There comes a point when every investor asks themselves whether they need a property manager. The answer is not straightforward and depends on various factors. The corresponding episode of the WealthBuilders podcast features Karen Conrad and Frank Pulley discussing the significance of evaluating the decision to hire a property manager when investing in real estate. Click here to listen to it on The WealthBuilders Podcast!
Shownotes: Pros and Cons of Self-Property Management
1. The importance of Property Management
A great team is behind every successful real estate investor. Property management is essential for scaling a real estate business. Managing the first few properties oneself helps in identifying what to look for when hiring a property manager.
2. Self-Management Considerations
- Environment: A neat, clean, functional, and safe environment is crucial for attracting good tenants.
- Tenant Vetting: Screening tenants for their ability to pay rent on time and their responsibility to take care of the property is important.
- Knowledge of Laws: Understanding local, state, and federal laws is necessary for legal and successful property management.
- Rent Collection: Having a system for collecting rent and charging fair market rents is essential.
- Maintenance and Repairs: Ensuring that properties are well-maintained and repaired is necessary for keeping tenants happy.
- Security Deposits: Understanding how to collect and return security deposits according to state law is essential.
- Pet Policy: Deciding whether to allow pets or not can impact the pool of prospective tenants.
- Turnover Time: A good system for quickly turning over properties can reduce lost income.
3. Adhering to Laws
Violating fair housing laws can lead to significant legal consequences. Familiarity with federal, state, and local laws is crucial to avoid fair housing violations. Discrimination based on race, color, national origin, religion, sex, familial status, and disability is prohibited by fair housing laws. Federal law does not specifically protect against sexual orientation discrimination, but state and local laws may do so.
4. Do You Need a Property Manager?
There are multiple factors to consider like:
- Distance from investment property
- Number of properties owned
- Availability of time and stress level
- Knowledge of laws and regulations
5. What Do Property Managers Do?
Property managers can handle a list of tasks, including:
- Marketing and tenant screening
- Lease preparation
- Security deposit management
- Move-in and move-out procedures
- Rent collection and late fees
- Eviction procedures
- Repairs and maintenance
- Regular inspections
- Accurate accounting and bookkeeping
- Cost of Hiring a Property Manager
- Property managers typically charge 6-10% of monthly rent
- Additional fees for new tenants and lease renewals