The decision to hire a property manager for your rental properties can be a tough one, particularly for small-balance multifamily owners. If you have tight margins to begin with, bringing a property manager into the mix could make your properties operate at a loss. However, most people aren’t born to be landlords, and many property owners find hiring a property management company to be very beneficial to their portfolio.
PAYING FOR TIME SAVINGS
According to Chris Wright of Wright Property Management, a property management firm just outside of Los Angeles, many of his clients feel that their time is worth more to them than saving money by managing themselves. They are willing to pay to no longer worry about the micro details and instead focus on other things such as business or family.
“We’re not in property management, we’re in people management,” said Wright. Often times, the people aspect of owning an investment property is the most daunting. Having a property manager on board will allow you to dodge those late-night phone calls and avoid hunting down a late rent payment.
VALUABLE INSIGHT
Property managers have more to offer than just dealing with resident and maintenance issues. We live in a litigious world, and there are many laws and regulations landlords must follow that they may not even know about. Staying on top of these laws is an important, yet overwhelming, task for many, and a property manager can often insulate landlords against any liability.
Additionally, a third-party manager can make owners face reality. “Sometimes, if you’re an owner, your objectivity of what needs to be done gets clouded by the fact that you believe you are entitled to a rent because you have something to rent,” said Wright. “Just because you have a vacant unit doesn’t entitle you to a tenant—you have to provide certain standards of habitability.” Having an experienced property management team can help provide valuable insight.
DUE DILIGENCE
Once you have made the decision to hire a property manager, you must do your due diligence to select the right company for your needs. If you have a company in mind, you can ask if you can talk to some of their clients about their experience with the firm. You can also ask other local landlords for referrals.
Online reviews are another source, but Wright warns to be careful when taking to the internet. “There are always going to be complaints from tenants, because we are working for the property owner, and the tenants who complain are the ones that are typically breaking the rules,” he said. If you see bad reviews from owners, however, that is something to be cautious about.
FROM CEO TO CHAIRMAN
The hardest part about having a management team for many property owners is giving up control. You should cut the cord with the residents and allow the property manager to take over. “The way I like to explain it to owners is by saying, we are now the CEO, and you are chairman of the board. If you want us to do a little bit of this and a little bit of that, it’s not going to work, because tenants will go around us to you and then all control is lost,” said Wright.
Owners can, and often have, managed their own properties, but eventually come to a point where they still want to collect the rent check but don’t want to deal with the issues associated with it. You may be able to effectively manage your own properties and make extra money doing so, but for most owners, this is not the case. If you decide you would like to bring a management company into the mix, make sure they align with your goals and you feel comfortable giving away some control.
