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Advantages and Disadvantages of Hiring a Property Management Company
Managing rental properties is challenging and at times frustrating, more so when you have demanding clients or you are unable to attract tenants to your property. As the property owner, you can become stressed and overwhelmed if you try to self-manage or hand over your rental property’s responsibilities to an independent property manager. By enlisting a reliable property management company, you can easily concentrate on the things that matter. An experienced property management company can help you maximize ROI on your investments. If you are unsure of hiring an independent property manager or a full-fledged property management company, we’ve listed some advantages and disadvantages of working with a property management company.
Pros of Hiring a Property Management Company
Owning rental properties becomes quite a task for the owners to oversee property upkeep, maintenance, renting, and marketing. This is where you can explore the benefits of hiring a property management company. We’ve listed a few of the benefits that help add significant value to your property.
- Detailed industry & legal knowledge
A good property management company has the strategic insight to optimize profitability from your investment property. With their in-depth industry knowledge and know-how, they can help you with multiple things you might have overlooked, such as rental agreements, regular upkeep, emergency repairs, or dealing with problematic tenants. Additionally, they have a dedicated team to handle all legal concerns, ensuring that you always stay compliant with local, state, and federal laws. - Less maintenance time
Handling maintenance and repairs efficiently can significantly improve your bottom line and help in tenant retention. This is what a property management company does the best. Unlike an independent property manager, they have an in-house maintenance team or have a stockpile of vendors, suppliers, and contractors at their disposal to handle regular upkeep and emergency repairs. This can contribute to a lower tenant turnover rate, which maximizes your ROI. - Tenant screening, retention & vacancy management
Tenant screening is a tough job to maneuver. While self-managing, there is a high chance that you may end up choosing the wrong tenant or unknowingly ask a discriminatory question because of a lax screening process, landing you in legal trouble. This is where a professional property management company’s market standing, skills, and techniques will help secure your rental income and profit margins.
Cons of Hiring a Property Management Company
- Cost
Hiring a property management company comes with a cost, and those initial expenses can deter people from thinking of hiring a property management company. Most property management companies charge a monthly fee (usually 4-8% of the month’s rent). For instance, for a $2,000 property, you can expect to pay $160-$200 per month to the property team as payment for managing the property. If this is something you can afford, a property management company is worth the price. But, if this fee appears too high, you can choose to be a DIY landlord or hire an independent manager, but beware of the consequences that may arise. - Lack of involvement
For owners who want to be hands-on all the time, hiring a property management company may not be the best option. Property management companies follow strict guidelines while screening tenants. Also, they likely won’t involve you for minor tenant issues, maintenance issues, or other trivial matters. So, if you wish to handle your investments on your terms, it’s advisable to self-manage.
For some rental property owners, the question is not, “Do I want a property management company?” but instead, “Can I afford a property management company?” If you have decided to be a DIY landlord, we recommend using Rentec Direct to self-manage your investment properties.
But, if you can afford to hire a property management company, the next important decision is to find a professional and ethical property management team. Read on our next guide page about the 10 property manager interview questions to shortlist a stellar professional.