Wednesday, February 3, 2016 / by Bill Berning*
Managing your own rental properties isn’t as easy as you think. Here are four signs that it’s time to hire a property management company.
Being a landlord is more than just collecting the rent check. You have to market your properties, screen tenants, conduct walkthroughs, handle repair calls, and sometimes evict tenants that do not pass muster. Still think you can handle it yourself? These four indicators are sure signs you need the help of a professional property manager.
Investors—and even reluctant landlords who rent out their home because they can’t sell it—often make the mistake of thinking they can save money by managing their own properties. After all, how hard can it really be? You just have to collect the rent and pay the mortgage, if you have one. It shouldn’t take more than a few minutes each month.
The reality is that, as a landlord, you have to deal with late rent, damaged property, repairs, evictions, and more. It takes time, and it can cost you money. Even though property management company fees can be up to 10 percent of the rent rate (depending on the market), on average, a property manager can significantly reduce vacancies. Plus, he can save you money on repairs and find better quality tenants who will pay on time.
When you manage your properties yourself, it’s not always easy to see (or admit) that you are in over your head. Take the time to assess yourself. If you are experiencing any of these common signs, it’s time to hire a property manager.
You feel burned out.
Watch your attitude. If your attitude changes from positive to negative when it comes to your rental properties, it could be a sign that you need to step away, even if you still want be a hands-on investor. Tenants will pick up on your negative vibe, and it could impact how they treat your property and whether they renew their lease.
No matter if you own one rental property or twenty, it is vital that you take stock of your energy levels and ability to manage your responsibilities…after all, you likely invested n a rental house or condo so that you could have some level of financial security, not so that you could feel stressed out or agitated.
If you feel burned out or negative, it’s time to hire a property manager - someone who can serve as the middleman for you. A good property manager will promptly tackle the tasks you might not have been motivated to handle on your own and can deal with your tenants in a positive but fair manner.
You are in over your head when it comes to understanding housing regulations
While renting out a home may have tremendous financial benefits, there are also downsides, specifically with the myriad of rules and regulations property owners must adhere to. Every state is different and – if your property has its own HOA regulations to maintain as well – you could be looking at a long list of requirements that would overwhelm even the savviest homeowner.
According to the experts at Biggerpockets.com, “Property Manger's have extensive and up-to-date knowledge of property laws and regulations and will assist you in making sure you are in compliance with your local, state and federal rules and regulations. These rules and regulations include complying with fair housing regulations, the Americans with Disabilities Act and other applicable local, state and federal laws. Avoiding one law suit will more than pay for any PM's fees many times over.”
Your tenants need more time and assistance than you can provide
Tenants rarely contact you to let you know how much they love your property or how much they appreciate what you do for them—they call because the water heater went out, they text that the pool pump broke, and they email to give their 30 days’ notice that they are moving.
When you start feeling overwhelmed by your tenant’s calls, texts, and emails or find yourself not wanting to check the mail for fear of what you’ll find there, it is a good sign that it is time to bring on someone to help you effectively manage your landlord responsibilities. If your tenants are happy, they will recommend you as a landlord and will be more likely to stay on in your rental unit. According to Tom Cohn, the Vice President of the Property Management Association, “When properties take ownership of problems, get them resolved quickly and exceed resident and tenant expectations, loyalty increases and often these residents and tenants become passionate fans who willingly recommend your property to others. The quality of the living or working experience is what makes a property’s brand.”
Your quality of life isn’t what you expected.
Most people become landlords hoping to improve their quality of life. They want to build long-term wealth and generate monthly cash flow from their rental incomes. What they don’t realize is that real estate investing is hard work, especially if you manage your properties yourself.
Tenants call you in the middle of the night because the heat has gone out. Some tenants don’t pay their rent on time. You have to market the property, maintain it, and much, much more. That takes time away from your family, friends, and other interests. When your real estate investments take over your life, it’s well worth a property manager’s monthly fees if it frees you up to get back to what really matters to you.
If you resonate with one or all of these things, take the time to meet with some certified property managers in your area. You will be surprised how much they can take off your plate, and how they can raise the overall value of your rental property simply by virtue of being available and lending their vast knowledge to the rental process.