Deciding on whether to self-manage your rental property or hire a property manager is a question I imagine every real estate investor asks themselves. While you’ll find people on both sides of the fence, in this post, I’ll share with you what I’ve learned about property management from owning 35 rental properties over the last 5 years.
In Most Cases, Self-Managing Is Better
There are situations when hiring a property manager probably does make more sense. For instance, if you’ve got a high-maintenance, high tenant churn rental such as an Airbnb or a Vacation Rental by Owner (Vrbo), hiring a property manager is likely the right move due to high demands these types of rentals come with.
Furthermore, if you’re not local to your rental property, then hiring a property manager might make more sense than self-managing.
However, for a “normal” rental where you’re renting out a single-family home on a standard 12-month lease, I suggest self-managing. Property managers cost money, and, especially with these types of rentals, self-managing doesn’t HAVE to be that much work.
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Property Managers Are Expensive
At least where I rent properties in Springfield, MO, a property manager will take 50% of the first month’s rent for each new lease + 10% of the rent in exchange for their services. They may also mark up the cost of maintenance. Hey, I get it. They need to get paid, but is the cost worth it?
Property Managers Take Longer to Find Tenants
I’ve worked with several property managers, and one thing that I’ve noticed among all of them is that they take noticeably longer to find me tenants than if I was finding tenants on my own. I think the biggest reason for this is because they’re busy. You’re not their only client. They’re likely managing dozens, if not hundreds, of properties. In some sense, you’re just a number. This leads to longer vacancy periods and less money in your pocket.
If you self-manage, don’t you think you’ll be answering the phone every time it rings, or at least returning calls much faster than a property manager would? Don’t you think you’ll speak to prospects with more enthusiasm about the property than a property manager would? Don’t you think you could show the property to a prospect sooner than a property manager could?
With property managers, It Takes Longer to Get Paid
If you self-manage, you get the rent money as soon as its paid. When you hire a property manager, expect to wait several weeks after the rent is received before you get a check.
You Can Make Self-Managing A Breeze with Software
There are 2 tools you need to subscribe to if you decide to self-manage your rentals: Buildium and Rently. Buildium will handle all the rent charges and payments. Buildium will also handle the online applications and screen tenants for you. Rently is also wonderful. With Rently you’ll never have to show a property again.
You heard me correctly. You’ll never have to show a property again. Rently sells a special kind of lockbox that allows tenants to tour the property themselves at their convenience. I know this sounds risky, but Rently runs prospects through a strict automated screening before giving them access to the lockbox. Rently and Buildium will both push your rental listing onto major 3rd party sites, so you don’t need to worry about promoting your rental property.
In my case, I manage all my 35 rental properties except for one out-of-state rental. It’s the way I prefer to do it, and honestly, at least in my experience, self-managing is easy especially with Buildium and Rently in my arsenal.