Pros and Cons of Hiring a Property Management Company
If you own rental property (or multiple income properties), you have likely considered the option of hiring a property management company. They could take a lot of stress and work off your plate by handling the day-to-day duties, tenant management, financial items and other important details. There are some pros and cons of hiring a property management company. It’s a good solution for many real estate investors, but not the right option for everyone. Here are some of the biggest advantages and disadvantages to consider:
Pro: Let Them Do the Dirty Work!
Nobody ever said owning and managing a rental property is easy. You could luck out with great tenants who stay there for many years, pay their rent on time and take care of the unit. This is a dream scenario, but not as common as you hope it would be. There can be a lot of work associated with rental property ownership, including marketing, screening tenants, collecting rent, managing repairs/maintenance, etc. Hiring a good property management company ensures these issues are taken care of, so you can focus on collecting the income and doing whatever else you need to do. A property manager can take a lot of stress off your plate, whether this is just a secondary property you own on the side or real estate investment is your business.
Con: Property Management Services Aren’t Free
Of course, the main drawback of hiring a property management company is that you will have to compensate them. They are handling the dirty work and there is a fee for their services. You have to factor this in when setting rent prices and determining your overall investment budget. Ideally, you should still be making profit each month, even with any fees you are paying to hire a third-party property manager.
Pro: Best for Multiple Properties
If you own multiple rental properties (including a short-term rental like an Airbnb), hiring a professional property management company can be an excellent solution. You may simply not have the time to deal with everything, so let them handle most of the work while you focus on your other business priorities. Single rental unit owners will need to weigh the extra costs and determine if the services are worth it.
Con: More Complications
Hiring a property management could add some extra complications. The tenant will likely go through them if requesting repairs or upgrades. They end up as a go-between on some important decisions that may still ultimately fall on your shoulders as the owner. This may be preferred if you don’t want to deal directly with any tenants. It just may add a little more complexity when it comes to certain issues.
Pro: Use their Expertise
The final advantage is an important one to consider. Managing rental properties is what the property management company does. They know how to fill units with good tenants. They know how to deal with disputes, insurance and legal issues. They know how to market and price rental properties. You can benefit from their expertise, especially if you are new to the world of rental property ownership. A first-time real estate investor can probably learn a lot from a good property management company.
These are just some of the items to consider when thinking about hiring a property management company or not. For additional home buying and real estate investment resources, join the PropertyLark network.