Many landlords prefer to oversee the management of their properties themselves, and while self-management can have many advantages for the property owner, there are also many downsides to it. Weighing the pros and cons can help you decide whether it's worth hiring a property manager or not.
Advantages of Self-Managing Rental Properties
Cost Savings
You won't have to pay property management fees and this can go towards your profit margins, helping you maintain your cash flow and save money. Depending on the arrangement of the property management company, monthly fees can go between 8% to 12% of the rental income.
Direct Control
Considered one of the primary advantages of self-management, you have full control over all the aspects of your rental property such as collecting rent, overseeing maintenance requests, tenant screening and selection, and monthly rent increase. With greater control, you can make all the decisions about the operations of your rental property.
Direct Tenant Communication
One of the biggest differences between self-management vs property management services is that you get to communicate with your tenants more directly about property management tasks like rent collection and handling maintenance issues. You can be more lenient in certain circumstances like late rent payments, which can help with tenant satisfaction.
Experience
Self-managing your rental properties allows you to gain needed experience as a property owner, especially if you have plans for expanding your portfolio in real estate investing. A hands-on approach can give you the most knowledge about the rental industry, which is essential for making informed decisions.
Assurance
Although it's easy to find a reliable property management company to manage your rental property, self-management means that you are 100% sure about every decision since you make it. You won't have to wonder how a property manager enforces lease terms or handles tenant selection, which leaves no room for doubt.
Disadvantages of Self-Managing Rental Properties
Lack of Experience
Self-managing properties is not an easy task, especially since effective property management is crucial to making your business thrive. If it's your first property, you might not know everything you need to as a property owner, which can make your profitability suffer and discourage potential tenants.
Legal Issues
A property manager needs to know about all landlord-tenant laws and building laws for legal compliance. While consulting a lawyer is an option, it can quickly become tedious to do so for every decision that needs a professional's advice for legal compliance. A property management company will already know every state and local law they need to abide by like fair housing laws.
Time-Consuming
Self-management will take a lot out of your schedule since rental property management is a full-time job. A self-managing landlord will have to oversee everything such as screening tenants, timely rent collection, financial management, enforcing lease agreements, handling tenant disputes and lease violations, regular maintenance, and more.
Limited Scalability
Since self-managing a rental property can take a lot out of your time, you might not be able to expand your real estate portfolio since you would be spread too thin with all the responsibilities. By hiring a property manager to handle day-to-day operations, you can expand your portfolio without having too much on your plate.
Marketing Difficulties
Without the right knowledge of the rental market and property marketing strategies, you might not be able to find quality tenants for your rental. Paying property management fees can be very well worth it if it means that you'll significantly reduce your vacancy rate, which trumps the potential cost savings from self-managing.
Factors to Consider When Choosing Professional Property Management
Experience and Expertise
Finding an experienced property manager is necessary since their track record can tell you a lot about how they can handle your business. Check how many properties they are currently overseeing and how many years they have been operating in the industry. Companies usually include these details in their websites.
Services Offered
The point of hiring a property manager is for them to take over the aspects of the business you cannot do. Ensure that the company has a comprehensive range of services based on your needs such as marketing, tenant screening, rent collection, maintenance, accounting, eviction, and more.
Tools
A property management company usually has tools that can help streamline tasks. Inquire whether they utilize certain technologies like property management software, tenant portals, and payment apps. This has become more crucial in the modern age where tenants find convenience in digital platforms.
Reviews and References
You can now check ratings and reviews from customers on third-party sites to ensure that they are genuine, which can provide you with insights into the company's services aside from the details they publish online. You can even get direct references from their clients if they're from the same location as you.
Insurance and Licensing
Verify whether the company has a team of employees who are insured and licensed for the tasks they need to perform. It can spell legal trouble for you if they don’t, and it also proves that they have the expertise to oversee certain aspects of your business.
Hiring Performance Asset Management for Property Management
Our company offers one of the best property management services in Wisconsin, backed by 16 years of experience and more than a thousand five-star reviews. We will ensure that you get the most profit you can out of your investment as we oversee its day-to-day operations.
You can expect that we are up-to-date with the current technologies that streamline property management operations, and you can rest easy that your business is in good hands. While we do our best to maximize your property value, you can explore other business opportunities and expand your rental portfolio!
Contact us now so we can help you with your rental business journey. You won't even have to commit just yet, as you can schedule a free consultation to determine whether we're the right fit for your needs.
