Property Owner? You Don’t Have To Be The Manager Too
Investing in a rental property is a great way to take control of your financial future, but if you think being a landlord is a primarily passive income source, don’t be fooled. Being a landlord is hard work and can mean being on call 24/7, navigating complicated relationships and legal issues, and handling a variety of maintenance emergencies.
What many investors don’t realize, though, is that being a landlord doesn’t mean that you also need to be the property manager. In fact, hiring a property manager can be better for both you and your tenants.
Property Management Is Relationship Management
Being a good investor requires a certain kind of financial wisdom and the ability to assess market trends, but being a good landlord or property manager requires a variety of business and interpersonal skills that are entirely separate from this. For example, a good landlord needs to set clear boundaries; this is a business and you shouldn’t be friends with your tenants. This can be particularly challenging if you live in a multifamily unit alongside your tenants, but even if you live in the neighborhood, it’s easy to find yourself tempted to socialize.
One benefit of hiring a property manager is that they can act as a go-between in these complex relationships. This includes providing support in the tenant screening process, which requires a high level of expertise. New landlords often miss key signs that someone is an unreliable tenant or find themselves renting to friends and family, creating a dangerous intersection of interests. When it comes to screening and selecting tenants, a property manager is a disinterested party who only needs to determine what’s in your best interest.
The Benefits Of Expertise
Not only do property managers bring a specialized skill set to the tenant screening process, but that’s not all they do. Property managers also take care of maintenance issues and often come with a whole list of pre-vetted local contacts like plumbers, landscapers, and electricians who they can contact when there’s work to be done. It’s one thing to look up a plumber to fix a problem in your own home, but when you’re responsible for maintaining an investment property, you need the added security of trusted experts.
In addition to knowing who to call in the event of a maintenance issue, property managers take on the responsibility of providing 24/7 support in the event of an emergency. Of course, they may not take those calls themselves, but they have the ability to contract with a support line. That kind of care is critical and it’s hard to rent out a property if tenants don’t have access to an emergency contact line. You just don’t want that emergency contact to be you, especially if you have an anxious tenant.
The Earning Add Up
Some property owners are hesitant to hire a dedicated manager because they’re worried it will cut into profits - and at first, it might. It takes a little while for a manager to establish themselves and develop a rapport with tenants. In the long run, though, the majority of properties earn more if they have a manager. That’s because property managers can reduce vacancy rates and stabilize cash flow. People are also typically willing to pay more for a property with comprehensive management than they are for properties managed exclusively by the owner.
Not only do property managers reduce vacancy rates, but they also can save you money because they have the skills to proactively prevent maintenance issues and screen out problem tenants. The fewer issues your property has, the less expensive it will be to operate.
Property management is a business, and most businesses aren’t solo operations, so don’t be afraid to bring in help. As with any other professional task, it’s all about having the right skills for the job.