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How To Decide Between Hiring A Property Management Firm Or Self-Managing A Property

To manage or have managed? That is a question many realtors are asked about properties by their clients. There are, of course, benefits to both scenarios. Costs are reduced for self-managed properties, but the care and dedication that comes with hiring a property management firm can significantly outweigh any savings that you might incur doing it yourself.

What Is a Property Manager?

Hiring a property management firm can help with multiple properties and prevent legal issues from occurring. As a self-managing landlord, it can difficult to keep up-to-date with the changing regulations and ensure that your properties are maintained to the best of your ability. The choice can be a difficult one to make.

Real estate agents are frequently burdened with this conundrum. Here’s what to consider when facing this dilemma:

Who Can Do It Better

For each and every decision we make as a fully integrated real estate firm, we ask ourselves one simple question: Can we really do it better than the third party? With property management, our initial question starts there. If someone can do it better than us, whether it's because of scale, costs or resources, we are more than happy to hand it over. Those questions, though, are not always simple.

Your Ultimate Objective

Work on your business and not in your business. There is absolutely no reason at all why you would want to deal with tenants and toilets. Outsource that to a reputable property management company for a reasonable fee and focus on growing your portfolio by buying more properties that will add more cash flow to your bottom line.

Too Much Risk For The Reward

I know many successful property managers, and when I started adding that service to my portfolio I soon realized that headache far outweighed the reward. The time you spend prevents you from working on your business. Don't let the idea of a potential monthly income fool you into thinking it won't be a time suck, even with a team. Every little problem becomes yours for at least a year at a time.

Simplified Process

Our formula is very simple. Having a good property management company in place to manage your portfolio is critical at the point that you have more than five doors. Leave it to the professionals. The best property management companies make this process so easy — finding the properties, finding the tenants, qualifying the tenants, placing the tenants, collecting the rent and maintaining the property.

Your Profit

Making or losing money on your investment property really comes down to management. Property management is more difficult and time consuming than most investors realize. Unless you're an expert with time to spare, using a professional property manager is a worthy investment. Upon finding a good manager, it’s really a no-brainer. The cost will almost always outweigh the time, energy and headache of self-managing.

Your Financial Model

As you build an investment portfolio, it is good practice to include the third party property management fees into your financial model. This way you can make the right decision even before you acquire the property. Then ask yourself, "What business are you in?" If you are an investor, then stick to investing. If you are a property manager, then stick to the property management. Stay focused.

How Much You Care About Your Money

A friend once suggested I would better spend my time developing property by outsourcing property management of my 15 multi-unit rental properties. I took his advice and the company almost put me out of business in nine months. I intuitively knew this was a bad idea. Collect your money and visit your investments. No one else cares like you.