While every investors situation is different, there are certain scenarios and factors that typically pre-dispose owners one way or the other. The following questions are designed to help you determine if you should consider hiring a property manager.



1. How far do you live from your rental property and how frequently can you visit the property on a regular basis? If you are close you may be able to make the regular visits required for maintenance, inspections, collections, etc., otherwise the further you live the higher your travel time and expenses will be. The larger the distance the more temptation there is to not keep a close eye on things, and that can be a recipe for disaster. You should plan making monthly scheduled visits and there is always the potential for a middle of the night emergency call that requires your immediate attention. In the long run, is this feasible for you?

2. How do you deal with stress? Do you consider yourself to be a tolerant person? This is a tough one. We all like to think of ourselves as level-headed and even-keeled, but at the end of the day it takes a special kind of person to deal with the ups and downs of property management. Behind the seemingly simple task of collecting rent every month lie a number of unpredictable problems can push people to their limits. Ask yourself how you would react in the unfortunate event that tenants:

• Get in fights with other tenants or neighbors
• Have domestic disputes
• Conduct illegal business in the dwelling
• Carry on all night parties and revelry
• Try to sneak extra people or animals into the home
• Decide to sue you
• Trash the property
• Incite the wrath of the HOA because of repeated deed restriction violations
• Refuse to pay rent because they are a "professional tenant" and know how to work the legal system for the maximum amount of free housing at the owners expense?

3. Are you currently overwhelmed with your property(s)? Managing rental properties can become quickly overwhelming, even for experienced investors. There is always something going on that requires attention and it takes very little time for things to get out of hand. Hiring a property manager can provide an opportunity to regain control and restore stability to both your properties and possibly life in general.

4. How many rental properties or units do you have? As your portfolio grows so do the management challenges, and it becomes easier for things to fall through the cracks. Investors with large portfolios stand to reap significant benefit by leveraging the efficiencies a property manager can provide. Size can also constrain investors' ability to consider purchasing new properties if they're already maxed out managing their current holdings.

5. How much experience do you have with maintenance and repairs? If you can't do it yourself, do you know who to call? Finding reliable handymen and contractors can take a while and in the mean time you may unknowingly hire people that are unethical, uninsured, do poor quality work, over charge etc. Maintenance and repairs are a significant component of land lording and if you question your ability to ensure the work is done well and in a timely manner, you might want to consider hiring a property management company.

6. How quickly are you able to get your unit rented? Advertising, fielding calls, and showing the unit can take a considerable amount of time, but are critical tasks as vacancies will quickly eat into your profit margins. If you question whether you have the skills or the time to make this happen, OR if you have historically had an unacceptably high vacancy rate, you may want to consider hiring a property management company.

7. Are you capable of handling the accounting and record keeping for your property? From profit and loss statements to tax deductions, this area needs special attention and becomes an increasingly larger burden for larger portfolios. Some owners (especially those with a back ground in finance) will do just fine, others may opt to hire an accountant to help with the book keeping. If you feel like this might be a weak point you might want to consider hiring a property management company.

8. Are you willing to be on call 24/7/365? Its important to answer this question honestly, because when an emergency happens at your property you can't ignore it. Your special event, important meeting, vacation, or personal crisis doesn't relieve you of your obligation to your tenant. These emergencies don’t happen all the time, but when they do you have to be willing to handle them immediately. Can you handle being called at 2 in the morning to fix someone's overflowing toilet?

9. Are you willing to confront tenants about late payments and if need be evict them from the property? Many new owners dislike feeling like the bad guy and try to be understanding by making exceptions. The problem is that this only invites additional abuses and excuses by tenants. Late payments must be dealt with immediately, and while sometimes a friendly reminder is all that’s needed, other times, it can be a very confrontational process ending in eviction. Unlike running a charity, running a successful rental business means enforcing the rules even it means evicting a single mother who lost her job and won’t be able to pay rent anytime soon.

10. How well do you understand the laws governing land lording? Ensuring the property is run in accordance with the law is critical in both preventing lawsuits and shielding yourself from liability if you are sued. Familiarity with contracts is also very important as your rental agreement is the only binding agreement between you and the tenant.

11. From a financial standpoint, is managing your property the best use of your time? Ultimately, your decision to hire or not hire a management company should hinge on whether or not it is a good fit with your lifestyle and makes sense financially.  Individual investors will have to assess the opportunity cost of both options based on their unique circumstances.

