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Pros and Cons of Hiring a Property Management Company

Read about the pros and cons of using a property management company to manage your rental properties. In this article, we touch on what makes a property management company beneficial but also why some people might be hesitant to hire.

Deciding to hire a property manager can be a challenging process. Maybe you’ve never managed before and aren’t sure what you should be looking for in a manager. Maybe you’ve had a property manager but it didn’t go as well as you’d hoped and now you’re wondering if it’s still the best option for you.

There are advantages and disadvantages to hiring a property manager depending on what you are looking for. You might have a basic understanding of fair housing laws, making it easier to manage on your own. Or you might be panicked because you want to start renting your home, but it needs a lot of updates.

At Good Life, we believe that property management can resolve a lot of the headaches you get while managing your own property. However, we understand that it’s critical to know all the pros and cons before making this decision. Here’s what you should consider when debating if you should hire a property manager.

Pros of Property Management Companies

Experience in the Industry

A property management company has years of experience managing homes. Depending on how long they’ve been in the business, they should have a defined process. Some companies post each step of this process on their website. If they don’t, you can ask them.

Most property managers are licensed real estate agents, meaning they have an education behind them as well. This allows them to know the ins and outs of the market, how to price homes (renting or selling) based on a number of factors, etc.

Over the years, they’ve dealt with tenant disputes, roommate changes, lease breaks, evictions, and more. These are things that can often be overwhelming for an ordinary landlord, especially if you have never managed a property before. Thankfully, property management companies have handled these issues and know the best ways to combat them.

Property managers have also studied fair housing laws and local laws that can affect landlords and tenants. Some of these laws are very specific and without reading through all of them, one could easily break them.

Frees Up Your Time

Managing a property is a time-consuming task. You are on call 24/7, so be prepared to have to leave your kid’s soccer game early to resolve a maintenance issue. Not only are you responsible for that, but also for payments, lease issues, etc. It can quickly turn into a second job.

Hiring a property manager to take on these tasks frees up a lot of your time. Taking care of broken windows or leaking pipes will no longer be your job. You’ll be able to go about your life without the constant worry of being interrupted.

Your stress levels will likely go down once you hire a property manager as well. No more piles of paperwork and tenant disputes to deal with. You can live with the reassurance that your property manager will take care of everything and only contact you for emergencies.

It also allows you to move out of the area. When you manage your own property, it’s necessary to be close to your home so you can respond quickly to maintenance requests and perform walkthroughs. Hiring a property manager means you can move elsewhere because they will be taking on these duties.

Maintenance Response Time

One of the biggest inconveniences about managing your own property is dealing with the maintenance issues. They come up anytime and can often be a bigger problem than you are prepared to deal with.

Property managers not only respond to these maintenance issues quickly, but they typically have multiple vendors that can tackle the job. This saves you the hassle of having to research different vendors and decide which one is the best fit.

A property management company likely has someone that is a dedicated maintenance manager or team that is prepared to tackle any maintenance issues and keep you in the loop as they get them resolved.

Shorter Vacancy & Tenant Retention

People often think that once a tenant signs a lease for your property, the difficult part is over. However, that tenant isn’t going to stay forever, and at some point you will have to find a new one.

Long vacancy periods can quickly decrease your profits when it comes to managing your own property. You want to get a new, qualified tenant into your home as soon as you can once the current tenant vacates.

Property managers are skilled at preparing the home for rent and doing it in a timely manner. They are accustomed to tenants leaving (even at a moment’s notice) and will be prepared to start marketing the home and getting it ready for rent once the old tenant vacates.

They are also skilled at retaining tenants. Both you as the owner and them as the managers want the tenants to be happy and feel like they are in good hands. If they have a good experience in the home, they are likely to renew the lease.

Cons of Property Management Companies

Expense

The biggest obstacle people see when determining if they want to hire a property manager is the cost. Property management is a paid service and those initial dollar signs can deter people that think they can do it themselves.

Most property management companies will charge a monthly fee, which is typically a percentage of the month’s rent (standard rate in San Diego is 8-10%). On top of that, there might be a leasing fee. This fee goes toward the marketing of your home, i.e. listings, photos and video, etc.

There might be miscellaneous fees as well, depending on the company. Some charge a cancellation fee, extra maintenance fees, renewals fees, etc. Keep an eye out for these fees. Some companies claim to have a low management fee but then charge extra fees on the side where other companies might not.

Lack of Involvement

Some owners prefer to be involved in every decision that is made with their property. This can be difficult if you choose to hire a property management company because their system works best with a hands-off approach.

Property managers likely won’t involve you for minor tenant issues, maintenance issues, or other trivial matters. This is because they are equipped to handle these issues and have learned the best way to do so.

Property managers understand that your property is your baby, so to speak, and you want it taken care of. However, hovering over every move they make only makes their job more difficult. If you are someone that needs to be hands-on at all times, perhaps self-managing is a better fit for you.

Final Thoughts...

While property management is an expense, the pros outweigh the cons for most people. If you can afford it, your life will be less stressful and you’ll have more time for other ventures.

