May 2, 2023 | Sexton Real Estate Group
The decision to self-manage a rental property or hire a property management company is one that every landlord must make. There are pros and cons to both options, and it ultimately comes down to personal preferences and circumstances. In this article, we will examine the pros and cons of self-management versus property management companies.
Pros of Self-Management
1. More Control
One of the primary benefits of self-managing a rental property is having complete control over the property. You are responsible for setting rent prices, screening tenants, handling maintenance requests, and enforcing rules. You can make decisions quickly and adjust policies as necessary, without having to consult with a third party.
2. Cost Savings
Another advantage of self-management is cost savings. When you manage your rental property, you avoid paying management fees, which can be as high as 10% of the monthly rent. Additionally, you can shop around for maintenance and repair services, and negotiate better rates than you would with a property management company.
3. Direct Communication
Self-managing a rental property means you communicate directly with your tenants. This can foster a more personal relationship with your tenants and create a sense of community. You can also address issues quickly and efficiently, without having to go through a property management company.
Self-management also provides flexibility in terms of your schedule. You can choose when to schedule showings, inspections, and maintenance tasks. This allows you to work around your own schedule and avoid the restrictions that may come with working with a property management company.
5. Better Understanding of Property
Managing your rental property also gives you a better understanding of the property’s condition, and any repairs or maintenance that may be needed. You can inspect the property regularly and address any issues immediately, rather than relying on a property management company to alert you to problems.
6. Personal Touch
Finally, self-managing a rental property allows you to add your personal touch to the property. You can choose the décor, landscaping, and overall look and feel of the property, creating a unique experience for your tenants.
Cons of Self-Management
Self-managing a rental property can be time-consuming, especially if you have multiple properties or other responsibilities. You are responsible for advertising vacancies, screening tenants, collecting rent, and handling maintenance requests, among other tasks.
2. Lack of Expertise
Managing a rental property requires a certain level of expertise in areas such as landlord-tenant law, accounting, and maintenance. If you lack this knowledge, you may make mistakes that could be costly or result in legal issues.
3. Limited Resources
As a self-managing landlord, you may have limited resources, particularly if you only own one or two properties. This can make it difficult to handle unexpected expenses, such as major repairs or vacancy periods.
4. Emotional Attachment
As a landlord, it is easy to become emotionally attached to your rental property. This can cloud your judgment when it comes to making decisions about tenants, rent increases, or property improvements.
5. Tenant Relations
Self-managing a rental property can also lead to strained relationships with tenants. When you are directly responsible for handling issues, such as maintenance requests or disputes, you may become the target of tenant frustrations.
6. Limited Availability
Finally, self-managing a rental property means you are always on call. If a tenant has an issue or emergency, you are the one they will call, regardless of the time of day or night.
Pros of Property Management Companies
One of the primary benefits of working with a property management company is their expertise. They have experience in areas such as landlord-tenant law, accounting, and maintenance, and can handle these tasks efficiently and effectively.
2. Time Savings
Property management companies can save you a significant amount of time by handling tasks such as advertising vacancies, screening tenants, and collecting rent. This frees up your time to focus on other priorities or invest in additional properties.
3. Access to Resources
Property management companies often have access to a network of trusted service providers, such as maintenance and repair professionals, which can save you time and money in the long run. They may also have access to resources such as marketing tools and legal advice.
4. Consistent Policies
Working with a property management company means you can establish consistent policies and procedures across all of your properties. This can help to prevent misunderstandings or inconsistencies that can arise when you manage properties on your own.
5. Tenant Relations
Property management companies can also act as a buffer between you and your tenants, which can help to maintain a positive relationship. They can handle maintenance requests and disputes, reducing the likelihood of tenant frustration directed at you.
Finally, working with a property management company can help to add a level of professionalism to your rental business. This can attract high-quality tenants and increase the value of your properties over time.
Cons of Property Management Companies
The primary disadvantage of working with a property management company is the cost. Most property management companies charge a monthly fee of 7-10% of the monthly rent, plus additional fees for services such as leasing and tenant placement. This can add up quickly, particularly if you own multiple properties.
2. Limited Control
Working with a property management company means relinquishing some control over your property. They will make decisions about rent increases, tenant selection, and maintenance without consulting you first. While this can be convenient, it can also be frustrating if you have specific ideas about how your property should be managed.
Property management companies may not communicate with you as frequently or as thoroughly as you would like. This can lead to misunderstandings or conflicts, particularly if you have specific requirements or expectations.
4. Limited Flexibility
Working with a property management company can also limit your flexibility in terms of scheduling and decision-making. They may have policies in place that restrict your ability to make changes or adjustments to the property.
5. Lack of Personal Touch
Finally, working with a property management company means that you may not be able to add your personal touch to the property. They will handle all aspects of property management, including décor and landscaping decisions, which may not align with your vision for the property.
Our Final Thoughts
In conclusion, the decision to self-manage a rental property or hire a property management company ultimately comes down to personal preferences and circumstances. Self-management offers more control, cost savings, and flexibility, but can be time-consuming and requires a certain level of expertise. Working with a property management company offers expertise, time savings, and consistent policies, but can be costly and limit your control and flexibility. It is important to weigh the pros and cons of each option carefully before making a decision that is right for you and your rental business.
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