the Cost? Property Management Fees Explained
You can see the benefits of hiring a property manager. But those benefits come with a price, which may leave you thinking, “Is hiring a property management company worth it?”
And the answer is, unless you have years of experience in managing properties and a lot of time on your hands, yes.
Does hiring a property management company cost money? Of course. But when you factor in the money you’ll save, it is a worthwhile investment.
Property managers make you money in a variety of ways. First, they save you time, and as the old saying goes — time is money.
Working with a property manager who knows the market, knows how to price your property, and knows how to get good tenants in the door is invaluable.
Property managers also know how to get your property rented; the longer your property sits on the market, the more money you lose, so working with a property manager who knows the market, knows how to price your property, and knows how to get good tenants in the door is invaluable.
In addition, the years of experience that property managers bring to the table are a huge value add. Because they know what they’re doing when it comes to managing properties, they’ll do things (like vetting tenants and marketing your property) right the first time, which will save you money in the long run.
And lastly, property managers ensure that your property is well-maintained and taken care of, saving you money on depreciation.
How Involved Do You Need to Be With Your Property Manager?
Now that you know hiring a property manager is the way to go, you’re probably wondering, “Just how involved do I need to be in the process of managing my property after I hire a property management company?”
And the answer is not that involved.
When you hire a great property management company, you want to give them the space they need to do their job. If you want to be more involved, you can have your property company send you regular updates on what’s happening at the property, but allow them to move forward with their processes as they see fit. If you’re less inclined to be involved in the day-to-day operations of your property, the only involvement your property manager will need from you is availability to make larger executive decisions, like major repairs.
Ready to Get Started? Get in Touch With LEAP
If you’re ready to let go of the hassle of managing your own properties and hire a professional property management company, get in touch with LEAP. At LEAP Property Management, we bring over 15 years of experience in managing properties in the Dallas-Fort Worth area.
Our process is simple. Once you’ve signed a management agreement that allows us to work on your behalf, we’ll get you onboarded and into our system, answer any questions, assign you your points of contact for your property management needs, and get to work!
Ready to get started? Get in touch today.
