The key to a profitable real estate investment is selecting the appropriate property in a great area, but this alone won’t be enough to make an investment property successful. You’ll still need to manage the property, handle maintenance, find tenants, etc. Depending on your strategy, hiring a property manager can prove to be the most effective aspect of being a real estate investor.
Managing a property that is appealing to renters requires an infinite number of improvements. A landlord may be required to perform various tasks throughout a single day when maintaining a property, including those of a plumber, accountant, and marketer. The daily time commitment needed for successful property management is approximately equal to that of a 9 to 5 employment. The most important investment you will need to make if your real estate investment is to thrive is most likely your time.
Thus, it is crucial to consider how you will manage the property before investing in a rental property. Do you have the time and necessary skills to manage the property yourself, or would it be preferable for you to hire a reputable property manager to do so? This article examines both methods’ benefits and drawbacks.
Should you hire a property manager or do it yourself?
Managing your rental property yourself: the pros and cons
Pros
- Make more money
The main benefit of managing your property is that you will avoid paying a property manager’s salary, which ranges from 8 to 12% of your monthly income. You can save even more money if you carry out certain repairs and upkeep yourself.
- Build closer relationships
You might develop a closer bond with the tenants and the property if you manage the property yourself. This may help you attract long-term tenants and cut down on your maintenance expenses.
- Gain a lot of knowledge
The opportunity to learn is the best justification for managing a rental property alone. It’s common advice for new real estate investors to buy their first house on their own. This education has been priceless.
Cons
- It can become a job
Your initial motivation for becoming a real estate investor—to achieve financial independence and time freedom—is defeated if you manage the rental yourself. Taking on property management essentially turns it into a new career.
- You cannot scale
There is a limit to how many homes you can manage directly, so managing the rental on your own is not a long-term option. In order to properly manage such properties, you must also be in one place. This limits your revenues in addition to raising your dangers.
- De-markets the rental
\Many tenants dislike renting a place when the owner is actively involved. They worry that the landlord won’t be as objective as a property management company because of their attachment to the house. This substantially restricts the pool of potential tenants to whom you can advertise the property.
Hiring a property manager: the pros and cons
Pros
- Profitable from the get-go
A property manager with at least five years of experience already has a successful system in place. The property manager can immediately plug your rental into the system to make it profitable.
- Accelerate your learning
A property manager expedites your learning. To operate a rental property profitably, you need a ton of knowledge and abilities in areas like taxes, tenant screening, legal requirements, marketing, etc. Hiring a property manager will speed up the time it takes to learn those skills.
- Avoid devastating mistakes
One catastrophic error is all it takes for your path into real estate investing to fail. One lawsuit from a dissatisfied renter, an error with your taxes, a violation of the rules, or spending too much money on maintenance, and you find yourself trying to get back on track. You are shielded from errors by a property manager.
- Gain time and freedom
Hiring a property manager provides you with time and independence. Time is the most valuable resource for growing your real estate investing firm. With a property manager, you can use that time to learn how to run a business rather than fixing toilets.
- Increased profits
A property manager is skilled in reducing your rental’s maintenance costs. More significantly, the property manager has the network and marketing resources to reduce vacancies and increase rental income better than you could.
Cons
- Costs money
The main issue with hiring a property manager is the cost of paying them, which ranges between 8 and 12% of the monthly rent. However, if you took this into account before you purchased the home, this is substantially less of a cost than what the property management can do for you.
In conclusion, should you manage your property yourself or engage a professional? It depends on what your objectives are. If you are simply interested in owning one property, the idea of managing it yourself is more viable. But if you want to turn your property investments into a business and have multiple properties, we advise hiring a property manager.
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