Hiring a Property Manager vs. Self-Managing: What’s Better?
- Rental properties build wealth, but they require active management and ongoing responsibility.
- Self-managing saves money and gives you more control, but it demands significant time, knowledge, and effort.
- Hiring a property manager saves time and simplifies scaling, but comes with management fees and less direct oversight.
- The best choice depends on your goals, available time, experience, portfolio size, and proximity to your rental properties.
Rental properties have a well-established reputation as one of the most reliable avenues for building wealth that endures over a lifetime.
A well-maintained rental in a good location can offer several outstanding benefits to its owner - steady cash flow, capital appreciation, tax efficiency, and inflation protection, to name a few.
However, there is one important detail which often gets left out in conversations about owning income properties. Despite all its attractions, a rental property is not a truly passive investment.
Rental properties require constant oversight, and managing them is a highly demanding and multidimensional commitment.
In a single week, a landlord may be called to juggle multiple roles - from acting as a marketing and leasing agent to playing the role of a financial manager, maintenance crew, legal expert, and conflict mediator.
These responsibilities require skill and a significant investment of the owner’s time and energy. This is why, if you're planning to buy your first rental or you're on the verge of expanding your portfolio of income properties, a key question to ask yourself is: How will I manage this asset?
Should I run it myself or hire a property manager to do it on my behalf? These questions matter for several important reasons. The path you choose will impact your daily schedule, legal liability, maintenance efficiency, long-term profit margins, and ability to grow your portfolio.
To help you understand the implications of your decision and provide what you need to make an informed decision, TRI Property Pros will compare the pros and cons of these two options.
CONTACT US TODAY FOR MORE INFORMATION
Self-Managed Rental Property: Pros and Cons
Self-managing a rental property means you have direct oversight of every task in the property. Although this can be a daunting responsibility, it also holds significant benefits.
Advantages of Self-Managing
Cost Savings
Managing your property yourself lets you save the 8%-12% of the monthly rent you would have paid to a property manager to do it for you. This means you keep 100% of the profits from your property.
Direct Control
With a self-managed property, you have direct control over important things like maintenance, tenant selection, and your relationship with residents. The landlord’s close involvement often results in better quality control.
Learn Valuable Skills
By managing the rental yourself, you become intimately familiar with the ins and outs of its operations. This knowledge can serve you well in the future even when you decide to hire a property manager.
Build Valuable Relationships
A self-managed rental property often has higher retention rates and lower turnover costs due to the landlord’s relationship with the tenants. The landlord also builds relationships with vendors and other experts.
LEARN MORE ABOUT OUR TEAM
Self-Managing Disadvantages
Time Constraints
For a landlord, the first major cost of self-managing a rental is its impact on their time. If you have a full-time job, finding time to oversee a property will be difficult. You will also struggle to find free time to do other things.
Managing Tenants
Managing a business where you have to deal directly with customers, such as a rental property, is never easy. Tenants may delay rent, damage the property, cause noise disturbances, violate the lease, or initiate disputes with the owner.
Legal Risks
The legal risks posed by managing your property yourself are significant. This is because of the myriad of rules and regulations surrounding rental property operations and landlord-tenant relations. It is very easy to get into legal trouble.
Scaling is Difficult
After two or three properties, it becomes very hard for the landlord to maintain quality. Self-managing your properties will limit how many properties you can run effectively; it places a ceiling on your growth potential.
EXPLORE OUR PROPERTY MANAGEMENT SERVICES
Hiring a Property Manager: Pros and Cons
By hiring a property manager, you give them full oversight of every task related to the smooth running and success of your property. They become the landlord’s representative in the rental. This arrangement comes with several important benefits.
Pros of Working With a Property Manager
Save Time
The most obvious advantage of hiring a property manager is that it transforms the rental property into a truly passive investment. Owners can focus on other things while their property runs smoothly and earns income steadily.
Access to Industry Insights
Because they understand the local rental market, a property manager often makes better decisions than the landlord. For instance, they know the optimal rental amount and the best improvements to make in the property.
Vendor Networks
Property managers maintain a list of pre-vetted licensed contractors. Due to the number of jobs they bring to these vendors, they can negotiate better rates and shorter wait times. This can benefit the property’s bottom line.
Help Investors Grow
A property manager makes it easier to scale your investment property portfolio. By helping owners systematize rental operations, property managers give them the freedom to buy properties in diverse locations.
Cons of Working With a Property Manager
Management Fees
Hiring a property manager will cost you between 8% and 12% of the gross income from your property. You will also be required to pay other fees, such as placement fees, maintenance markup, setup, and many more.
Quality Issues
Since the property manager doesn't have the same attachment to the rental as its owner, they may not direct as much time and energy to overseeing the rental, leading to diminished service quality and tenant dissatisfaction.
Fosters Dependency
Hiring a property manager prevents landlords from developing the skills to manage their property. If the owner replaces the property manager, they will lose the systems and networks the property manager brought with them.
Conflict of Interest
Because a property manager’s income comes from tenant placement, maintenance, and lease renewals, they may prioritize these activities. So, they benefit when a property has a high tenant churn rate or persistent maintenance issues.
GET IN TOUCH TODAY
Final Word
In view of the above, should you hire a property manager or self-manage your investment property? The right answer depends on the particulars of your situation.
Hire a property manager if you own multiple properties, live far from your rentals, have very little free time, are not interested in learning the legal framework guiding landlord-tenant relationships, and invest in properties solely to earn passive income.
Self-manage your properties if you need to learn the ropes of rental operations, have a lot of free time, live in proximity to your rentals, want to maximize cash flow, are familiar with local regulations (or are willing to learn), and only have one to three properties.
If you have more questions about working with a property manager contact TRI Property Pros today for all your property management needs!