Should I Hire a Property Manager or Do it Myself?
Are you weighing the pros and cons of hiring a property manager versus taking on the responsibilities yourself? As a property owner, it’s one of the big decisions you need to make—but that doesn’t make it a simple choice.
In this article, we explore what it takes to manage a property, the benefits of DIY property management, and when it’s time to wave the white flag and hire a professional property management company.
The Ins and Outs of Property Management
Whether you’re doing it yourself or hiring a professional property manager, certain responsibilities will land on the lap of whoever manages the property. While these tasks will look different depending on who is executing them, it’s important to understand what you can expect from a pro or what will be required if you decide to become a DIY landlord.
Compliance with landlord-tenant laws
Landlord-tenant laws can be very complex, but they are essential to managing a rental property effectively and legally. Everything from screening and selecting tenants to rent collection to evictions has rules and regulations that need to be followed. Not following these rules can leave you vulnerable to an expensive and time-consuming lawsuit. And “I just didn’t know” isn’t an excuse that will hold up in court.
Knowing and understanding the laws surrounding rental properties is an important part of being a landlord or property manager. If you’re new to the industry, you must dedicate 1-2 hours per week to learn about the laws and regulations for the first 6-10 months of your journey. After that, you need to keep your ear to the ground to stay on top of new updates and changes to the laws—it is not uncommon in California for laws to be updated each year.
A great way to stay connected is to become an active member of the California Apartment Association or the Southern California Rental Housing Association. These organizations are a great way to ensure you get all the essential updates.
Managing maintenance requests
Whether the calls come in at a reasonable time or you’re picking up an emergency call in the middle of the night, managing maintenance requests is an important part of being a landlord or property manager. It’s the responsibility of whoever manages the property to address all maintenance issues in a timely and efficient manner.
As a DIY landlord, you may choose to handle some maintenance requests yourself. However, having a vendor list of insured and trustworthy businesses you can rely on will make a huge difference in how you’re able to respond to maintenance requests. When your property is occupied, it’s essential that you work with professional vendors with their own insurance who you know to be reputable in order to protect you and your tenants.
Additionally, having after hours vendors lined up can help make the process even smoother. You want to have a list of vendors in advance—from electricians and plumbers to HVAC specialists and contractors, you don’t want to find yourself scrambling to find someone when things go wrong. Not only does a preferred vendor list save you stress, it can also save you money. Working with a vendor on a last-minute basis can potentially lead to you paying a higher “emergency” rate.
As a landlord, you must inform your tenants of the process for making a maintenance request—ensure they know whether they should call, email or text you in the event of a maintenance issue.
Marketing vacant properties
When a property is vacant, the landlord or property manager is responsible for finding new tenants. To get the best possible tenants, you need to market your property effectively. This involves staging and photographing your property, posting ads, hosting open houses, and using social media to spread the word about your property.
The top place to market your property is Zillow—they have a 3D tour feature that you can shoot on your phone. This is a powerful feature for DIY landlords who don’t have a professional team supporting them. You can shoot the video and qualify your potential tenants by ensuring they’ve seen the layout of the rental beforehand.
Marketing your property ensures you get responsible tenants who pay on time, take care of your property, and treat it with respect.
Here are five key things to include in your rental ads to maximize interest from qualified candidates:
- Available date.
- How they can schedule a showing—ensure this is at the top of the ad.
- 3D tour or video tour of the property.
- An in-depth description of the property—location, number of beds and baths, top 5-10 highlights that would be important to your prospective tenants.
- Answer some of the most frequently asked questions, including:
- Is there a washer and dryer in the unit or onsite?
- Does the unit have air conditioning?
- Is there a parking spot included?
- Are utilities included in the rent?
- Are pets allowed in the unit?
Screening and selecting tenants
Tenant screening is the process of assessing whether or not a tenant will fulfill the terms of the lease agreement. This is essential as it helps to protect your property to the best of your ability. It’s also vital in terms of legal compliance—the Fair Credit Reporting Act and state and federal Fair Housing Laws concern how you can conduct tenant screening ethically and legally.
