Managing property is a completely different activity from investing in real estate. Some people are very good at both and some are good at either one or the other. Many people get the two confused and think that investing in real estate and managing properties are one in the same.
If you’re considering hiring a property manager, then it’s likely you are already a real estate investor or at least on your way to becoming an investor.
So, to the question… “Should I management the property myself?” The answer to that question is that it depends on a couple of different factors.
First, would you enjoy performing tasks involved in property management?
There are many stories of investors getting out of the rental business because they hate dealing with tenants, late rents, complaints, late night emergency phone calls, and the like. This makes very little sense because investing in real estate has too many advantages not to be a part of it. But if you don’t have the personality to deal with those things, then you will likely get out of the real estate business long before your investment has a chance to go to work for you. But if you have the personality that enjoys this kind of work you may be right to manage your own property.
Second, what is the value of your time?
Is it worth your time to do all of the things involved in the management of your property for the savings it will provide you by not hiring a professional management company? If you feel the savings are significant enough for you then you still might be the one to manage your rental. Here is how to best evaluate if it’s worth your time.
If it saves you say about $75 per month by doing property management yourself, and if you spend on average about five hours per month working on property management tasks that would otherwise be farmed out, you are essentially working an additional job at $15 per hour by being the property manager.
Another way to think about it is… if you need something painted, why would you want to hire a painter if he charges $20 per hour? Surely they could just paint the rental yourself and save the $20 per hour.
Only you can determine how to best leverage your time. Ask yourself… are you better off spending that time at your job? Can you perform higher value activities in the time you would spend on property management duties? Is it important for you to keep your time free for other activities outside of your work?
Also, what freedoms are you trying to achieve by investing in real estate in the first place? Is it important to you not to have to worry about your investments while on vacation? If something were to happen to you… would you be leaving your investments to your spouse or children for support… and if so… will they be suited to pick up the pieces and manage the properties themselves?
Again, for some people, it still may make sense to manage their own property but before you decide consider the next question.
Third, how effective will I really be?
Where will I advertise my vacancy and how much will it cost? Will I be available to take a new prospect phone call when it comes in? Will I have to delay the showing the property because I’m at work or have other commitments in the evening? How will I be able to handle an emergency when I’m out of town or on vacation?
The reality is that in trying to save money by managing yourself may not actually save you money.
For example, if the only thing the management company provides you is to keep your rental occupied two weeks more per year than you do, the extra rental income would more than pay the management fees for an entire year. This does not even include your cost of advertising, your time to show the property, perform inspections and all the other services provided by the management company.
Please see this independent survey. Survey Results – All Property Management.pdf
Simply put, if you are not effective or just do not have the time to be effective, you will probably not be any better off financially managing yourself, even after you’ve spent the time and effort to manage the property.
Even if you are an effective manager yourself the true costs of hiring a good management company will probably be far less expensive than you initially believe. Hiring the right company may even make your investment more profitable than it would be otherwise.
Lastly, are all property management companies the same?
The honest answer to this is no. If you hire a company that does not have enough staff or resources to perform all of necessary duties in managing your property then their results will be similar to someone that manages their own property but doesn’t have the time to manage it effectively. There are poor companies out there just the same as there are poor realtors, or painters, teachers, or in any profession.
On the other hand, there are really excellent companies and hiring the right company can be invaluable to your real estate investments and we’d like the opportunity to be that company. With our 30 years of experience, tools and commitment we can help you become the kind of investor you want to be. And we believe that the better your investments go the longer you’ll be a happy client.
Please give us a call if you are ready to find out more about working with Coldwell Banker Gold Key Realty or contact us here.