A competent property manager can add significant value to your investment, which is why many seasoned real estate investors will tell you that a good management company is worth their weight in gold.  Here are a few ways that a good property manager earns their keep:



Higher Quality Tenants Think of tenant screening as the moat and draw bridge around your castle. It is certainly possible to get a bad tenant out of your home once they are in, but it’s a real hassle and you are so much better off never accepting them in the first place. A thorough screening process results in reliable tenants that:

• Pay on time
• Rent longer
• Put less wear and tear on the unit
• Generally cause less problems

An experienced property management company has seen thousands of applications and knows how to quickly dig for the real facts about candidates and analyze that information for warning signs. By allowing a management company to handle the screening, you will also be shielding yourself from rental scams directed at owners, and discrimination lawsuits resulting from an inconsistent screening process. This kind of experience takes time, and insomuch as it means avoiding bad tenants, scams and lawsuits it is arguably one of the most significant benefits a property management company will provide.

Fewer costly and time consuming legal problems Veteran landlords know it only takes one troublesome tenant to cause significant legal and financial headaches. A good property manager is armed with the knowledge of the latest landlord-tenant laws and will ensure that you are not leaving yourself vulnerable to a potential law suit. Each state and municipality have their own laws, these plus federal law cover a number of areas including but not limited to:

• Tenant screening
• Safety and property conditions of the property
• Evictions
• Inspections
• Lease addendums
• Terminating leases
• Handling security deposits
• Rent collection

Avoiding a single law suit can more than pay for the property management fees, and spare you time and anguish.

Shorter vacancy cycles A property manager will help you perform three critical tasks that affect how long it takes to fill your vacancies:

• Improve and prepare the property for rent - A property manager will suggest and oversee cosmetic improvements that maximize revenue.
• Determine the best rent rate - Too high and you are stuck waiting, to low and you’re losing money every month the tenant is in the unit. Determining the optimal price requires knowledge of the local market, data on recently sold comparables, and access to rental rate tools.
• Effectively market your property - An experienced property management company has written hundreds of ads and understands what to say and where advertise in order to get a larger pool of candidates in a shorter period of time. Additionally because of their volume they can usually negotiate cheaper advertising rates both online and offline. Lastly, they are familiar with sales and know how to close when they field calls from prospects and take them on showings.

Better tenant retention While its easy to see the effects of lost rent, there are other equally serious problems with a high tenant turnover rate. The turnover process involves a thorough cleaning, changing the locks, painting the walls and possibly new carpet or small repairs, not to mention all the effort associated with marketing, showing , screening and settling in a new tenant. This is a time-consuming and expensive process that can often be averted by keeping tenants happy and well cared for.

A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays in your properties. These kinds of programs require a consistent, systematic approach, which is where a good property management company will shine.

Tighter rent collection process The way you handle rent collection and late payments can be the difference between success and failure as a landlord. Collecting rent on time every month is the only way to maintain consistent cash-flow, and your tenants need to understand this is not negotiable. By hiring a property manager, you put a buffer between yourself and the tenant, and allow them to be the bad guy who has to listen to excuses, chase down rent, and when necessary, evict the person living in your property.

If you let them, your tenants will walk all over you. They have to be trained to follow every part of the lease or deal with the consequences. Property managers have an advantage because tenants realize that they, unlike the owner, are only doing their job and are obligated to enforce the lease terms. Many property managers will tell you that it is considerably easier to manage other people's units rather than their own for this reason.

Regarding evictions, there are strict laws concerning the eviction process, and doing it wrong, or trying to evict a "professional tenant" can be a MAJOR fiasco. A good property management firm knows the law and has a good process for obtaining the best possible outcome given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.

Assistance with taxes A property management company can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Additionally, the property management fees themselves are also tax deductible.

Lower maintenance and repair costs Good maintenance and repairs keep tenants happy and preserve the value of your investment which make them a very important part of land-lording. By hiring a management firm you gain access to both their in-house maintenance staff, as well as their network of licensed, bonded and insured contractors who have already been vetted for good pricing and quality work. This can translate into significant savings compared to going through the yellow pages and hiring a handyman yourself. Not only is the firm able to get volume discounts on the work, they also know the contractors and understand maintenance issues such that they are capable of intelligently supervising the work.

Increase the value of the investment Preventative maintenance is achieved through putting systems in place that catch and deal with maintenance and repair issues early on, before they grow into larger more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits. The management firm can also offer you suggestions and feedback on upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.

Personal benefits for owners

• Less stress - Avoid having to deal with middle of the night emergencies, chasing down rent, evicting people from your property, tenants who wreck your property, rental scams, lousy vendors, piles of paperwork.
• More freedom - Live and invest wherever you want with the constraint of needing to be near your properties. Additionally you can live and travel without the requirement of always being available in the event that your tenants have a need you have to tend to. Once you have found a good management company, it doesn’t matter if you live in the same state. Some landlords live in other countries and simply collect their check every month without ever seeing the property.
• Free up more of your time - Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties. When you focus on asset management you’re working ON your business, when you manage your own properties you work IN it. Additionally you have more time to spend with family or friends doing things you enjoy.

A final thought Of course, this is an ideal scenario.  These results can only be expected if a management company is competent, trustworthy and a good fit for your property.  A poor choice of a management company can produce many headaches of its own.