Every real estate investor, no matter their background, eventually must decide: Should you hire a property manager for your single-family rental property, or is it more cost-effective to manage it personally? When you only own one property, the financial trade-off becomes especially important.
This article takes a deeper look into the complex world of property management to assess whether the benefits of employing a property administrator justify the expense. Even if the numbers suggest one answer, personal and strategic considerations can make things more nuanced. Let’s explore both sides of hiring property management for your investment property.
Benefits of Hiring a Property Manager
- Time and Stress Relief: Hiring a property manager relieves you from the daily management tasks like listing vacancies, tenant background checks, signing leases, rent collections, and organizing maintenance. This allows you to focus on broader goals with less hassle.
• Vendor Relationships and Cost Savings: Property managers often have established connections with dependable service vendors, allowing for quicker, more cost-effective repairs. Their ability to negotiate discounts due to the volume of work can lead to real savings.
• Legal Compliance: Understanding the complex landscape of real estate law and local regulations can be daunting. Property managers stay current with real estate law and ensure your rental property complies with all legal requirements, shielding you from potential litigation.
• Tenant Relations: A seasoned property manager knows how to handle tenant relations, including disputes and tenant communication. Their experience in managing difficult tenants reduces your exposure to legal complications and ensures smoother operations.
• Market Analysis and Financial Management: A competent property manager offers local real estate market insights, helping you attract tenants with competitive rent rates. They also oversee financial matters like rent collection, reporting, and taxes.
Downsides of Hiring a Property Manager
Hiring a management company for a single investment property does have drawbacks. The most notable is the cost. Property management firms usually charge a percentage of your monthly rent—commonly ranging from 6% to 12%.
If you only own one property, these fees can take a significant bite out of your returns. Charges may also include services like tenant screening and marketing your rental.
Another consideration is the perceived loss of involvement. Property owners who hire a property manager typically have less say in the day-to-day operations of their rental property. Some property owners may feel uncertain when decisions are made without their direct oversight.
Though property managers provide a range of advantages, it’s important to carefully consider these drawbacks—particularly if you own only one property. Your financial status and desired level of involvement as a property owner should influence your decision.
Is Hiring a Management Firm Worth it?
In real estate investing, hiring property management for a single property is a decision that requires thought. While property managers offer benefits like time savings, tenant relations, and market expertise, their costs can reduce returns if you have just one property.
To determine if you should hire a property manager, reflect on your investment objectives, comfort with handing off property management tasks, and budget. As a real estate investor, you need a strategy that aligns with your long-term goals.
Contact us today for more information on optimizing and maximizing returns on your real estate investments in Watertown and the surrounding area. Real Property Management Commonwealth can offer competent advice on management and real estate investment matters. Call us at 617-299-2342.
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