You need screening criteria that are well-documented. You can’t simply choose someone because you both watch the same kinds of movies—you need to prove that you’ve used the same vetting criteria on every applicant. Without screening criteria, you leave yourself open to potential discrimination claims that can be detrimental to your business.
To learn more about the tenant screening process, read our guide to tenant screening.
Managing tenant issues and complaints
Landlords and property managers are responsible for managing tenant complaints when they arise. Tenant turnover can be costly, so it’s important to maintain good landlord-tenant relationships—especially when you have great tenants.
When tenants come to you with complaints, you must remain open, let them know that you hear them, and take their concerns seriously. Be sure to take notes when you’re speaking with your tenants that you can refer back to later. It’s not about solving their problem right away, but you do need to be prompt and professional. Remember, it’s about open communication and showing them that you’re on their side.
It’s also essential that you do not get in between roommate disagreements. If you have two tenants from two separate units, you will need to hear both sides of the issue. But you are not there to mediate between roommates.
Collecting rent
Collecting rent is the responsibility of the landlord or the property manager they hire. In the best of times, collecting rent is a simple, hands-off process. But if there are late payments or a tenant refuses to pay rent, things quickly become more complicated. You’ll need to follow up and potentially get a lawyer involved. Most property management companies have a process in place to deal with late payments and have a legal team they work with in these situations.
Rent is usually due on the first of the month and considered late by the 4th of the month. Most landlords provide a 2-4 day grace period. If they don’t pay, you need to serve a three-day notice to pay rent or quit. This notice gives your tenants three more days to pay their rent or they’re required to move out in 30 days. If they have not moved out after 30 days, then the landlord is required to file an unlawful detainer, or eviction, case.
Handling evictions
While no one wants to have to evict a tenant, it does happen. Completing an eviction is a complex process that can be quite costly. Whether you’re a DIY landlord or you’ve hired a property manager, evictions involve months of back and forth with attorneys, the court, and your tenants.
As a DIY, you must equip yourself with the information to proceed with a legal eviction. Explore our in-depth guide to the California eviction process, including steps and a cost breakdown.
The Benefits of DIY Property Management
For many people, becoming the property manager for their rental property makes the most sense. And there are undeniable benefits to going the DIY landlord route. While they don’t apply to everyone, these four benefits may be a reason for some property owners to conduct their own property management.
You have complete control
Some property owners want to be involved in all aspects of property management and in control of all decision-making processes. This is a great reason to become a DIY landlord, as most property management companies have their own systems that work best with a hands-off approach.
If you want to know everything that is happening and be involved in all aspects of property management, hiring a property management company is most likely not the best option for you and your property.
We often see control becoming an issue with properties owned by a family trust. Because multiple people are already making choices, adding a property manager can make it more complicated and not worth the investment.
You can save money
If you’re responsible for the management of your rental property, you will save the management and miscellaneous fees associated with hiring a property management company.
Additionally, if you qualify for Real Estate Professional (REP) Tax Status, you can deduct your rental property losses against any income source, like salaries or business profits, to lower your tax bill. There are three IRS requirements to meet REP tax status:
- You must spend 50% of your total hours providing services in real property trades or business during the year.
- You must dedicate at least 750 hours total per year on real estate-related activities.
- You must actively work on your business’s day-to-day operations and decision-making processes. This is called the material participation test.
Check with your CPA to see if you qualify before claiming REP tax status.
You gain experience in the industry
You cut out the intermediary
The Benefits of Hiring a Property Management Company
You can rely on a professional
When you work with a property management company, you’re working with professionals who do this work for a living. They will know the laws and have best practices in place to keep you out of trouble. And when you need it, they are there to offer you advice. Property managers know how to interact with tenants, have a vendor list a mile long, and have experienced and handled every possible landlord-tenant situation effectively.
