Why Hire a Property Manager?
How hiring a property management firm can be the best thing for your investment
If you are a landlord we do not need to tell you how much work it can be to ensure your building is running smoothly. From day-to-day maintenance, to managing rent roll, to fixing potential random disasters, you want to make sure problems are taken care of so the burden does not fall on those living in your building. Thus, for your best interest and that of your tenants, hiring a property manager could be the best decision you could make in regards to alleviating complications in the long-term. Now, as has been the theme throughout our blog, your decision to hire someone to manage your building is dependent on your willingness and your specific needs. If you own a 3-story walkup with only 6 units, and it’s your only building, you may not need anyone and can easily handle the responsibility. There are also property management firms out there that specialize in smaller buildings if that fits your needs. In this post, we will highlight the main reasons one should hire a property management firm and include a few considerations you should think about if you do decide to place your building in the hands of a more experienced party. This could be one of the most important decisions you make as a responsible landlord…. So listen up!
In a second we will outline the types of situations that would benefit landlords the most in hiring a property manager. But first, what is property management exactly? In its broadest form, property management is the overall operation, control and oversight of real estate. The ‘operations’ mentioned can include, but are not limited to, dealing with your tenants (in any capacity), marketing your listings, handling maintenance and repair issues, responding to all tenant complaints, pursuing evictions if necessary, etc. The degree to which you will need a property manager or not is dependent on how many of these issues you deal with and how often. Without further delay, here are situations where hiring a management company can help… a lot:
When should you hire a management company?
- If you don’t want to be hands-on: This was something we touched on in our last post about Turnkey investments. Being fully hands-on when it comes to your property is truly a lot of work. So much so that in order to do it properly, and to maintain the attractive qualities of your property, it almost becomes a full-time job. Finding quality tenants and the background checks associated with this is very time consuming, but also the most important thing you do to ensure you have committed residents and limited vacancies in the future. These are all things property managers focus on, making them a great long-term resource to have. Also, if you don’t want to be hands-on but want to spend time growing your business or looking for other investment properties, property managers can take care of what you need so you have more time to pursue other opportunities.
- You have lots of properties in your portfolio: Amountof properties and workload have a direct relationship. Obviously the size of buildings your dealing with vary, but if you find yourself with a monster building with many units or just a bunch of smaller buildings, you can easily dig a deep hole of work that will be difficult to get out of. Odds are as well the more buildings you have the further they are from each other, which makes it difficult to get to a specific building if an immediate emergency arises. This also ties in with being hand-on. A property management company can benefit you greatly if you find yourself having many buildings/units to take care of.
- You don’t live local: Say you have been eyeing a hot real estate market outside of where you live and come across a fantastic deal. It would not be smart for you to completely give up on a great investment just because you live far away. Hiring a property manager benefits you in a multitude of ways in this situation. One, you would not need to leave where you live and travel a great distance to take care of issues that arise. Two, property managers are typically experts in their neighborhoods/markets. Hiring a local company to work for your building will give you insider access to the local market and provide future forecasts (based on historical figures) even though you yourself are not an “insider”.
- You can afford it: Hiring a management company can take a load off your shoulders, but it does not come cheap. If you are hardly breaking even, this may not be your best choice. However, if you have enough in reserves and have had a consistent stream of positive cash flow, you may want to consider alleviating your workload by hiring a property manager.
- ‘Landlording’ is simply becoming too much work: The overarching theme of this post is essentially, “’Landlording’ is a lot of work”. If you find yourself being dragged down by the demands of your property, you may want to put your trust in a third party to take care of the work for you.
Having outlined these situations, only you can decide whether or not your situation dictates the need to have a management company dealing with your day-to-day building related demands. Factors that should be considered include your overall expenses, size of your portfolio (real estate), your proximity to your properties, and whether or not you want to make ‘landlording’ your primary occupation, among others. If you do choose to work with a management company, however, there are a couple important things you should keep in mind:
- Trust: When it comes to handing over your building’s responsibility to a third party, you have to be able to trust them. When an issue pops up and an inquiry is made, you have to be able to trust that the service you hired will do whatever they can to make sure the problem gets fixed and the tenants needs are fulfilled. This is especially important when marketing listings and keeping tenant information confidential – as these are sensitive issues when it comes to landlord/management co. relations. Also the nature of managing buildings comes with handling payrolls and dealing with many legal requirements imposed by different entities/institutions/municipalities. You need to be able to make sure these responsibilities are handled appropriately and abided by industry standards.
- Size: First you should consider the size of your building then the size of the management company. Do you own a monstrous 30-story building with 300+ units? You may need to hire an equally big management company that has the capability to provide you with a resident manager who can live in the building and tend to any needs at any point in the day, and has a proven track record having dealt with huge buildings in the past. Or, do you have a smaller or mid-size building without much of a maintenance staff? In this scenario you may need the help of a smaller management company without many other clients. This way all of their attention is on you and their responsibility is not diluted over a multitude of properties and landlords.
To find the right property management company for your situation make sure to do your due diligence. Read up on as many as you can and really take time to look through their website to make sure they have all the necessary resources in place to handle your needs. Also, make sure they are up to date with their technology and overall services! Real estate in general is notorious for falling behind on the whole technology train, and you want to make sure everything is up to date. Don’t be afraid to interview companies as well, feeling them out personally can be your best indicator of future success. To make it easier for you… you can also just reach out to us at Lexiti Realty, as our core business is property management and we are more than happy to help you in any capacity relating to real estate. Cheers!