REAL ESTATE TIPS: Landlords have pros and cons to hiring property managers
Andy and I have been tenants and we have been landlords.
We have made the call to our landlord to see if they could help us because we locked ourselves out of the house and we have received the call from our own tenants. We have written the rent check and we have received the rent check. We understand how both sides work. But what we haven’t really experienced in either scenario is involving a property manager.
The closest we came to a property manager was when we first got married in 1998. We were living near the high school in Bowling Green, Ohio, in an upstairs unit of a relatively large apartment complex. There was a manager but rather than managing many buildings throughout a multitude of cities, which is what a property management company does, this gentlemen managed our complex only. Part of his compensation was a free apartment.
We rented two places where the landlords owned multiple units but managed all of their own properties and a third place in Walnut Creek that was their one and only rental. It was the original farmhouse on the family farm so we felt more like family. The Mrs. on the farm and I would take walks together on the roads nearby and when I had a chocolate craving, she would always open her freezer and share her baked goods.
So as a landlord, what is the best option? To manage your own properties or to pass it to someone else? It depends. There are good and bad to both.
From a landlord perspective, the biggest reason is that you own the property and have the benefits that come along with that but zero responsibility for what might go wrong. And things will definitely go wrong. So when the furnace quits working at 2 in the morning, you don’t get the call to go fix it. Or when it is time to fill a tenant vacancy, you don’t have to worry about finding time to take applications, show the unit, etc. You can wash your hands of the property so to speak.
But it comes with a price, literally. In exchange for doing all of your “dirty work,” your management company receives a percentage of the monthly rent on your property. Money well deserved, I must say, for being the people who do have to take the 2 in the morning furnace call.
Of course, as in any profession, there are good and bad property management companies but if you use a good one, you can usually enjoy the perks of owning rentals without dealing directly with the headaches.
So how do you decide? It’s easy. It comes down to what is more important to you personally. And the good news is, no matter how you answer, your answer isn’t wrong. Is it more important to have your freedom and not feel tied down or add another responsibility to your plate. Or is it more important to keep most of your monthly cash flow rather than pay a percentage out to a management company?
If possible, it is best to know your answer before you buy the rental property. That way you can plan ahead as far as what your expenses and income will be when making the purchase. Of course, you can change your mind but since I am one to plan everything, I like to prepare in advance. For me, being a landlord is a pretty neat thing. It is a way to diversify your investment portfolio for sure but it is also a great service you are providing someone — you are providing someone a home. Have a blessed week!
Esta Ryder, Broker/Owner
Ryder Realty, LLC