But beware of the most overlooked headache.
Think twice before deciding to Manage Your Own Rental Properties.
When investing in rental properties, there are a lot of tasks that need to be done on a regular basis if you want to be a successful landlord and investor. Some of these tasks include placing ads to find tenants, taking phone calls to showing properties many times not at convenient times and then going through the qualifying process to find the best potential tenants.
Let’s take a quick look at some of some reasons you might want to think twice about attempting to manage your own properties.
Can you manage the contractors when needed to fix the toilets, heating, roof, plumbing and maintenance issues that arise?
Are you able to be constantly available to tenants—24 hours a day, 7 days a week, 365 days a year? If you are already retired and have no plans to travel, have the family over on the holidays, and never get sick, that may not be a problem for you. But if you’re like most investors trying to build a portfolio while juggling a full-time job or business and your family, this can be quite a challenge.
Also, are you good at collections? Yeah, this is a big one. Many times, tenants just don’t pay their rent on time and you need to call them constantly to get the payment. A huge time waster. But it needs to be done.
But there is a simple solution as all that work doesn’t need to be done by you. Professional property management companies can take care of most of the above and more. But management companies are not always a perfect solution either. But for the newbie or busy experienced investor, I would give it serious thought.
So, should you manage yourself or hire someone else? There are several key issues that a real estate investor should consider before making the decision.
A couple of points to consider when hiring a property management company.
The cost is usually around 8 -10% of the monthly rent roll along with a onetime fee each time the unit is rented out. This can equal to a half or full month rent. This is one reason why you need to do your numbers correctly to make sure you have enough cash flow to cover these costs.
Screening for Tenants. Most property managers can handle this daunting task. They will advertise, screen and show your property. A big-time saver.
Most can manage their own one or two rental properties if they really understand what the undertaking involves, which many investors don’t. And managing the property effectively is a whole other story and is a skill that must be learned and perfected. I would prefer to spend my time to find profitable properties and let the property management companies deal with managing of the properties.
In summary, do the math on the liability and the cost of juggling multiple full-time roles, the stress, and the lost time you could’ve spent looking for more properties, spending quality time with family and not having to be called in the middle of the night because someone doesn’t have heat. This can suck the joy and benefits of being a landlord who is trying to build their rental portfolio. If you want to manage yourself, learn everything you can about being a landlord and how to skillfully manage the property, tenants and your time.
From my experience here in NJ I will say I’ve had the most success with a property management company. They are Crowne Management in Union NJ. The owner is Vanessa Regalado aka “the queen of property management”. Website: Crownemgmt.com