Property management companies have processes to manage every aspect of your rental, and they’ve been tried, tested, and proven effective.
You save time and money
Your time is valuable. And managing a property can be a burden on your time. You can’t control when an emergency happens at one of your properties and when you might have to respond to tenant complaints.
With a property management company on your team, you no longer have to worry about losing time to your property. Whether it’s a middle-of-the-night call or a complaint coming in when you’re on vacation, your property manager will be the one ready to help.
You might be surprised to learn that a property management company can also save you money.
We always recommend conducting a return-on-time analysis—what is your current hourly rate, and how many billable hours are you spending managing your property? Seeing the number can be a real eye-opener for many property managers. A property management company can save you money in many other ways, including reducing vacancy rates, attracting high-quality tenants, and providing access to less expensive maintenance and repairs.
You maximize your rental income
Using a property management company can help you maximize your rental income in two ways.
First, property managers are experts in filling vacancies. With a team of experts on your side, your rental will experience fewer vacancies, so you will not lose out on potential rent. Second, property managers are experts in the industry and will be able to set a competitive rent that is optimized for your area and your property.
You gain access to industry knowledge
Remember when we talked about those 1-2 hours a week, you need to spend on educating yourself? When you work with a property management company, you tap into their years of industry experience and knowledge. You do not need to become an expert on landlord-tenant laws, lease agreements, or evictions because your property management team will cover all those bases.
You can take back those 1-2 hours a week and spend them doing something you love. Instead, you have a team of professionals who have spent years of their lives building this knowledge base and making it a part of their jobs to stay up-to-date on any changes that occur.
7 Signs It’s Time to Hire a Property Manager
If you’ve been going the DIY route yourself, there comes a point where you need to consider hiring a property manager. These six signs are a clear indication that it’s time for you to hire a property manager.
- You have five or more rental properties: The more rental properties you own and the more units in each property, the more likely you are to benefit from having a property management company handle the day-to-day operations.
- You live far from your rental property: If you live in another state, country, or even a few hours’ drive from your rental property, hiring a property manager can be essential for dealing with any emergencies that may arise.
- You have multiple time commitments: As we mentioned before, your time is invaluable. If being a landlord isn’t your only responsibility, you may find you don’t have enough time to dedicate to being a DIY property manager.
- You’re falling behind on management tasks: When did you last inspect your property? Have you raised the rent on your property in the previous five years? Are your tenants on a month-to-month basis? If you’re falling behind on essential rental property management tasks, it might be time to hire a professional to take them off your plate.
- You’re stressing about your responsibilities: It’s easy to manage a property when everything is going well with the property. You might start to see the cracks when issues arise. If you’re sitting in a meeting at your 9-to-5 and get a call about a leak, your laundry list of things you need to do grows exponentially. It becomes another ball you have to juggle. If the stress is becoming too much, you may want to look into a property management company that can take care of your rental.
- You had a negative experience with a previous property management company: If you worked with a property manager in the past and fired them because they weren’t a good fit, it can be tough to find a new manager. Not only will you be more likely to take on the work yourself, but the world of local property management is small, and it’s unfortunately easy to get a reputation as someone challenging to work with. To avoid this, you need to be upfront with your new potential property manager. Tell them exactly what happened in the past and how you can work together to avoid the same outcome. If you want to be a hands-on landlord, then be upfront with that—there’s nothing wrong with that, but it’s important to be honest with your property management company.
- Your property isn’t renting: If your property has been sitting vacant for an extended period, bringing in a fresh set of eyes can help improve your chances of placing a tenant. Working with a property management company with a proven track record can help ensure your property is rented as soon as possible.
Hire the Right Team for Your San Diego Investment Property
Hiring a property management company for your rental property might seem like an overwhelming choice. With over ten years of experience, Good Life Property Management has been San Diego’s choice for trusted property managers.
At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
Schedule a call to speak with one of our Good Life experts.
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Steve Welty
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