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Olivia

Content Marketing Manager at Good Life Property Management

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Hey guys, Adam Manley here from Good Life Property Management. So you’re considering hiring a property manager, but you’ve got to know all the pros and cons associated with hiring one. It’s going to be the right decision for you, is it going to be the wrong decision for you? There’s a lot to consider when hiring a property manager, whether it’s your first time or your temp time. So in today’s video, I’m kind of going to be highlighting some of the pros and cons associated with hiring a property manager and hopefully that will give you some better insights as to whether or not this is going to be the right decision for you and your property. Alright guys, so before we jump into the first part of the video, which is going to be discussing the pros of hiring a property manager, I just wanted to remind you guys that if you’re enjoying this type of content, please like the video and give it a thumbs up and certainly you can subscribe for more content just like this. Thanks guys. So jumping into the pros of hiring a property manager, I would say the kind of biggest and most advantageous part of bringing one into your property is going to be the expertise that they bring to the table. Property managers have developed a very strong expertise in understanding the legal landscape of your individual market, all of the processes and systems associated with doing everything from getting maintenance done quickly and correctly, from correcting lease violations, from handling basic tenant issues. It’s their job and their business to really think about this at a very high level and continue to make it easier for owners and tenants. So I would say the expertise that a property manager brings to the table is probably going to be the best pro associated with using one. The next one is time and energy. So again, managing a property is a full time job or we wouldn’t be in business. So if you’re a homeowner and you have a high degree of time, maybe you’re retired, have a lot of energy or taking care of your property gives you a lot of energy. That’s great. But if you don’t, if you have a family or a normal job or a busy life or maybe it just doesn’t fire you up the way it does us, that’s going to be one of the other main benefits of hiring a property manager. Is this the abundance of time and energy you’re going to save rather than pouring it into the property? So the third pro of hiring a property manager is going to be maintenance response time. And this may sound a little bit unusual, but keep in mind, the tenant is the customer in this whole situation. So getting to their request quickly is a big part of how we make property management successful. If you’re working a job and have your own life going on, it may be a little bit difficult to get to a tenant maintenance request in a timely manner. A property manager on the other hand, again, is going to have a lot of systems and processes in place so that when a tenant does need something maintenance related, it’s going to be quickly responded to and the appropriate action is going to be quickly followed up on as well. That helps your property stay in better condition. It helps your paying customer stay more happy and enjoy the property a lot more as well. So that’s something to consider too is just how much time you’re going to have available to handle maintenance requests. And again, a big pro of hiring a property manager. The last item that I feel is probably the biggest pro of hiring a property manager is just the reduced vacancy time that you’re going to have. Again, property managers have really at least sometimes thousands of properties over the course of their tenure and the processes and systems that they’re going to employ to get your property rented are most likely going to be a lot more detailed and be able to get the job done more quickly at a better price to a higher quality tenant. So I think the processes that property managers have developed around reducing vacancy, turning over properties, getting it on market, those are really going to be a huge benefit in getting the best quality tenant in the shortest amount of time at the best price possible. So those are what I feel are probably some of the biggest pros of hiring a property manager. We’ll segue a little bit and kind of talk about what may be some of the cons of hiring one as well. All right, guys, now we’re here for the cons part of the video. Now of course, there are pros and cons to everything, right? So we got to be honest about what some of the cons might be associated with hiring a property manager too. In my experience, what I tend to find or see as the biggest con with some of the owners I work with is just the general lack of involvement that a homeowner may have working with a property manager. A lot of times, if this was maybe a property with a very high degree of emotional attachment, maybe you grew up in it, maybe it was your parents’ home, maybe it was the first home you ever bought with your significant other. The emotional aspect and not being able to be involved with the day to day could be a huge con for some people, really not being able to control who the property rents to or not having a large say in the maintenance, I think just the overall lack of involvement for some people just maybe a total deal breaker because a property manager is there by design to kind of keep you out of the weeds for the most part and kind of insulate you a lot from that kind of day to day activity and kind of what’s going on in the property. So that in my opinion is probably the biggest con or the con that I see most owners bring up, especially with one of those types of properties. The second one is just cost, right? So property management isn’t free and for some people, the additional cost of hiring a property manager may put them in a precarious situation as far as what they’re bringing in each month and projected rent and what they’re paying out each month in expenses, whether that’s mortgage insurance and now property management fees. So again, that could be a serious con for some people. Now I will say property management fees are considered an expense, so it is tax deductible at the end of the year, but you’re still feeling that money come out of your pocket each month and that’s just something that everybody’s going to need to consider. Is this going to be financially viable and will bringing a property manager in the mix, put you too far in the red to make that make that situation a reality? All right, guys. So that wraps up another video here just to kind of recap again, some of the pros and cons of hiring a property manager on the pros side. It is the expertise that they’re going to bring to the table, freeing up your time and energy, the whole maintenance process and the response times associated with handling maintenance and overall reducing your vacancy, whether that’s retaining a tenant or reducing the amount of time your property spends empty before it comes on market. Again, on some of the cons side, the biggest cons I feel are just the general lack of involvement you may have as an owner and of course the cost associated with hiring someone. So that wraps up another video here again. Please like this video and subscribe for more. My name’s Adam. That’s Olivia behind the camera and we’ll see you guys next time.